Fitch: Rate Of US CMBS In Special Servicing Declining

The rate of U.S. commercial mortgage-backed securities loans being transferred to so-called special servicing continues to decline, Fitch Ratings said, a sign of improving quality in debt backed by offices, shopping centers and apartments.  Loans that were packaged into CMBS are transferred to the control of special servicers when they show certain signs of distress. Such servicers represent investors in the CMBS, often taking on the work of resolving the loan’s issues. The commercial real-estate market continues to face historically high vacancy and low property values–squeezing landlords who took on debt to finance acquisitions–though the sector has seen signs of improvement.

About $85.7 billion in loans were being worked out by special servicers as of the first quarter, down from the peak of $91.2 billion in the second quarter of 2010. The volume of such debt has been declining the last three quarters.  “Improving market conditions are slowing the velocity of loans transferring into special servicing,” Fitch Managing Director Stephanie Petosa said.

-By Matt Jarzemsky, Dow Jones Newswires, http://en.wikipedia.org/wiki/Commercial_mortgage-backed_security

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