CMBS Special Servicing Takes Biggest Monthly Leap in Four Years

Special servicing on CMBS loans took an 80-basis point jump between March and April to land at 8.11%, according to Trepp. It was the biggest month-over-month gain in almost four years. The only higher increases were in the middle of 2020 in the heat of the pandemic. It was also the first time since 2021 that the monthly rate was higher than 8.00%.

“There were some big movers when analyzing by property type, with three up by at least 100 basis points,” Trepp wrote. The special servicing percentages by property type were — retail (up 105 basis points to 10.85%); office (up 53 basis points to 10.84%); mixed-use (down 28 basis points to 8.25%); lodging (up 5 basis points to 7.40%); multifamily (up 269 basis points to 5.10%); and industrial (flat at 0.41%). The multifamily rate passed “the 5.00% mark for the first time since June 2017.”

Overall CMBS 2.0 special servicing rate was 8.00%, up year over year from 5.39%. For CMBS 1.0, it was 24.86%, down year over year from 34.70%.

About $5.46 billion in loan value transferred to special servicing in April. Office, retail, multifamily, and “other” categories represented 98% of the new transfers.

More than $2 billion of the total was due to two loans, with the Parkmerced one contributing $1.2 billion by itself. “Most recent financials had shown the loan struggling in 2023 and had transferred to special servicing according to April 2024 remittance data,” Trepp wrote.

The second was the IMC Portfolio loan, scheduled to mature in December 2024, which was $975 million. It was appraised during 2019 securitization at $2.11 billion. The senior loan stack was $1.5 billion; the mezzanine stack was $275 million. In the most recent financials, the debt service coverage ratio (DSCR) based on net cash flow (NCF), was 0.47x. Occupancy in the three quarters of 2023 was 83%. Previously, the loan had been current during its life. It is now less-than-one-month delinquent.

The portfolio comprises 16 properties between High Point, North Carolina, and Las Vegas, totally 9.6 million square feet. The loan has seen three one-year extensions since 2021, which brought it to April 2024. However, it was transferred to special servicing at the end of March 2024, then modified to a June 2026 maturity date. “The DSCR (NCF) on the loan has declined from 3.61x in 2021 to 1.70x in 2022 and most recently to 1.01x in 2023,” Trepp wrote. “The occupancy on the property in 2023 was 77%. The loan makes up the entirety of the collateral behind the single asset BX 2019-IMC deal.”