Trepp: CMBS Special Servicing Rate Increases

(Illustration courtesy of Trepp)

The commercial mortgage-backed securities special servicing rate continues to grow, increasing 10 basis points in May to 8.21%, according to Trepp, New York.

“Though this increase was modest compared to the 80 basis point leap a month prior, the overall rate is now at its highest level since June 2021,” Trepp’s May Special Servicing Report said.

Trepp noted the rate has increased every month this year and is now 1.43% higher than the year-end 2023 6.78% mark.

Four property types experienced changes of 30 or more basis points, Trepp said. The office sector’s special servicing rate actually decreased 32 basis points to 10.52%, its first drop of 2024. The mixed-use sector saw the largest monthly increase, up 69 basis points to 8.94%.

“The mixed-use rate has been consistently rising, up every month this year, and currently sitting at a near 11-year high,” the report said.

New Transfers

Trepp called May’s new transfer balance into special servicing “moderate,” with just shy of $2.48 billion in total volume, led by the office and mixed-use sectors. The remaining balance came from retail, lodging and multifamily properties, which accounted for 18%, 14% and 10%, respectively.

The overall U.S. CMBS special servicing rate equaled 8.21% in May, Trepp said. One year ago, the U.S. CMBS special servicing rate was 6.11%.