J.P. Morgan Securities Inc.’s latest look at CMBS special servicing revealed that there are now 2,904 loans representing a cumulative $42.9 billion in special servicing. The amount grew by $1.99 billion in August and means that now 6.35 percent of all conduit debt now resides in special servicing. On the positive side—the 32 basis point increase from July is the smallest month-over-month increase in the amount that sits in special servicing since January 2009. According to J.P. Morgan, it is “another sign that the market may be, at least temporarily, stabilizing.”
Retail continues to lead all sectors in the total volume of loans in special servicing. The sector accounts for 39.3 percent (by balance) of loans in special servicing. That number is actually a slight decrease from July when retail accounted for 40.2 percent of the overall total.
In total, 970 retail loans are currently in special servicing—33.4 percent of the total. Those loans account for $16.9 billion. The largest loan size in special servicing is $258.5 million and the average loan size is $17.4 million. Overall, about 8.1 percent of all retail loans are currently in special servicing.
Aside from the sector-specific numbers, other interesting data in the report shows that more recent loans have been more likely to end up in special servicing. Overall, 53.3 percent of all the loans in special servicing were originated in 2006 and 2007 and 83.7 percent of the loans are from 2004 or later. Overall, 6.4 percent of all 2005 vintage loans, 7.1 percent of all 2006 vintage loans and 6.2 percent of all 2007 vintage loans reside in special servicing.
“Loans from these vintages will continue to enter special servicing at an accelerated pace because of fundamental issues relating to their aggressive underwriting and their faltering performance,” according to the report. In addition, “2005 vintage 5-year loans and 2000 vintage 10-year loans are becoming more prominent in special servicing as they reach their anticipated maturity dates and will likely be unable to refinance.”
Of the $42.9 billion, loans worth $7.1 billion are current, $5.6 billion are in a grace period, $5.5 billion are less than one month late, $3.5 billion are 30 days delinquent, $2.0 billion are 60 days delinquent, $8.6 billion are more than 90 days delinquent, $6.5 billion are in foreclosure, $2.0 billion are REO, $542 million are performing matured and $1.5 billion are non-performing matured.