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Almost $1.4 billion in commercial mortgage-backed securities (CMBS) conduit loans were resolved with losses in May, according to ""Trepp LLC"":http://www.trepp.com.
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That number was up about 11 percent from the April total reported by the New York-based commercial market research firm. It was the second highest value since Trepp began tracking this stat in January 2010. Only January 2011 saw a higher total.
During the month of May, Trepp says 148 loans with a total balance of $1.38 billion were liquidated. That
[COLUMN_BREAK]compares to 175 loans with $1.24 billion in face value in April.
The losses on the May liquidations were about $594 million, representing an average loss severity of 43.2 percent, according to Trepp. In April, the average loss severity was just under 40 percent.
The May value is slightly above the average loss severity of 41.5 percent over the last 17 months.
Special servicers have been liquidating at a rate of about $949 million per month over that time so the $1.38 billion in liquidations this month represents an above average reading, Trepp explained.
Take out the loans with losses of less than 2 percent and the story fares worse. Trepp says in many cases, the small loss loans are actually refinancings that have taken place where the losses reflect small, unpaid special servicer fees or other costs.
On this basis after taking out the small-loss loans the average loss severity jumps up to 48.2 percent for May, according to Trepp. That’s still below the average severity of 55.1 percent over the last 17 months when small-loss loans are excluded.
