Quarterly US CMBS recovery rate jumps 11.6 pct points

Recovery rates on liquidated US CMBS loans rose sharply to 69.5% in Q2, according to Fitch Ratings’ latest CMBS special servicing index. Stephanie Petosa, a Fitch managing director, noted in a statement that the substantial rise came after the rate had reached historic lows the two previous quarters, adding that “a sizeable portion of CMBS loans were liquidated with less […]

Recovery rates on liquidated US CMBS loans rose sharply to 69.5% in Q2, according to Fitch Ratings’ latest CMBS special servicing index.

Stephanie Petosa, a Fitch managing director, noted in a statement that the substantial rise came after the rate had reached historic lows the two previous quarters, adding that “a sizeable portion of CMBS loans were liquidated with less than a 5% loss during the first half of this year.”

The data shows (see table below) that the rate during the previous two quarters was 57.9% and 57.5%, respectively, which were the lowest percentages recorded as far back as the data goes (to 2010).

As the rate jumped, the special servicing universe continued to shrink. The number of total loans and liquidated loans in special servicing during Q2, at 365 and 272, respectively, also represented lows among the data. A peak was reached in Q4 2011, when there were 861 total loans and 650 liquidated.

The $43.7bn of CMBS loans in special servicing during the first half of the year was less than half the size of the $91.7bn reached during the peaks of 2010.

The average time in special servicing continued its upward trend regardless of whether loans were liquidated, returned to performing or remained in special servicing. The 2012 average was less than 20 months, jumped to 24 months in 2013 and then to 26.8 months during the first half of 2014.

Liq
Liquidated loans and recovery rates by quarter, Fitch (click to expand)
Average time in special servicing (Click to expand)
Average time in special servicing (Click to expand)
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