Comprising U.S. conduit, large loan and single asset/borrower commercial mortgage-backed securities (CMBS) deals, CMBS loan disposal volume reached a total of nearly $76.6 billion in the last year, according to analysis from Trepp LLC.
Joe McBride, research analyst at Trepp, explains that 43% of these loans were prepay – most of which ‘prepaid in the open period before the note's maturity date.’
The disposed loans were divided into two major categories, McBride says, with prepayment/paid at maturity making up 58% and paid post maturity/disposed with loss making up 42%.
While 21% were disposed with a loss, he says that these "losses were distributed evenly across the major property types, with retail topping the list in terms of loss severity." While retail maintained a total loss percentage of 56, multifamily and industrial recorded the lowest at 29% each.
Note sale, real estate owned and deed in lieu of foreclosure workouts resulted in the highest loss severities, according to Trepp.
On the other hand, CMBS dispositions were at a 2:1 ratio of loans pre-paying prior to maturity versus losses, McBride says, with losses at only 21.4% of the loans disposed the past year.
"As the distressed loan market has slowed down, originators, underwriters and leasing brokers should redirect their attention to refinance and sales opportunities," he advises.
The company's report, "National Market Snapshot: CMBS Disposed Loan Trends" gives data from the second quarter of 2013 to the first quarter of this year.
