Special Servicing Rate Posts Biggest COVID-Era Improvement

Lodging showed a 233 basis point reduction last month, and retail registered a 37 basis point decrease.

The special servicing rate in April showed the largest monthly improvement since the coronavirus crisis began, with a decline of 40 basis points. 

The Trepp CMBS special servicing rate hit 9.02% last month, the seventh monthly decrease since its September 2020, post-Great Recession peak of 10.48%. 

“With federal plans underway to make vaccinations more widely available in the US and states taking steps to ease lockdown restrictions even further, loan ‘cures’ and special servicing removals should continue at a measurable pace in the coming months,” Trepp’s Catherine Liu wrote in a recent analysis of the April figures. 

Lodging showed a 233 basis point reduction last month, and retail registered a 37 basis point decrease. About 21.83% of lodging loans and 15.86% of retail loans were reported to be in special servicing in April, according to Trepp.  The percentage of loans with the special servicer for other property types was relatively unchanged month-over-month.

The percentage of loans on the servicer watchlist increased for the fourth straight month to 25.66%, with lodging (up 3.35% to 60.49%), multifamily (up 2.39% to 25.72%), and retail (up 1.19% to 22.56%) posting the biggest increases in April. But a steady supply of loans exiting special servicing “has helped to put downward pressure on the overall reading,” according to Liu. Nearly $3 billion in CMBS loans returned to the master servicer in April, whereas about $1.1 billion was newly added to special servicing.