The speed and volume of loans in U.S. CMBS being transferred into special servicing has begun to subside in recent months, according to Fitch Ratings.

The ratings agency said last week that roughly 200 loans have transferred so far this year, compared with 631 loans for the first quarter of 2010.

"Following a monthly high of 255 loan transfers in January 2010, new specially serviced transfers steadily decreased each month, reaching a low of 74 in November," managing director Mary MacNeill said in a press release.

Since then the number of monthly loan transfers has not exceeded 78. In 2010 there were 1,646 loans, totaling $28.4 billion that transferred into special servicing in Fitch's rated portfolio. This is down from 2009 when 2,162 loans, totaling $37.5 billion moved to special servicing.

The rate of transfers for hotels loans has dropped off sharply this year, to 8% from 22% in 2010, as many underperforming hotels had already transferred to special servicing and the hotel sector is now in recovery mode.

In contrast, office properties continue to lead new transfers at 41%, up from 25% in 2010. "Continued high unemployment and lack of job growth will continue to force office loan borrowers to seek relief as leases roll or are renegotiated," said MacNeill.

In 2010 office properties led the new transfers at 25%. This was followed by a significant increase in hotel loans (22% of new transfers) and a decline in retail (21%), which continued to be affected by cautious consumer spending and slow business travel.

Office properties account for 32% of Fitch's outstanding $438 billion rated U.S. CMBS portfolio, followed by retail properties, which account for 29%, multifamily at 14%, and hotels at 10%.

Loans generally transfer into special serving after a technical or monetary default, or if the servicer expects an imminent default. The special servicer can either return the loan to the master servicer as performing or will liquidate the loan, with or without a loss. Fitch's ratings take into account default probabilities and loss severities for each loan.

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