The Trepp CMBS special servicing rate rose again in September, reaching its highest point since February 2013. The overall increase was modest compared with August’s jump, but property-level trends diverged: retail, lodging and multifamily rates climbed, while mixed-use, office and industrial rates edged lower. New transfers totaled about $2.65 billion.
Key takeaways
September’s increase lifted the overall rate to 11.49%, a post-February 2013 high. Among property types, retail recorded the largest monthly rise, while office had the highest special servicing rate. Office loans also made up more than half of new transfers during the month.
- The overall rate increased seven basis points to 11.49%.
- Retail rose 24 basis points; lodging and multifamily also increased.
- New transfers totaled roughly $2.65 billion across 42 whole loans.
- The largest transfer was a $512.8 million New York City office loan.
Overall rate extends its rise
The Trepp CMBS special servicing rate advanced seven basis points in September. That followed a sharper 33-basis-point increase in August, which reversed a decline in July. The September reading was the highest since February 2013.
Special servicing generally indicates that a loan is receiving focused attention because of distress or a potential default. A higher rate signals more loans in that category, but it does not by itself mean that every affected property has entered foreclosure or will be liquidated.
Property-sector results split
Retail rose 24 basis points to 13.84%, the largest monthly increase among the sectors cited. Lodging climbed 21 basis points to 8.95%, while multifamily gained 17 basis points to 8.54%.
Other sectors moved lower. Mixed-use declined 30 basis points to 13.17%, office fell five basis points to 16.85%, and industrial eased four basis points to 1.23%. Despite its monthly decline, office had the highest sector rate reported for September.
Office loans dominate new transfers
About $2.65 billion in loans entered special servicing in September, spanning 42 whole loans. Office accounted for 57% of the total, according to Trepp.
The largest loan transferred was the $512.8 million One SoHo Square, an urban office property in New York City. It moved to special servicing because of an imminent balloon or maturity default.