After a welcome reversal in January, the special servicing rate jumped 45 basis points in February, according to Trepp’s February 2025 Special Servicing Report.
The jump was due to a pair of inverse movements in a fraction. The special servicing balance, the numerator of the fraction ratio, increased, while the denominator of the overall loan balance decreased. Retail and office were the two property types that contributed most to the sector the increased; mixed-use reached a 12-year high rate for the first time since 2013.
The overall rate was 10.32%, a jump of 318 basis points from 12 months prior. The main drivers of the jump were office — 108 basis points above January to reach 16.19% — and retail, which was up 58 basis points from January to 11.26%. The two were above the previous 12-month values by 615 and 145 basis points, respectively.
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