The Trepp CMBS Special Servicing Rate rose 45 basis points in February 2025 to 10.32%. The increase followed the rate’s slight decline in January, which represented its first drop in more than a year.

Trepp cited two factors behind February’s sizable increase in the overall rate. First, the net balance of loans in special servicing increased by $1.8 billion, and second, the overall balance of loans outstanding fell by $8.8 billion.  “Thus, a comparatively larger numerator divided by a comparatively smaller denominator led to the substantial jump in the monthly rate,” wrote Trepp’s Vivek Denkanikotte.

Two property types contributed most heavily to the increase in the overall rate. The retail rate climbed 59 bps to 11.26% following a 100-bp drop the month prior. And the office rate rose 108 bps to 16.19%, marking yet another 25-year high.

Additionally, the mixed-use rate rose 33 bps to 13.04%, clearing the 13% mark for the first time since early 2013. Otherwise, none of the remaining property types changed by more than 15 bps in either direction, according to Trepp.

Amid an overall four-basis-point decline in CRED iQ’s distress rate, multifamily posted an 80-bp increase in February, the analytics firm reported. It was the largest monthly increase in that sector in more than 18 months. 

As an example of issues that CRED iQ is tracking within the apartment sector, the firm cited a $94.1-million loan backed by The Reserve at Brandon, a 982-unit multifamily property in the Tampa suburb of Brandon, FL. The loan fell 30 days delinquent in February.   

“The loan’s rate cap expiration date was in April 2024, along with its initial maturity date,” according to CRED iQ. “There were three 12-month extension options at securitization. The loan was added to the watchlist in May 2023 due to low occupancy and DSCR – mostly recently reported in September at 82.3% and 0.41, respectively.  

“At underwriting, the as-is appraisal for the multifamily community was $232.5M ($263,762/unit) with an as-stabilized value of $312.6 million, with stabilization anticipated for March 2025. Servicer commentary indicates there are discussions of extending the April 2024 maturity date.” 

CRED iQ attributed February’s decrease in the overall distress rate primarily to a $2.1-billion loan backed by a self-storage portfolio becoming current after being delinquent the previous month. Office continues to see the highest distress rate at 11.0%. 

Pictured: The Reserve at Brandon. Photo courtesy of Cushman & Wakefield.