Trepp reported that the CMBS special servicing rate moved higher in June, reversing the decline recorded in May. The overall special servicing rate increased by 34 basis points to 11.20%, indicating a larger share of securitized commercial real estate loans are now being handled by special servicers.
Four of the six major property types saw special servicing rates rise during the month. Lodging experienced the steepest increase, with its rate climbing 44 basis points to 8.89%. Office followed closely, with its special servicing rate increasing by 36 basis points to 17.11%, a move that Trepp linked to several sizable loans transferring into special servicing.
Mixed-use properties also saw more distress flow into special servicing, as that sector’s rate rose 28 basis points to 11.90%. Industrial showed a more modest change, edging up nine basis points to 1.37%, suggesting comparatively limited stress in that segment of CMBS collateral.
Multifamily loans stood out on the positive side of the ledger. The sector posted the largest improvement in June, with its special servicing rate declining 27 basis points to 8.23%. Trepp attributed part of that improvement to the return of the large Yorkshire & Lexington Towers loan, which helped reduce the share of multifamily loans in special servicing. Retail also recorded a small improvement, with its special servicing rate slipping five basis points to 12.95%.
New transfers to special servicing in June totaled approximately $3.08 billion across 42 loans, highlighting continued stress in parts of the CMBS universe. The largest individual loan to transfer was the $975 million IMC Portfolio loan, which moved to special servicing due to an imminent balloon or maturity default. That loan is secured by a 16-property showroom portfolio totaling 9.6 million square feet, with assets located in Las Vegas and High Point, NC. The properties backing the IMC Portfolio loan were constructed over a long period, from 1907 through 2017, underscoring the mix of vintage and newer product within the collateral pool.
