Specially serviced CMBS loans still awaiting resolution are larger, complicated and unlikely to be resolved at the same rate of recovery seen in the industry since 2009, according to Fitch Ratings.

In the first half of 2013, liquidated CMBS loans recovered at a rate of 66%, which has contributed to the decline in volume of CMBS loans in special servicing, according to Fitch. The percentage of CMBS loans in special servicing is now at 9%.

“CMBS special servicers resolved a total of $17.09 billion (974 loans) during the first one-half of 2013; 58% were resolved through liquidation and 42% through modification. Their combined recovery rate was 80%,” said Fitch.

Of the $9.88 billion liquidated, $4.07 billion, or 40% of liquidated loans were liquidated with recoveries greater than 85%. Thirteen loans over $50 million also had recoveries greater than 85%.   

But CMBS Loans left to be resolved may not be recovered at the same rate because these loans are larger and more complicated. Their recovery rate will depend on many factors, according to the ratings agency, “including property type, market, property values, and special servicer capabilities. “We have begun seeing some of the refinanced CMBS loans in new CMBS transactions,” said Fitch.


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