CMBS Special Servicing Spike Biggest Monthly Leap in 4 Years

CMBS Special servicing rates spiked significantly in April, marking the largest month-over-month rise in almost four years.
May 16, 2024
CMBS Special servicing rates spiked significantly in April
  • Nationally, special servicing on CMBS loans surged 80 bps to 8.11% in April.
  • Retail properties shot up 105 bps to 10.85%, while office rates rose 53 bps to 10.84%, passing 8% for the first time since 2021.
  • Loan value transfers of $5.46B to special servicing from office, retail, and multifamily highlighted dropping debt service coverage ratios.
Key Takeaways

April’s surge in CMBS special servicing rates—particularly in retail, office, and multifamily—indicates mounting difficulties in those sectors, according to Trepp.

Roaring Rate Surge

Nationwide, special servicing on CMBS loans spiked by 80 bps to 8.11% from March to April. Retail and office rates shot up to 10.85% and 10.84%, respectively. These sectors haven’t jumped above the 8% mark since 2021, and are also above 2020’s peak pandemic levels.

Loan Value Transfers

In April alone, $5.46B in loan value moved to special servicing. Office, retail, multifamily, and other sectors accounted for 98% of these transfers, with two loans totaling over $2B in the mix. Changes to debt service coverage ratio (DSCR) and occupancy rates indicate difficulties in maintaining loan performance.

The infamous Parkmerced loan in CA, which has faced difficulties since 2023, made up a substantial portion of the transferred loan value. The IMC Portfolio loan, scheduled to mature in December 2024, also contributed $975M.

Why It Matters

Investors and lenders in CRE should closely monitor CMBS trends, as high special servicing rates indicate potential defaults. These developments underscore the complexities of managing large portfolios, especially in the face of evolving economic conditions and market uncertainties.

I’m an award-winning copywriter and digital marketing consultant who co-founded Tailored Ink. I help business owners and marketers craft the right messaging and create content at scale to grow their brands, generate leads, convert them into customers—and even get acquired by their competitors. As a member of Young Entrepreneur’s Council (YEC) and a columnist for sites like Forbes, Entrepreneur, and Business Insider, I also help mentor current and aspiring entrepreneurs and marketing professionals.
CRE Daily is a digital media company covering the business of commercial real estate. Our mission is to empower professionals with the knowledge they need to make smarter decisions and do more business.
View All
CRE Mortgage Debt Spikes Despite Fewer Originations
June 20, 2024
Retail Sales Decline Again, Strengthening Argument for Rate Cut
June 19, 2024
NYC Board Approves Rent Hike for 1M Stabilized Apartments
NYC Board Approves Rent Hike for 1M Stabilized Apartments
June 18, 2024
Yardi: U.S. Multifamily Market Outlook – Summer 2024
June 17, 2024
Join 65k+
  • operators
  • developers
  • brokers
  • owners
  • landlords
  • investors
  • lenders

who start their day with CRE Daily.

The latest news and trends in commercial real estate delivered to your inbox. Get smarter about what matters in just 5-minutes or less.