Question 1

Which Dallas commercial submarkets have the most CMBS special servicing activity?

Accepted Answer

Las Colinas (Irving) leads by dollar volume given the concentration of mid-size office buildings with CMBS financing. The 635/LBJ corridor has high building count activity. North Dallas suburban corridors (Plano, Frisco, Allen) have elevated activity from 2018-2019 vintage loans on speculative office builds. The DFW retail market - particularly power centers in Mesquite, Garland, and outer suburban Dallas - carries significant legacy CMBS retail debt from 2015-2017 originations that is now working through servicing.

Question 2

Can I buy CMBS-secured debt on Dallas commercial properties before the servicer dispositions the asset?

Accepted Answer

Yes - note purchases (buying the CMBS B-piece, mezzanine, or non-REMIC subordinate debt) are a pathway for buyers who want to control the enforcement timeline. A note buyer with the most senior position in the capital stack controls the workout timeline and can direct the servicer's remedies. In Texas, a note buyer who controls the deed of trust can conduct a non-judicial trustee sale in as little as 21 days after notice of default. Dallas B-note and mezzanine note sales are traded through the same servicer channels as equity dispositions.

Question 3

What is a "watchlist" loan in the Dallas CMBS context?

Accepted Answer

A CMBS watchlist loan is one where the master servicer has flagged potential issues (upcoming maturity, declining DSCR, deferred maintenance reserve draws) that may result in transfer to special servicing if not resolved. Watchlist loans are reported monthly in CMBS remittance reports. Dallas watchlist loans in the suburban office category are a leading indicator of upcoming special servicing transfers - typically 6-12 months before transfer. Buyers who monitor Trepp watchlist data for DFW properties can anticipate the pipeline.