CMBS Loans In Special Servicing Hit All-Time High

Posted by Orb Staff on June 03, 2010 No Comments
Categories : Commercial Mortgage

loan resolutions increased in 2009, the inventory of U.S. commercial mortgage-backed security (CMBS) loans in special servicing is at an all-time high and likely to tread higher, according to Fitch Ratings in its latest annual U.S. CMBS Loss Study. Cumulative average loss severities for Fitch-rated CMBS through the end of last year hit 37.2%. Loss severities for 2009 alone reached 57%, representing a significant jump from 2008 (43%). ‘Loss severities are expected to remain above the current cumulative average through 2011,’ says Fitch Managing Director Mary MacNeill. ‘Assets liquidated in the current economic environment will be those not likely see cashflow improvement from an extension or modification.’ The average time to resolution remained steady at 19 months, with modifications helping to move loans through special servicing more quickly, Fitch says. Still, assets ‘will take longer to resolve as special servicers continue to see high volumes of underperforming loans,’ adds Richard Carlson, a senior director at the agency. ‘Continued high inventory and the declining frequency of modifications means there is no relief in sight.’ The largest loan resolution methods for 2009 were real estate owned dispositions, discounted payoffs and note sales. Loans resolved by each of these methods resulted in loss severities greater than the cumulative average. Fitch expects higher loss severities for all property types this year. Annual loss severities by property type for last year were as follows: [list] multifamily – 58%;*retail – 48.2%;*office – 56.9%;*industrial – 48.8%; and*hotel – 81.9%.[/list] Fitch's full ‘U.S. CMBS Loss Study: 2009’ will be available on the agency's [link=http://www.fitchratings.com]website[/link] later this week. SOURCE: [link=http://www.fitchratings.com]Fitch Ratings[/li

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