In July, more than $1.3 billion in CMBS conduit loans were resolved with losses, Trepp said today in a report. 

The firm attributed the dip to special servicers taking "their feet off the accelerator after June’s record breaking pace."

There were 175 loans in total that were liquidated over the month. This compares to 197 loans and $1.8 billion in face amount in June. The losses on the July liquidations were roughly $538 million, which represents an average loss severity of 40.2%. The average loss severity was just below 46.4% in June, according to Trepp.

The July loss severity average is a little less than the average loss severity of 41.8% in the last 19 months. The special servicers have been liquidating at around a $1.01 billion-per-month rate over that time, Trepp reported. As a result, the $1.3 billion in liquidations this month is well above the recent ongoing average.

If the loans with losses of less than 2% were taken out, the story will be different. As Trepp has noted previously, the data provider thinks that in many cases, the small loss loans are refinancings that have taken place where the losses represent small, unpaid special servicer fees or other costs.

After removing the “small loss” loans, the average loss severity, according to Trepp, goes up to 51.9% for July. This dropped around 3.5 points from June’s reading and is below the average monthly loss severity of 54.9% in the last 19 months.

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