News

CRE Finance Council has released a report on CMBS loan performance for July.*

Key takeaways:

DELINQUENCY RATE CLIMBS AGAIN

• Conduit/SASB CMBS combined delinquency of 5.43%
• Delinquency rate increased 8 bps in July, following a surge of 38 bps in June
• Delinquency rate has increased five of the last seven months; on a YOY basis, the overall combined delinquency rate is up 102 bps (5.43% vs. 4.41% in July 2023)

• Office accounted for two-thirds of newly delinquent loans
• ~$1.9 billion in office loans became newly delinquent in July
• Office delinquency rate is now above 8% for the first time since November 2013 when the rate was at 8.58%
• Convergence of work-from-home (WFH)-induced demand shock, high benchmark, mortgage, and cap rates, and a pullback in bank lending will continue to present office financing headwinds

• June delinquency rate is still 489 bps below 10.32% peak in June 2020 – the height of pandemic-related lockdowns

• Loans in special servicing (SS) rose 7 bps to 8.30% in July, up 168 bps YOY; despite the modest increase on the month, the SS rate remains elevated
• SS rate is at a three-year high and has increased in every month of 2024. it is now 152 bps higher than the 6.78% mark at year-end 2023.

• In a report dated 8/2/24, BofA Global Research examined YTD pay-off trends for conduit loans
• In one analysis, pay-off rates were calculated by property type and loan size; successful pay-off rates decreased as loan size increased, with office loans facing the greatest challenges
• BofA notes that the lower pay-off rates for larger loans may reflect “sponsors of larger loans believing that they have leverage over special servicers”

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $609.5B: 57.8% ($352.3B) conduit CMBS, 42.2% ($257.2B) single-asset/single-borrower (SASB) CMBS.

Click here to download the full report. Contact Raj Aidasani for more information on CMBS loan performance.