The balance of commercial mortgage-backed securities (CMBS) loans in special servicing as of Dec. 31, 2012, was $70.5 billion compared to $83.1 billion at year-end 2011, according to new data from Fitch Ratings. The decline is primarily attributed to the large volume of resolutions ($47.1 billion) during 2012 and the relatively low volume of transfers into special servicing. Transfers into special servicing for 2012 amounted to $49.9 billion compared to $82.5 billion in 2011.
Fitch Ratings reports that since the second quarter of 2010, when the volume of loans in special servicing peaked at $90 billion, the most active special servicers have been working out over 11,000 loans, approximately $166 billion.
LNR Partners Inc., CIII Asset Management and CW Capital Asset Management continued to dominate the market by volume and number of specially serviced loans – the three companies have resolved more than half of their total loans in special servicing during this time period, although disposition methods vary. Liquidations from CW and CIII represent 71% and 74% of their respective workouts, whereas LNR has liquidated 83%. The resolutions that were not liquidations were loans returned to the master servicer, usually through modification.Â
Overall time in special servicing for resolved loans is increasing, Fitch Reports adds. For loans resolved in 2012, the average number of months in special servicing was 21.6. This has more than doubled since 2009 when the average was 9.1 months, although at that time the special servicers had a lower of volume of loans to work out.