Special servicers in the commercial mortgage-backed securities (CMBS) space have blazed a trail of successful loan resolutions, Fitch Ratings reports.
According to the firm's data, special servicers have resolved more than $82 billion in distressed CMBS since 2007, with an average recovery rate of 86%. Additionally, over three-quarters of the volume has come in the last year-and-a-half ($63.5 billion resolved between January 2010 and June 2011).
Nonetheless, special servicers are still facing "a formidable backlog of underperforming loans that are in need of a workout," says Fitch Managing Director Stephanie Petosa.
Modification is the most common resolution strategy for larger-balance loans. Fitch reports that the average modified loan comes in at $28.6 million (compared to $9.6 million for liquidated loans).
However, Petosa cautions, "It is too early to determine what effect these modifications will have on final CMBS loan resolutions."
