For the first time in four years, the overall CMBS special servicing rate of all vintages hit 9.89%, according to Trepp. That’s an increase of 311 basis points over the December 2023 level of 6.78% or 36 basis points from November 2024.
The highest special servicing rate by property type was, as one might guess, office, at 14.78%, a month-over-month increase of 15 basis points. Over the last 12 months, it was a jump of 633 basis points. The last time before November 2024 that the office special servicing rate was more than 14% was in three months in 2012 in the aftermath of the global financial crisis. If it ultimately rises to 15%, it would be a figure not seen since 2000, according to Trepp.
Another standout, in a negative way, category is mixed-use. The property type saw the largest one-month jump from November to December 2024 of 181 basis points. That marked the first time since 2013 that mixed-use special servicing rose above 11%.
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Retail posted the second-highest special servicing rate in December, at 11.67%, although it was down 12 basis points compared to November after five straight months of increases.
A year ago, multifamily had the second-lowest special servicing rate at 3.17%. In December, it went to the third-lowest at 8.72%, and up from 7.37% in November.
Lodging special servicing rate was 8.29%, up 14 basis points from November’s 8.15% and the 7.13% rate in December 2023.
Then comes the lowest — industrial — still showing a sub-1% rate at 0.56%. Twelve months ago, it was 0.37% and in November, 0.38%.
Overall, $2.3 billion was transferred into special servicing in December, the smallest amount since July 2024. The biggest portion came from mixed-use, representing just under a fourth at 22.0%. Coming up close behind was office at 21.8%. The remaining transfers were fairly evenly spread across multifamily, lodging, industrial, and retail.
The largest loan transferred was $1.07 billion of the Workspace Property Trust Portfolio SASB (single-asset single-borrower) loan. That included $209.8 million A-Piece (Workspace Property Trust Portfolio – Component A) and $850.0 million B-Piece (Workspace Property Trust Portfolio – Component B), as well as an additional $120 million fixed rate loan (Workspace). The reason was imminent non-monetary default ahead of the July 2025 maturity date.
Due to payment default, the second-largest loan to transfer to special servicing in December was the $519.5 million Yorkshire & Lexington Towers loan. Backing the loan were two multifamily towers on the Upper East Side of Manhattan. The loan posted a DSCR (NCF) of 1.65x with occupancy at 93% in the first six months of 2024.
The next question is how long this trend might continue.
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