Monday, December 9, 2013

Special-Servicing Rate at 4-Year Low

The special-servicing rate for securitized commercial mortgages dropped sharply again last month, hitting its lowest level in four years.

The proportion of mortgages in the hands of special servicers was 9.35% as of Nov. 30, down 56 bp from a month earlier, according to

Trepp. That key measure of credit quality for commercial MBS loans peaked at 13.65% in February 2012. The rate has been decreasing virtually nonstop for the last year, by an average of 27 bp per month. The improvement reflects a contraction in the volume of loans in special servicing by an average of $1.7 billion per month during the last year.

There were 2,805 loans with a combined balance of $49.6 billion in special servicing at the end of November, down from $52.1 billion a month before. The all-time high for the aggregate balance of loans in special servicing was $89.9 billion in September 2010.

Another factor pushing the special-servicing rate down last month was a fresh batch of CMBS offerings. The overall amount of securitized commercial mortgages outstanding jumped by $5.2 billion in November, to $530.4 billion — the largest monthly increase since before the credit crisis. That figure serves as the denominator when calculating the rate.

Since peaking at almost $800 billion in 2007, the CMBS universe has been shrinking as new deals have failed to keep pace with the runoff of legacy loans. But that decline has slowed this year amid soaring issuance, and the monthly total has now ticked up three times in 2013.


 

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