2022 Multifamily Special Servicing Rates

The Trepp CMBS Special Servicing Rate dropped three basis points in December to 5.17 percent – representing the first decline in the past five months. Six months ago, the rate was 4.91 percent, and 12 months ago, the rate was 6.75 percent.

The December rate declined after four consecutive increases from August to November. In December, three of the five major CRE property types declined, the office sector special servicing rate was
unchanged, and the industrial sector special servicing rate rose by two basis points.

The percentage of loans on the servicer watchlist fell 48 basis points to 19.64 percent.

The largest basis point decline occurred in the lodging sector, down 32 basis points from the month prior. New special servicing transfers were dominated by office loans, although it appears that the new list of transfers have been offset by a host of office loans coming out of special servicing. In total, approximately 14 office loans (split across 19 loan pieces) were transferred, with a combined outstanding loan balance of $939 million. January’s special servicer data will indicate if this month’s special servicing rate drop was a momentary reprieve or the start of another sustained decline.

—Posted on Jan. 30, 2023

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The Trepp CMBS Special Servicing Rate rose 23 basis points in November to 5.20 percent – a stark jump from the incremental increases of the months prior. Six months ago, the rate was 5.12 percent, and 12 months ago, the rate was 6.95 percent.

The November rate represents the largest month-to-month increase since September 2020. In November, three of the five major CRE property types experienced a rise in their respective special servicing rates, while the retail sector special servicing rate inched down, and the industrial special servicing rate remained unchanged.

The percentage of loans on the servicer watchlist fell 32 basis points to 20.12 percent.

November’s 23 basis point increase was largely due to a host of lodging, multifamily, and office transfers. In a month where the multifamily delinquency rate rose nearly 100 basis points, the multifamily special servicing rate also rose by 69 basis points, more than any other major CRE property type. Imminent maturity defaults are also proving to be a prime reason for special servicing transfers of late. Three of the five Iargest special servicing transfers in November were due to imminent maturity default, as the current interest rate environment continues to make refinancing difficult.

—Posted on Dec. 30, 2022

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The Trepp CMBS Special Servicing Rate rose three basis points in October to 4.97 percent – slightly above the September print. Six months ago, the rate was 5.30 percent, and 12 months ago, the rate was 7.17 percent.

This is the first time since June of 2020 that the CMBS Delinquency and Special Servicing Rates rose in tandem. In October, three of the five major CRE property types experienced a rise in their respective special servicing rates, most notably the office and retail sectors, which saw a rise of 28 and 25 basis points.

The percentage of loans on the servicer watchlist fell 73 basis points to 20.44 percent.

As mentioned in last month’s report, the office sector has a large concentration of loans with near-term maturities and tenants with expiring leases, which is adding a heightened amount of distress to the office loan market.

However, the retail sector also faces its own set of challenges. Some companies are opting to forgo traditional brick-and-mortar space and increase their online presence, warehouses, and distribution capabilities, while others have experienced subdued quarterly earnings and are shedding space to cut costs. For these reasons, Trepp is keeping a close eye on retail and office.

—Posted on Nov. 30, 2022

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The Trepp CMBS Special Servicing Rate rose two basis points in September to 4.94 percent – slightly above the August print. Six months ago, the rate was 5.66 percent, and 12 months ago, the rate was 7.48 percent.

This is the first time the rate has increased in consecutive months since August and September of 2020. September data revealed declines in the rate for four of the five major commercial real estate (CRE) property types. However, it was the office sector that saw a 26-basis point increase, and the volume of retail loans in special servicing remained high.

The special servicing rate for loans categorized as ‘Other’ (not one of the five major property types) rose by four basis points from the August print.

September CMBS data reflects market suspicions that August 2022 was an inflection point, at least as it pertains to specially serviced loans. The office sector has a large concentration of loans with near-term maturities and tenants with expiring leases. Lockdown periods during the pandemic displayed the ease at which companies can implement a work-from-home (WFH) policy, and if many of the major tenants in the office sector shed their leases and opt to implement a full or hybrid WFH model, this could have a major impact on the CRE market. Now, the looming maturities and lease terminations are starting to be reflected in the special servicing numbers.

—Posted on Oct. 25, 2022

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The Trepp CMBS Special Servicing Rate rose 13 basis points in August to 4.92 percent—slightly above the July print. Six months ago, the rate was 6.08 percent, and 12 months ago, the rate was 7.79 percent.

