News
CONTINUED DETERIORATION
August 4, 2011
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| It's Shark Week, so why don't we take a bite out of some special servicing trends? The data contained in Trepp’ s latest research would seem to be counterintuitive, as the number of loans that are moving to special servicing is increasing and the dollar amount of loans being special serviced is decreasing, says NYU Schack clinical associate professor Larry Longua (whose nearly 50 years of CRE experience includes senior spots at Chemical Bank, Irving Trust Co, Bankers Trust Co, and The Mitsubishi Trust and Banking Co). |
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| Behind this is continued deterioration in CMBS pools, as maturing loans are finding refinancing difficult in an environment of tighter underwriting standards, Larry says. The solution has been to extend the loan maturities and restore them to the collateral pool in the hopes that when they come due, the financing market will be more user-friendly. There is the fear that this is a cosmetic fix—“that we are, to use a very overworked cliché, kicking the can down the road.” The dramatic dollar reduction of New York loans in special servicing, even as the number of loans is growing, probably goes to the resolution of a few mega deals, such as Peter Cooper Village/Stuyvesant Town. |
