The Trepp CMBS Special Servicing Rate moved lower in May, declining by 51 basis points to 10.86%. The pullback in the overall rate was led by the resolution of a major office exposure: a large loan secured by One New York Plaza in Lower Manhattan. That office loan, which had transferred to special servicing in December, returned to the master servicer during May, contributing materially to the shift in the headline rate.
Trepp reported that new transfers into special servicing remained elevated during the month, and these included several sizable office and retail loans. Despite that incoming volume, loan resolutions and transfers back to the master servicer outpaced new additions. A larger aggregate outstanding CMBS balance also played a role, helping to push the overall special servicing rate lower on a month-over-month basis.
The May results showed broad-based improvement across most property types. Office special servicing rates recorded a notable decline, dropping 91 basis points to 16.75%. Mixed-use properties also saw an improvement, with the rate falling 59 basis points to 11.62%. Multifamily loans in CMBS pools experienced a 57-basis-point decline in their special servicing rate, ending the month at 8.51%.
Lodging CMBS posted the strongest gains among the major sectors. Hotel-backed loans saw their special servicing rate fall by 121 basis points to 8.45%, marking the largest property-type improvement reported for the month. This lodging performance came alongside the broader trend of resolutions and returns to master servicing that supported the overall decrease in the marketwide special servicing rate.
Not all property types participated in the improvement. Industrial loans in CMBS saw a modest uptick in their special servicing rate, increasing by five basis points to 1.28%. Retail also recorded a slight increase, with its special servicing rate edging higher by one basis point to 13.00%. These incremental moves contrasted with the more pronounced declines in office, mixed-use, multifamily, and lodging.
The May data set underscores the current crosscurrents within the CMBS universe. While certain sectors and individual large loans, such as the One New York Plaza exposure in Lower Manhattan, helped drive the aggregate special servicing rate lower, continued elevated new transfers in office and retail highlight ongoing credit stress in those segments. For market participants tracking CMBS performance, the combination of sizable loan resolutions, sector-level divergence, and a growing outstanding CMBS base are key elements shaping special servicing dynamics as of May.
