The January average loss severity was 44.39%, up 733 basis points compared to 37.06% in December.
At $1.15 billion in January the total volume of liquidations was lower than the 12-month moving average of $1.36 billion and even lower than earlier averages. Since January 2010 CMBS servicers have been liquidating at an average rate of $1.17 billion per month.
But “the story looks a little different,” according to Trepp’s senior managing director Manus Clancy, if loans with losses of less than 2% that often result from “small, unpaid special servicer fees or other costs” related to the refinancing of small loss loans are taken out of the equation.
A total of $871.3 million in "small loss" loans were liquidated in January, he said, compared to “an average of $901 million over the last 37 months and $999.47 billion over the last 12 months.”
According to Trepp, the average loss severity on this basis is 58.45% for January, up 46 bps compared to 57.99% in December.
Nonetheless, “January's reading remained above the average monthly loss severity of 54.93% over the last 37 months and the 12-month average of 54.66%.”
A closer look shows during the month the loan workout pipeline handled less total balance but more loans, analysts wrote.
Up to 158 CMBS conduit loans liquidated in January, compared to the 12-month average of 139.
Liquidations resulted in $512.3 million in losses that brought the average loss severity up to 44.39%, or 3.87% higher than the 12-month moving average.
The average size of loans also liquidated in January was $7.31 million, or $3.83 million smaller compared to loans liquidated in December and $2.42 million smaller than the 12-month average.