CMBS Special Servicing Rate Sees Ninth Consecutive Monthly Increase

The CMBS special servicing rate has jumped for the ninth consecutive month, according to the most recent analysis by Trepp. The overall rate across all property categories was 8.79%, an increase of 192 basis points over the last year.

From low to high, here are the rates for individual property types and how much they’ve increased over the last year: industrial, 0.50% from 0.32%; multifamily, 6.07%, from 3.14%; lodging, 7.84% from 7.24%; mixed-use, 9.67% from 7.19%; retail, 11.22% from 10.14%; and office, 12.58% from 8.34%.

Trepp noted that distress was consistent throughout, with special servicing rates increasing for all types. On a month-over-month basis, four of the types were up by at least 30 basis points. Office was up by 67 basis points since August, making 200 basis points over the previous four months. Multifamily’s 6.07% rate is the first time in almost nine years that it’s been over 6%. Retail at 11.22% was almost a two-year high and 7.84% for lodging marks a two-year high.

As usual, the rates for CMBS 2.0 and CMBS 1.0 differ vastly. For 2.0, the September rates by property type were 0.50% for industrial, 7.78% for lodging, 6.07% for multifamily, 12.57% for office, 9.98% for mixed-use, and 10.70% for retail.

For CMBS 1.0, the rates were 0.0% for industrial, 25.26% for lodging, 2.67% for multifamily, 15.4% for office, and 93.79% for retail.

The transfer to special servicing was a total of $3.27 billion. Office accounted for $1.9 billion, or 58%, of the total. Retail was 16%; lodging was 14%; and multifamily was 7%. Lodging loans had the top average weight of $76.8 million.

Two loans accounted for nearly $1 billion in the transfer to special servicing. One of them was a $525 million loan backed by 150 East 42nd Street in New York City, which defaulted on maturity. The building is a 1.7 million square foot office building near Grand Central Station. The second-largest tenant, Wells Fargo, occupies 462,000 square feet and plans to leave by 2026 for a property at 20 Hudson Yards. The DSCR was 1.50x with 89% occupancy.

The second was the Ashford Hospitality Trust Portfolio, accounting for $409.8 million. It transferred before its November maturity date.