CMBS special servicers had a busy April, liquidating $1.62 billion in loans, according to a Tuesday Trepp report. Since January 2010, servicers have been liquidating at an average rate of $1.17 billion per month.
The 128 loan liquidations resulted in $742 million in losses, translating to an average loss severity of 45.80%, above the 12-month moving average of 42.38%. and 6.2 percentage points higher than March's 39.65%, according to Trepp.
Fitch Ratings said in its 2012 CMBS loss study report this week that the average loss severity for disposed loans had a slight uptick to 50.5% in 2012, compared with 49.3% in 2011. Of the 742 loans resolved with a loss in 2012, 388 loans had a loss severity greater than the 50.5% annual average.
The average size of liquidated loans in April was $12.66 million, lower than February's $13.22 million but above the 12-month average of $10.16 million.
Fitch said that the most widely used disposition type in 2012 was REO liquidation, representing 52.7% of all dispositions. According to the report in 2012 there were 367 REO liquidations, totaling $3.6 billion.
The ratings agency expects special servicers will continue to pursue REO liquidations as they continue to foreclose on assets and resolve the peak vintages’ inventory of specially serviced loans.
“The rise in REO liquidations is a good sign that servicers are taking advantage of stabilizing market conditions to dispose of assets that have been languishing in special servicing for a number of years,” said senior director Karen Trebach.