CMBS special service rate improved in June, Manhattan led new wave of troubled loans: Trepp – Business Observer
“Trepp’s commercial mortgage-backed securities (CMBS) special service rate continued to decline sharply in June, helped by the continued advance of the US economy towards a full reopening. The overall reading fell 41 basis points to 8.24% last month, making it the ninth consecutive monthly decline. As companies reassess their office needs and finalize plans to get employees back to work, there appears to be a noticeable increase in special service transfers for office and mixed-use loans, especially those in large gateway cities, ” wrote Catherine Liu, an associate director at research firm Trepp.
“By property type, the reduction was most pronounced for the hardest-hit accommodation and retail sectors, which posted a month-over-month reduction of 143 basis points and 116 basis points, respectively. About 18.68 percent of home loans and 14.43 percent of personal loans were on special duty according to June remission data.
“The percentage of loans on the services watch list climbed to 27.48% in June, up 97 basis points from the May tally. The watchlist rate has now increased for six consecutive months, with loans taken out of special service then added to the maintenance services watchlist for ongoing monitoring. Accommodation (+1.66% to 65.66%), offices (+1.75% to 16.74%) and retail trade (+1.66% to 25.13%) represented the the largest monthly declines, while the industrial watchlist rate fell from 3.15% to 11.23%.
“About $ 1.28 billion of CMBS debt on 36 notes was transferred to the special service in June. CMBS loans backed by office, accommodation and mixed-use buildings in Manhattan accounted for nearly 50% of last month’s transfer balance.
“The $ 220 million 850 Third Avenue loan (total loan balance) – which is backed by a 600,000 square foot office in the Midtown East section of Manhattan – was the biggest loan sent to a special department last month. . The property supports the NCMS 2017-850T single asset agreement. The variable rate loan is expected to mature next month, but has built-in extension options that could extend the maturity to 2023. Financial data for the loan at the end of 2020 indicated an occupancy rate of 57% after the main tenant Discovery Communications released the guarantee after the expiration of its lease. in May 2020.
“Other notable transfers for June include the $ 205.5 million loan backed by the 1.3 million square foot Tucson Mall in Arizona (BBUBS 2012-TFT); the $ 170 million loan guaranteed by the Empire Hotel in Manhattan (GSMS 2013-GC10); the $ 160.3 million loan on the Town East Mall in Mesquite, Texas (BBUBS 2012-TFT); and the $ 124 million guaranteed by the Gansevoort Park Avenue Hotel in Manhattan’s Meatpacking District (CGCMT 2012-GC8 and GSMS 2012-GCJ9).
Access the full Trepp report here.