Liquidations of CMBS conduit loans slowed in October
The number of conduit loans in commercial mortgage-backed securities liquidated in October fell significantly while the average loss severity rate rose nearly five percentage points, data analytics firm Trepp said Friday. Trepp said the balance of CMBS conduit loans liquidated last month declined to $913 million from $1.26 billion in September. For October, the average loss severity rate passed 50% for the first time in 2011. About 112 loans were liquidated in October, compared to 141 loans in September. Losses tied to October liquidations hit $460 million. Special servicers are liquidating CMBS loans at a rate of $1.02 billion per month since the start of 2010. The average size of a liquidated CMBS loan in October was $8.2 million, according to Trepp. During the same month, Fitch Ratings noted a drop in CMBS delinquencies, making it the third consecutive monthly drop. The ratings agency called October's trend of slowing defaults an encouraging sign of a positive development. "Fitch is beginning to see larger loan defaults become more sporadic, which may be indicative of a developing positive trend," analyst said. "October’s new delinquencies included 14 loans with a balance of $25 million or greater (only one of which had a balance over $100 million), which is in line with the previous two months." Overall, CMBS late-pays fell four-basis points to 8.56%, down from 8.6% in September. New delinquencies were valued at $1.6 billion total, but were offset by $1.7 billion in resolutions during the month of October. New delinquencies last month tended to be on smaller loans that ended up defaulting on their maturity date, Fitch said. Write to Kerri Panchuk.