This week, the CRED iQ research team addressed one of the most common topics requested by our readers: understanding workout strategies from the Special Servicers’ perspectives.
Building upon last week’s report, the objective of this study was to understand how the largest special servicers have addressed troubled loans so far this year. Our team examined ~1,800 loans comprising loan values of ~ $45 billion. Our analysis focused upon the top 6 special services: Rialto Capital, KeyBank, LNR Partners, CW Capital, Midland and Situs.
The results are quite diverse. Just over 21% of KeyBank’s loans were worked out via foreclosures, the highest percentage of all the top six special servicers. Foreclosure was the most deployed strategy (apart from TBD) at 14.9% of loans in all 6 special servicers.
REO strategies saw a high of 19.5% at LNR Partners. REO was the second highest strategy deployed at 10% (apart from TBD and Other).
Modifications saw a wide range from 6.4% at Rialto Capital to 20.3% of loans at CW Capital. Across all special servicers modifications was the third most common strategy deployed with 9% of all loans falling into that category.
Loan extensions were achieved at 3 of the 6 special servicers and allocations were modest with Midland’s 5% at the top of the range. Full payoffs were achieved at 5 of the 6 firms, with Situs showing 5.6% of their loans reaching that mark—the category high.
Situs’s results are noteworthy with 79.3% of their loans in the TBD category—substantially higher than the other organizations. Clearly, we have a very limited view of the Situs portfolio’s ultimate outcomes as of this print. For that matter, all the special servicers in our study showed high percentages of TBD strategies (the lowest, CW Capital, at 33.9%).
The data utilized in our analysis is as of August 31, 2024.
Special Servicer Examples:
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