Trepp | CMBS Special Servicing Report August 2025: Overall Rate Retreats for the Second Consecutive Month

The Trepp CMBS Special Servicing rate receded moderately in August, falling another 19 basis points to 10.29%.

This was the second consecutive monthly decrease, after the rate peaked at an all-time high in June. The main cause for the decrease in the headline rate was the overall balance of loans outstanding falling nearly $14 billion from $597.0 billion to $583.0 billion from July to August.

When analyzing by property type, three sectors experienced substantial shifts in their respective rates. The two sectors with big reductions were lodging and mixed-use. The lodging rate fell 91 basis points in August to 9.10%, and the mixed use rate fell 157 basis points to 10.64%. This represented some much-needed relief for the mixed-use rate, which had risen more than 260 basis points since last August.

On the other hand, the only material increase was sustained by office, with the office rate climbing 70 basis points to another record high of 16.90%.

New Transfers

The balance of new loans to transfer to special servicing in August picked back up, following July’s low total of $1.0 billion. In August, just shy of $2.4 billion worth of loans were newly transferred, led by office’s $1.3 billion (55%) and retail’s $824 million (35%), which together accounted for 90% of the monthly total. Across remaining property types, no individual sector’s new transfer balance exceeded $100 million.

The top two new loans to transfer to special servicing in August were a retail and office loan whose combined balance totaled $1 billion. The larger of the two was the $545.8 million HBS Portfolio loan, which transferred due to imminent monetary default, though it won’t remain there for long.

The loan’s delinquency status is currently performing matured balloon, with servicer commentary mentioning that the borrower has provided an executed term sheet for a takeout financing at proceeds sufficient to pay off the remaining balance. The loan collateral is made up of 24 Lord & Taylor and 10 Saks Fifth Avenue stores. The properties total more than 4.5 million square feet, and were built from 1939 and to 2002. Of the 34 buildings in the portfolio, 10 were renovated. During H1 2025, the loan’s DSCR (NCF) was 2.73x.

August’s second-largest new transfer was the $463 million 5 Bryant Park loan, transferring to special servicing for balloon payment/maturity default. Updated special servicing commentary reveals that it is in conversation with the borrower on their prospective refinancing and is also instituting cash management and a tax escrow. The collateral is a nearly 685,000-square-foot office along Manhattan’s Bryant Park that was built in 1958 and renovated in 2014. The top tenant is Grubhub with 11.4% of the space through September 2029. During the 12-month period ended March 2025, the loan posted a DSCR (NCF) of 0.80x with 81% occupancy. Both figures are minimally changed from readings in 2024 and 2023.

See full analysis, including data and charts, here.

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