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Thursday, 09 January 2020

Volume of CMBS Loans in Special Servicing Drops in 2019, But 2.0 Loan Volume Grows

The volume of CMBS loans in the hands of special servicers ended the year at $14.15 billion, according to Morningstar Credit Ratings. That was down 20.5 percent from a year ago, when $17.81 billion of loans were in special servicing. But the volume of troubled loans that were securitized since the Great Financial Crisis increased by 17.5 percent over the past year, to $6.6 billion.

Commercial Real Estate Direct Staff Report

The volume of CMBS loans in the hands of special servicers ended last year at $14.15 billion, according to Morningstar Credit Ratings. That was down 2.7 percent from November and 20.5 percent from a year ago, when $17.81 billion of loans were in special servicing.

The volume amounts to 2.83 percent of the $500.13 billion universe that the rating agency tracks. In contrast, the volume from a year earlier amounted to 3.83 percent of what then was a $464.91 billion universe.

While the volume of legacy loans, meaning those securitized before the Great Financial Crisis, in special servicing continues to decline - they numbered 395 loans with a balance of $7.58 billion at the end of 2019, versus 685 loans totaling $12.21 billion a year ago - just the opposite is happening with 2.0 loans - those securitized since the crisis. As of the end of last month, 374 loans with a balance of $6.57 billion that were securitized since 2010 are in special servicing. That's up 17.46 percent from the 287 loans with a balance of $5.6 billion as of the end of 2018.

CMBS Loans in Special Servicing

 

Dec. 2019

Dec. 2018

Year

# Loans

Bal $mln

Shr %

# Loans

Bal $mln

Change %

CMBS 2.0

374

6,573.43

46.44

287

5,596.15

17.46

2007

217

4,295.15

30.35

381

6,686.99

(35.77)

2006

113

2,144.41

15.15

198

3,685.28

(41.81)

2005

29

692.91

4.90

47

1,164.33

(40.49)

2004

8

231.01

1.63

16

157.67

46.51

2008

13

174.01

1.23

27

392.33

(55.65)

2003

4

18.84

0.13

4

18.84

(0.01)

1998

6

12.83

0.09

3

11.27

13.86

2000

1

8.16

0.06

2

21.73

(62.45)

2001

2

2.12

0.01

4

65.77

(96.78)

1999

2

0.88

0.01

3

2.67

(67.11)

Totals

769

14,153.74

100.00

973

17,806.10

(20.51)

That was bound to happen as the 2.0 universe is now 10 years old.

Two of the largest recent transfers involved loans against student-housing properties near the campuses of colleges that have seen either declines in enrollment or a glut of recently built properties nearer to the respective campuses.

Property Name

Location

Prop Type

Deal ID

Bal $mln

Notes

Mstar Value $mln

Special Servicer

Two North LaSalle

Chicago

OFF

CSMC 2007-C2

127.44

Maturity default

142.00

Torchlight Loan Services

Wellpoint Office Tower

Woodland Hills, Calif.

OFF

GECMC 2007-C1

112.14

Maturity default

96.90

C-III Asset Management

Greece Ridge Center

Greece, N.Y.

RET

JPMCC 2010-C2

64.30

Borrower request

87.80

C-III Asset Management

Mall at Johnson City

Johnson City, Tenn.

RET

GSMS 2010-C1

48.10

Imminent default

59.70

Wells Fargo Bank

DoubleTree San Diego

San Diego

HOT

COMM 2015-CR23

33.90

Non-permitted transfer

39.60

CWCapital Asset Management

The largest was the $26 million mortgage against the 153-room Aspen Heights student-housing property near the Corpus Christi, Texas, campus of Texas A&M University. The loan is securitized through JPMBB Commercial Mortgage Securities Trust, 2015-C29.

The property, with 500 beds at 1938 Ennis Joslin Road, is only six years old, but Texas A&M has seen more than 1,000 additional student-housing beds come online since then, suppressing demand. The property as of last April was only 74 percent occupied, according to servicer data compiled by Trepp LLC, and wasn't generating enough cash flow to keep its loan current. The loan, which pays a 4.18 percent coupon, transferred to special servicer Midland Loan Services last month when it failed to make its scheduled payment. It was scheduled to start amortizing on a 30-year schedule next month.

CMBS Loans in Special Servicing

 

Dec. 2019

Dec. 2018

Property Type

Loans

Bal $mln

Shr %

Loans

Bal $mln

Chng %

Retail

358

6,715.11

47.44

475

7,666.70

-12.41

Office

148

3,532.26

24.96

226

5,362.73

-34.13

Hotel

119

1,579.51

11.16

101

1,592.03

-0.79

Multi-family

74

1,034.84

7.31

79

1,029.64

0.50

Industrial

20

298.20

2.11

33

474.18

-37.11

Healthcare

4

64.45

0.46

5

652.77

-90.13

Other

46

929.37

6.57

54

1,028.50

-9.64

Loans against retail properties continue to dominate the special servicing universe, with 358 such loans with a balance of $6.72 billion. While the volume is a 12.4 percent decline from a year ago, it still amounts to 47.44 percent of the overall special servicing universe. The volume of office loans in special servicing, meanwhile, declined substantially, to $3.5 billion from $5.4 billion a year ago and now account for a quarter of all troubled loans.

LNR Partners, meanwhile, remains the big dog in the special servicing world, with an active portfolio of 277 loans totaling $4.59 billion, or nearly one-third of the volume in special servicing.

CMBS Special Servicers

 

2019

2018

Special Servicer

Loans

Bal $mln

Mkt Shr%

Loans

Bal $mln

% Chng

LNR Partners LLC

277

4,587.99

32.42

385

6,134.21

-25.21

C-III Asset Management LLC

120

2,984.88

21.09

218

4,157.37

-28.20

Rialto Capital Advisors

185

2,482.62

17.54

129

1877.8

32.21

CWCapital Asset Management

63

1,337.95

9.45

109

2,173.62

-38.45

Midland Loan Services Inc.

69

1,095.31

7.74

57

887.30

23.44

Wells Fargo Bank

2

728.90

5.15

2

390.88

86.48

Keycorp Real Estate Capital Markets

22

418.64

2.96

21

411.65

1.70

Torchlight Loan Services LLC

13

304.48

2.15

22

601.41

-49.37

Capital Trust Inc.

1

65.00

0.46

1

65.00

0.00

Hudson Advisors

2

35.74

0.25

1

5.10

600.82

Just about every major special servicer saw a decline in their actively managed portfolios as the legacy CMBS universe has continued to wind down. Rialto Capital Advisors, whose portfolio is comprised exclusively of CMBS 2.0 loans, and Midland Loan Services, which also is very active in the 2.0 world, saw substantial increases in the size of their portfolios. Rialto's grew by 32.2 percent to $2.48 billion, while Midland's grew by 23.4 percent to $1.1 billion.

Wells Fargo Bank and KeyCorp also saw increases, but those were driven by large, single loan transfers.

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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