Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Thursday, 08 July 2010

Volume of CMBS Loans in Special Servicing at $86.8Bln

Commercial Real Estate Direct Staff Report

The volume of securitized loans in special servicing last month continued to grow, and now stands at $86.8 billion, or 12.69 percent of the entire CMBS universe, according to Realpoint.

While that's almost no surprise - volumes have been steadily increasing since June 2008, and are expected to continue growing as property fundamentals are still far off their cyclical highs - the news is that more office loans, by balance, are now in special servicing than retail loans. That can be explained by the recent transfer of several big-ticket mortgages.

Among them is a $4.9 billion loan that facilitated Blackstone Group's $38.7 billion acquisition of Equity Office Properties Trust.

The loan, securitized through GS Mortgage Securities Corp. II, 2007-EOP, matures next year and can be extended for another year. While the collateral properties generate substantially more cash flow than needed to service the senior debt, leases governing about half of their space roll over by 2012. And many of those leases pay what are now above-market rates.

Also in special servicing is $2.6 billion of securitized debt on a portfolio of Seattle and Washington, D.C., office properties that Beacon Capital had acquired in 2007 from Blackstone Group, which had assumed them through its acquisition of Equity Office. That loan was transferred in April.

Those aren't the only loans that were used to facilitate the purchase of former Equity Office properties that are now in trouble.

DBRS early this year determined that most buyers that relied on CMBS debt to fund their acquisitions have seen their equity wiped out. It also found that in many cases, collateral properties don't generate enough cash flow to service their debt.

Property Type

#Loans

Balance
$ mln

Avg Bal
$ mln

Office

953

21,182.95

24.41

Retail

1,410

19,112.08

22.03

Multifamily

1,147

18,271.76

21.06

Other

287

13,780.74

15.88

Hotel

495

12,165.49

14.02

Industrial

286

2,064.21

2.38

Healthcare

16

186.85

0.22

Source: Realpoint

Meanwhile, a whopping 83.07 percent of all the loans in special servicing were securitized between 2005 and 2007, proof again of just how frothy the lending market had become during those years. Many of the loans that have been flagged as either being delinquent or in trouble of being delinquent were originated under the premise that their collateral would generate increasing amounts of cash flow, when in truth many never produced sufficient cash to keep their loans above water.

Perhaps the best example of such a loan is the $3 billion of securitized debt on Manhattan's Stuyvesant Town/Peter Cooper Village apartment complex, which has 11,232 units. The loan was underwritten assuming that unit rents would quickly be brought up to market-rate levels. That hasn't happened because of New York City's onerous rent-stabilization rules. CWCapital Asset Management, which is handling the loan, was given the green light by a federal judge last month to initiate foreclosure.

LNR Partners remains the most active special servicer, handling 27.4 percent of the universe in special servicing. The number of loans it is handling will shrink by 268 in the coming weeks as it completes the sale of a $1 billion portfolio it offered through Eastdil Secured. That portfolio was sold to four buyers for roughly 45 percent of the loans' principal balance.

Most-Active Special Servicers

Special Servicer

#Loans

Balance
$ mln

Mkt Shr
%

LNR Partners

1,320

23,751.71

27.38

CWCapital

956

21,348.38

24.61

Midland Loan Services

519

9,303.40

10.72

C-III Asset Management (Centerline Servicing)

601

9,117.17

10.51

Banc of America

13

5,743.60

6.62

J.E. Robert Cos.

305

5,201.86

6.00

Helios AMC

187

3,601.07

4.15

Berkadia Commercial Mortgage

333

3,154.98

3.64

ING Clarion Partners

146

2,381.97

2.75

Wachovia Bank

53

1,063.19

1.23

Source: Realpoint

Comments? E-mail Orest Mandzy or call him at (267) 247-0112, Ext. 211.



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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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