Commercial: Economic Slowdown Hasn't Hindered Commercial Mortgage Primary Servicers.(Brief Article)

Primary servicers in the commercial real estate sector have not been impacted much by the slowing economy.

Dan Kirby, president, CapMark Services, Atlanta, said, "We have seen delinquencies ticking up slightly since last fall. What we are seeing mostly in terms of deterioration is somewhere in the healthcare and retail sectors. But overall, a lot of property types are still strong. Real estate values are probably going to appreciate in 2001 modestly, anywhere from 2% to 4%. So that's helping to keep the value of the collateral high and the value of the delinquencies relatively low."

He said that the interest rate cuts initiated by the Federal Reserve this year have not impacted CapMark's approximately $44 billion primary servicing portfolio since "rates have been low for some period of time and a lot of the refinancings have already taken place." Also, "with many other loans, they are locked out from refinancing for some period of time anyway."

A major trend in the primary servicing area continues to be a need for more information, according to Mr. Kirby.

He noted, "There is an expectation that the financial markets will deteriorate at some point ... that's inevitable. And that will require investors having more current and more accurate information. We are trying to work with others in the industry to develop common reporting mechanisms to deliver that information to the investment community."

Tim Mazzetti, executive vice president, marketing and sales, Midland Loan Services, Kansas City, Mo., said that there has not been much change in Midland's approximately $55 billion primary servicing portfolio's prepayment speeds in the current environment since the vast majority of the portfolio has lock- out provisions and prepayment protection.

The only impact of the recent interest rate cuts that the company has felt is a pickup in originations, both by portfolio lenders and Wall Street conduits.