This is the first time the rate has increased since 03’2020. In August 2022, the distress was concentrated in the retail and multifamily sectors, which saw 117 and 67 basis point jumps, to 11.03 percent and 1.90 percent, respectively.

The percentage of loans on the servicer watchlist rose 26 basis points to 21.34 percent.

August CMBS data has the makings of an inflection point. After struggling during COVID, the current economic environment may have hampered what retail borrowers hoped would be a full recovery. Companies like Bed Bath & Beyond and Cinemark have announced store closings and Chapter 11 filings which may indicate a I larger trend in the CRE market. This month’s large retail transfers were heavily tied to regional and superregional malls that were transferred due to imminent monetary default. This may indicate the lack of belief that the market has in some of the non-A Class malls and the retail sector as a whole going forward.

—Posted on Sep. 28, 2022

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The Trepp CMBS Special Servicing Rate fell 12 basis points in July to 4.8 percent. Six months ago, the rate was 6.3 percent and 12 months ago, the rate was 8.1 percent.

The percentage of loans on the servicer watchlist fell 128 basis points to 21.1 percent, its lowest reported rate in 2022. July CMBS data continued to promote the narrative that despite turmoil in the wider economic sectors, the commercial real estate market is isolated. Issuance has fallen off, specifically in what was a thriving CRE CLO market, but distress has continued to recede despite mounting economic concerns. When the pandemic first happened, it was easy to explain the low distress as a by-product of COVID loan extensions and forbearance, but the markets continued ability to weather distress speaks to the safety of the market post Great Financial Crisis regulations and changes to deal structures.

However, market participants are still cautious as there is ample room for refinance risk, and the future of the office market continues to loom somewhere in the distant background. New Transfers Approximately $372.8 million in CMBS debt was transferred to a special servicer in July.

For overall property types CMBS 1.0 and 2.0+, the multifamily rate went down six basis points to 1.2 percent.

—Posted on Aug. 25, 2022

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The Trepp CMBS Special Servicing rate fell 21 basis points in June to 4.9 percent. Six months ago, the rate was 6.8 percent and 12 months ago, the rate was 8.2 percent.

The percentage of loans on the servicer watchlist inched up one basis point to 22.4 percent, breaking what had been a streat of eight consecutive months of declines.

Despite the loan cures representing a positive sign for CMBS and the greater commercial real estate market, elsewhere the Trepp CMBS delinquency rate rose six basis points. It is too early to tell whether a new trend is emerging, but special servicing rate increases in the coming months would not be surprising considering the current interest rate and economic environment.

Approximately $341.1 million in CMBS debt was transferred to a special servicer in June.

The overall US CMBS 2.0+ special servicing rate is 4.5 percent. One year ago that was 8.0 percent and six months ago it was 6.3 percent. For property types, the multifamily rate for CMBS 1.0 and 2.0+ had no change at 1.3 percent.

—Posted on Jul. 27, 2022

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The Trepp CMBS Special Servicing Rate fell 18 basis points in May 2022 to 5.1 percent. Six months ago, the rate was 7.0 percent and 12 months ago, the rate was 8.7 percent.

The percentage of loans on the servicer watchlist fell to 22.4 percent. This is the eighth consecutive month of declines in the rate.

Distress rates continue to decline despite the recent volatility in the stock market, painting the picture of a CMBS market that has yet to take any collateral damage. Loans continue to cure, and the market is showing a sign of resiliency–cementing itself as as different financial environment than the one we saw during the Great Financial Crisis. Additionally, spreads have widened but issuers move ahead with quoting loans and deals continue to come to market.

Approximately $772.5 million in CMBS debt was transferred to a special servicer in May. The overall US CMBS 2.0+ special servicing rate is 4.8 percent. One year ago that was 7.9 percent and six months ago it was 6.8 percent. The overall CMBS 1.0 special servicing rate is 40.4 percent. One year ago that was 47.2 percent and six months ago it was 41.2 percent.

For overall property types analysis 1.0 and 2.0+, multifamily went down 20 basis points to 1.3 percent. For 2.0+, it went down 20 basis points to 1.3 percent. For 1.0, multifamily was unchanged.

—Posted on Jun. 21, 2022

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The Trepp CMBS special servicing rate fell 36 basis points in April to 5.3 percent. Six months ago, the rate was 7.2 percent, and 12-months ago the rate was 9.0 percent.

The percentage of loans on the servicer watchlist fell 37 basis points to 23.5 percent. This is the seventh consecutive month of declines in the rate. Approximately $1.09 billion in CMBS debt was transferred to a special servicer.

