Fitch: CMBS Special Servicing Transfers Continue to Shrink

The number of securitized U.S. commercial mortgage loans transferred into special servicing has dropped substantially at roughly 45% over the last year, according to Fitch Ratings.

And according to Fitch’s managing director, Mary MacNeill, “New transfers to special servicing will continue to decline with occasional spikes in activity from CMBS loan redefaults.”

By July 1, up to 43 CMBS loans at over $20 million were transferred to a special servicer, down from 94 loans in 2012 and 103 loans in 2011.

The number of CMBS loans over $100 million that were transferred to special servicing during the first half of 2013 dropped to six, compared to 16 in the same period of last year.

After watching closely “the incidence of loans that redefault after exiting special servicing,” that often follows a modification, explains MacNeill. It becomes obvious that “while some redefaulted CMBS loans simply need more time to secure refinancing, others are still suffering performance issues.”

For example, she said, of the 43 recent transfers, eight loans have transferred to a special servicer for a second time, of which four were hotel CMBS, two retail and the other two office.

At least in the near term, Fitch expects new transfers to special servicing “will continue to decline with occasional spikes in activity from CMBS loan redefaults.”