**CMBS Special Servicing Rate Holds Steady in March; Office Sector Leads at 16.2%**
The special servicing rate for commercial mortgage-backed securities (CMBS) loans remained virtually unchanged in March at 9.9%, according to a report from Morningstar Credit. Among property types, the office sector continues to have the highest special servicing rate, with 16.2% of outstanding office loan balances currently assigned to special servicing. This is a slight decrease from 16.4% recorded in February.
Year-over-year, the office sector has experienced the largest increase in special servicing activity, with the rate rising by 470 basis points since March 2023. Multifamily ranks second, growing by 450 basis points over the same period, reaching a 7.1% special servicing rate.
During the March reporting cycle, Morningstar noted the finalization of a significant loan modification for Worldwide Plaza, a $940 million CMBS loan associated with a two-million-square-foot office tower located at 825 Eighth Avenue in Midtown Manhattan. The affected loan is securitized across the WPT 2017-WWP, GSMS 2017-GS8, and BMARK 2018-B1 deals.
The newly approved modification permits reserve funds to be used for covering operating expenses and debt service obligations. “With these modifications, the loan is now being returned to the master servicer,” Morningstar reported. However, the outlook remains cautious as the property’s largest tenant is anticipated to vacate the space.
Pictured: Worldwide Plaza.
