CMBS Loss Severities Tick Up; Retail's Numbers Are Worst

NEW YORK CITY—Loss severities ticked up slightly for US CMBS year-over year in 2013 while the pace of loan resolutions fell, according to Fitch Ratings in its latest annual study of CMBS loan losses. The study, released Monday, showed that retail posted the worst numbers out of the major property types.

Average loss severities rose to 51.2% in 2013 from 50.5% in 2012. “Special servicers are continuing to resolve many over-leveraged CMBS loans with most of them still coming from the peak years of 2005-2007,” says Mary MacNeill, managing director at Fitch. The ratings agency expects the pace of CMBS loan resolutions to remain constant this year, while average loss severities should remain stable compared to 2013.