In August, CMBS losses saw a significant decline, dropping from $119 million in July to $47.2 million, affecting nine loans with an average loss severity of 55.20%. This marked the second-lowest monthly losses over the past year, with only November 2023 recording lower losses at $36.4 million.

The 12-month average disposed balance also fell from $305.5 million in July to $277.7 million in August, with a total of 129 loans disposed, amounting to $3.33 billion. Incurred losses for the year reached $2.108 billion, reflecting a loss severity of 63.28%.

The largest losses in August included:

1. Bella of Baton Rouge: This multifamily property experienced a loss severity of 92.96%, with a disposed balance of $9.5 million and a realized loss of $8.9 million. Its value plummeted from $16.6 million in 2015 to $5.9 million in 2024 due to past flooding.
2. Loyalty and Hamilton: An office building in Portland, OR, saw a 90.94% loss severity, with a disposed balance of $11.2 million and a loss of $10.1 million. Its value dropped from $20.2 million in 2017 to $3.0 million in early 2024.
3. Mall de las Aguilas: This retail property in Eagle Pass, TX had a disposed balance of $21.7 million and a realized loss of $12.2 million, translating to a loss severity of 56.23%.
4. Washington Square: A student housing property in Schenectady, NY, recorded a disposed balance of $13.0 million and a loss of $5.6 million, with a loss severity of 43.19%.
5. Glenwood Farms: This mixed-use property in Richmond, VA had the lowest loss severity at 9.41%, with a disposed balance of $9.8 million and a realized loss of $922,533.

Overall, August’s performance suggests a temporary reprieve in CMBS losses amidst ongoing market challenges.

Source:  GlobeSt.