CMBS Special Servicing To Reach $110B By Year-End

Fitch Ratings says it expects the level of special servicing of commercial mortgage-backed security (CMBS) loans to reach $110 billion by the end of the year. According to the rating agency, there was close to $92 billion of CMBS loans in special servicing at the end of June – a 25% increase from the $74 billion of outstanding CMBS as of the end of 2009.

‘The agency also anticipates the volume of loans transferring both into and out of special servicing in the second half of 2010 will continue at the high levels experienced in the first half,’ Fitch said in a report Wednesday.

On Monday, two loans serviced by Wells Fargo – a New York hotel property with a $60 million balance and a San Francisco multifamily property with a $27.62 million balance – were transferred into special servicing on the basis the loans were in imminent default. The hotel was transferred from Wells Fargo's master servicing to the company's special servicing division, while the multifamily property was transferred to special servicer LNR Partners, according to Fitch.

Fitch also offered its observations on distressed CMBS loan resolutions. In the first half of the year, large-balance loans were more likely to be modified, while loans with lower balances were more often foreclosed or liquidated, the firm said.

SOURCE: Fitch Ratings


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