As New Pools Emerge, High Rate of Special Servicing Marks Maturing CMBS: Fitch
- Jun 25, 2010
A mid-year analysis by Fitch Ratings indicates that more than one-fifth of the CMBS loans scheduled to mature during the second half of 2010 are in special servicing. However, the agency expects no negative ratings actions related to those loans in the short term, since a refinancing test is built into its most recent ratings review.
All told, 960 loans valued at $9.6 billion will come due from July through December. More than 10 percent of the loans—103, representing and 23.3 percent by value—have been transferred to a special servicer. “While liquidity appears to be slowly returning to the market, the time it takes for borrowers to refinance has continued to be a lengthy process,” wrote Adam Fox, a senior director at Fitch, in a note accompanying the update. “The lack of liquidity in the market in the market for refinancing mortgages coming due increases the likelihood of a transfer to special servicing for a modification or extension.” Twenty-seven of the loans in special servicing—representing 48 percent by value—are current.
In July, for example, 148 loans will mature. Retail properties lead the list by dollar value, backing 40 percent of the loans. Office assets secure 34 percent and multifamily properties back 12 percent. Loan values average $8.5 million, and 133 of the 148 loans are considered current and performing. The majority of the loans maturing next month—57 percent—are 2005 vintage. Fitch projects that eight of the 11 loans projected to mature in July will default. But only four loans are projected for a loss, with losses from defaults expected to be less than 5 percent.
Fitch’s latest update follows continued signs of a thaw in the CMBS market. JP Morgan Chase and Bank of America are offering a $650 million securitization that will help refinance the $1.3 billion Bank of America Tower in Midtown Manhattan. That deal follows a $716 million loan pool brought to market this month by JP Morgan Chase.