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Tuesday, 10 July 2018

Volume of Legacy, CMBS 2.0 Loans in Special Servicing Drops by 5.2 Percent in June

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Commercial Real Estate Direct Staff Report

The volume of CMBS loans in special servicing declined yet again in June, by 5.2 percent to $20.5 billion, according to Morningstar Credit Ratings.

The decline was broad based, meaning both legacy loans and those securitized since the Great Financial Crisis saw declines. The $20.5 billion amounts to 4.51 percent of the $454.2 billion universe tracked by the ratings agency.

A total of 920 legacy loans - those securitized before the crisis - with a balance of $16.3 billion are in special servicing. That's 5.4 percent less than were in special servicing in May. At the same time, the total universe of legacy loans keeps on shrinking as loans get resolved or otherwise paid off. That universe now totals $31.5 billion, down from $33.1 billion in May, so the percentage of legacy loans in special servicing declined to 51.9 percent from 52.3 percent.

CMBS Loans in Special Servicing - June 2018

Year Issued

#Loans

Bal $mln

2007

541

9,443.70

2006

229

4,240.33

CMBS 2.0

234

4,142.71

2005

64

1,386.92

2008

48

989.38

2004

15

141.38

2001

2

55.56

2003

9

41.74

2000

2

21.73

1998

6

17.74

2002

1

1.70

1996

1

1.00

Source: Morningstar Credit Ratings

Meanwhile, 234 CMBS 2.0 loans - those securitized since 2010 - totaling $4.1 billion are in special servicing. That's down marginally from the $4.2 billion in May. The total CMBS 2.0 universe tracked by Morningstar actually shrunk slightly, to 18,624 loans with a balance of $422.75 billion from 18,516 loans with a balance of $423.1 billion. Still, the special servicing rate declined by 2 basis points to 0.98 percent.

Most Active Special Servicers

June 2018

May 2018

Servicer

#Loans

Bal $mln

MktShr%

Bal $mln

%Chng

LNR Partners Inc.

447

7,215.31

35.22

7,751.52

(6.92)

C-III Asset Management

318

6,357.97

31.04

6,603.00

(3.71)

CWCapital Asset Management

153

2,703.39

13.20

2,895.85

(6.65)

Rialto Capital Advisors

99

1,437.19

7.02

1,325.10

8.46

Torchlight Loan Services

36

760.25

3.71

749.55

1.43

Midland Loan Services

50

692.75

3.38

676.18

2.45

Wells Fargo Bank

5

551.68

2.69

745.85

(26.03)

KeyCorp Real Estate

19

273.89

1.34

281.04

(2.54)

Situs

17

214.90

1.05

225.64

(4.76)

Blackstone Mortgage Trust

1

65.00

0.32

65.00

-

Source: Morningstar Credit Ratings

So it stands to reason that each of the three major special servicers - LNR Partners Inc., C-III Asset Management and CWCapital Asset Management - which handle primarily legacy loans - saw their portfolios shrink. The three now actively manage $16.3 billion, or 79.5 percent of all loans in special servicing. That's down from $17.5 billion, which comprised 80.1 percent of that universe in May.

Meanwhile, Rialto Capital Advisors, the most-active special servicer of CMBS 2.0 loans, saw its active portfolio grow by 8.5 percent, to 99 loans with a balance of $1.4 billion. Among the recent additions to its portfolio was the $50.7 million loan, securitized through WF-RBS Commercial Mortgage Trust, 2011-C3, against the Oakdale Mall in Johnson City, N.Y., which is near Binghamton, N.Y. The mall, owned by Interstate Properties Corp., is losing three of its anchors: Macy's, Sears and Bon-Ton, leaving only JCPenney and Burlington.

Recent Large Transfers to Special Servicing - June 2018

Property Name

Location

Prop
Type

Deal Name

Bal $mln

Notes

MStar Value
$mln

Special Servicer

Oakdale Mall

Johnson City, NY

RET

WFRBS 2011-C3

50.7

Imminent default

42.70

Rialto Capital Advisors

100 Pearl St.

Hartford, Conn.

OFF

COMM 2015-PC1

27.59

Imminent default

26.10

Rialto

DP II Portfolio

Various

OTH

COMM 2013-LC13

26.87

Imminent maturity default

30.10

Rialto

55-59 Chrystie St.

New York, NY

MIX

LCCM 2017-LC26

25.13

Imminent default

NA

Midland Loan Services

Lubbock Portfolio

Texas

HOT

COMM 2015-LC19

18.74

Other - loss of franchise

21.10

Midland

Source: Morningstar Credit Ratings

Each of the 10 largest loans to transfer to special servicing in recent weeks was securitized after the crisis. Among those is the $25.1 million loan against the 40,000-square-foot mixed-use property at 55-59 Chrystie St. in lower Manhattan. The loan was originated only 17 months ago and was securitized through Ladder Commercial Mortgage Securities, 2017-LC26.

The collateral property was fully leased when the loan was written, but many of its 33 tenants were under leases with terms that ran less than two years. That was by design, as the property's owner, an affiliate of Tse Group, had planned to reposition the property for occupancy by tenants in professional services, the fashion, art and fitness sectors. The property, according to servicer notes compiled by Trepp LLC, is 20 percent occupied.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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