Trepp reported that special servicing rate for multifamily commercial mortgage-backed securities (CMBS) loans moved higher for the fourth month in a row in November, jumping 116 basis points. The overall CMBS special servicing rate on commercial property also rose, as the special servicing rate of office loans climbed 136 basis points.
Multifamily CMBS special servicing rates on the rise
The special servicing rates on CMBS loans on multifamily property climbed at the fastest rate of the loan types tracked by Trepp. The special servicing rate hit 7.37 percent, another recent high.
The report found that overall CMBS special servicing rate rose to 9.53 percent, up from 9.14 percent the month before. This rate has now risen for 11 straight months.
The special servicing rate on CMBS loans on industrial properties is again by far the lowest of any commercial property type covered and it edged lower this month, falling 1 basis point to 0.38 percent.
The rate on lodging properties fell 14 basis points to 8.18 percent. However, it is up 105 basis points year-over-year.
The special servicing rate on office properties climbed 69 basis points to 14.63 percent. It is up from 8.87 percent in November 2023 and 3.85 percent in November 2022.
The rate for retail properties rose 42 basis points to 11.79 percent.
The history of the overall and multifamily CMBS special servicing rates as reported by Trepp since January 2020 is illustrated in the chart, below.
The full Trepp special servicing rate report can be found here.
Average loan loss rises
Trepp’s report on the volume and severity of loan losses on CMBS loans which were resolved in November showed a slight decrease in the number of loans disposed but increases in the total loan disposed amount and the losses incurred. While the report does not break down this data by the type of property covered by the loans, only one of the nine loans that resolved was on a multifamily property.
The history of the average losses incurred and the loss severity over the last 25 months is shown in the next chart, which shows the average loss incurred per resolved loan along with the average percentage of a resolved loan’s value that was lost during resolution.
The chart shows that the severity of CMBS loan losses declined in November, falling almost 6 percentage points to 56.67 percent. However. the average dollar loss per loan rose significantly from $4.7 million to $11.1 million. The number of loans resolving in November fell from 10 to 9. The total dollar value of the loans that resolved rose to $170.5 million, still below the monthly average of $254.2 million over the last 12 months.
Since monthly loan loss data can be volatile, Trepp also reports on the 12-month trailing average loss severity. This figure eased slightly to 65.53 percent this month, down from 65.90 percent last month. A year ago, it was 54.38 percent. The November loan loss severity report can be found here.