The overall CMBS 2.0+ rate is 4.9 percent, where one year ago it was 8.3 percent and six months ago it was 6.7 percent. The overall CMBS 1.0 rate is 32.3 percent. One year ago that was 47.3 percent and six months ago it was 41.9 percent. The multifamily special servicing rate went down 17 basis points for CMBS 1.0 and 2.0+ to 1.5 percent.

—Posted on May 23, 2022

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The Trepp CMBS Special Servicing Rate fell 42 basis points in March to 5.7 percent. Six months ago, the Trepp special servicing rate was 7.5 percent, and 12-months ago the rate was 9.4 percent. The percentage of the loans on the servicer watchlist fell 37 basis points to 25.5 percent. This is the sixth consecutive month of declines in the rate.

Approximately $668.3 million in CMBS debt was transferred to a special servicer in March. The overall US CMBS 2.0+ special servicing rate is 5.4 percent. One year ago, the US CMBS 2.0+ special servicing rate was 8.7 percent, while six months ago, the US CMBS 2.0+ special servicing rate was 7.0 percent. The overall US CMBS 1.0 special servicing rate is 41.5 percent. One year ago, the US CMBS 1.0 special servicing rate was 47.4 percent, while six months ago the rate was 41.7 percent.

For overall property types CMBS 1.0 and 2.0+, the multifamily rate went down 29 basis points to 1.7 percent.

—Posted on Apr. 27, 2022

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The Trepp CMBS Special Servicing Rate fell 25 basis points in February to 6.1 percent. Six months ago, the Special Servicing rate was 7.8 percent, and 12 months ago the rate was 9.6 percent. The percentage of loans on the servicer watchlist fell 21 basis points to 25.9 percent. This is the fifth consecutive month of declines. Approximately $270.5 million in CMBS debt was transferred to a special servicer in February. The new transfers were heavily made up of loans backed by office properties, which equated to $175.9 million of the newly transferred balance.

The largest of these transfers was the $67.5 million Sunbelt Portfolio. The portfolio backs three apartment properties located in Birmingham, Ala., and Columbia, S.C. that combine to make up 1,324,863-square-feet.

The overall US CMBS special servicing rate is 6.1 percent in February. One year ago, the US CMBS special servicing rate was 9.6 percent. Six months ago, the US CMBS special servicing rate was 7.8 percent. The overall US CMBS 2.0+ special servicing rate is 5.6 percent. One year ago, the US CMBS 2.0+ special servicing rate was 8.9 percent. Six months ago, the US CMBS 2.0+ special servicing rate was 7.3 percent. The overall US CMBS 1.0 special servicing rate is 43.4 percent. One year ago, the US CMBS 1.0 special servicing rate was 47.4 percent. Six months ago, the US CMBS 1.0 special servicing rate was 42.1 percent.

For CMBS 1.0 and 2.0+, the multifamily special servicing rate dropped 18 basis points to 2.0 percent.

—Posted on Mar. 25, 2022

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The Trepp CMBS Special Servicing Rate fell 42 basis points in January to 6.3 percent. One year ago, the US special servicing rate was 9.7 percent. The percentage of loans on the servicer watchlist fell for the fourth consecutive month with 26.1 percent of loans reported as on the servicer watchlist, a drop of 38 basis points from the December reading. Approximately $289.9 million in CMBS debt was transferred to special servicing in January. The office, multifamily, and mixed-use sectors made up 85.4 percent of the of the month’s newly transferred balance. A noteworthy transfer included the $33.2 million Park at Caldera (MSBAM 2014-C19) multifamily loan.

Six months ago, the US CMBS special servicing rate was 8.1 percent. The overall US CMBS 2.0+ special servicing rate is 5.9 percent. One year ago, the US CMBS 2.0+ special servicing rate was 8.9 percent. Six months ago, the US CMBS 2.0+ special servicing rate was 7.5 percent. The overall US CMBS 1.0 special servicing rate is 43.5 percent. One year ago, the US CMBS 1.0 special servicing rate was 49.9 percent. Six months ago, the US CMBS 1.0 special servicing rate was 45.9 percent. For CMBS 1.0 and 2.0+, the Multifamily special servicing rate increased 2 basis points to 2.1 percent. For 1.0, the multifamily special servicing rate went down 217 basis points and sits at 0.0 percent.

—Posted on Feb. 28, 2022