The dollar number of U.S. fixed-rate loans that were liquidated in March rose by 49% from the levels in February, according to Trepp. However, the majority of loans with losses have losses of less than 2%.

In total, 105 loans totaling $1.2 billion were liquidated in March, according to Trepp. The losses on those loans were approximately $216 million, which had an average 17.8% loss severity. That is the lowest loss severity tally that Trepp has seen since it began releasing the Trepp Loss Analysis report in January 2010. 

The March number is way less than average 41.1% loss severity in the last 15 months. The special servicers have been liquidating at a rate of about $901 million per month during that time.This is why the $1.2 billion in liquidation this month represents an above average reading.

The low loss reading for March was mostly due to a large number of loans closing out very close to par. In most instances, these loans were effectively paid off at par, although the payment of the 1% special servicing fee created a small loss on the loan, Trepp said. Of the 16 largest loans that had losses in March, 14 had losses of 1.1% or even less, Trepp said.

The  One Park Avenue loan, which recently paid off, is a good example. That $375 million loan was effectively paid off at par, although the special servicing fees of 1.01% created a loss on the loan of about $3.8 million. The loan was split into two $187.5 million pieces. The losses were not exactly the same.  One pieces loss had $2,340 more in losses compared with the other leaving us scratching our heads.

Of the $1.2 billion liquidated in March, $801 million fell into the category of having one of these minuscule losses.

In other commercial real estate news, Fitch Ratings said that the climb toward an expected 10% CMBS delinquency rate has slowed based on its latest index result.

Late-pays were two basis points less to end March at 8.74%, which represented the first dip since October 2010. This was when the Extended Stay America loan was resolved.

"Preliminary indications on year-end 2010 financials that have come in thus far  are  somewhat encouraging," Managing Director Mary MacNeill said. "Net operating  income  declines  have  slowed  or  reversed, which coupled with stronger  market  liquidity  and new CMBS issuance  should continue to help slow the rise in CMBS delinquencies going forward."

Despite  the  slower pace, delinquencies, which declined across four of the five major property types last month, will probably continue to rise in 2011, although at  a slower rate.  Fitch has projected that the index will peak at roughly 10%.

Current delinquency rates by property type are as follows: multifamily: 17.42% (from 17.58%);
hotel: 14.12% (from 14.33%); industrial: 9.38% (from 9.40%); retail: 6.89% (from 7.04%);
and office: 5.95% (from 5.85%).

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