News

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

Key takeaways:

DELINQUENCY RATE SURGES BACK ABOVE 5%

• Conduit/SASB CMBS combined delinquency of 5.35%
• Delinquency rate increased 38 bps in June, following a decrease of 10 bps in May
• Delinquency rate has increased four of the last six months; on a YOY basis, the overall combined delinquency rate is up 145 bps (5.35% vs. 3.90% in June 2023)

• Net increase in delinquent loans of ~$2B in June
• Office: Accounted for half of the net increase, followed by retail and multifamily
• 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
• Retail: The four largest loans that became delinquent in June had balances greater than $100 million and were all malls

• June delinquency rate is still 497 bps below 10.32% peak in June 2020 – the height of pandemic-related lockdowns

• Loans in special servicing (SS) rose 2 bps to 8.23% in June, up 181 bps YOY; despite the modest increase on the month, the SS rate remains elevated
• Before the pandemic, the last time the rate eclipsed this month’s 8.23% was in January 2014. The rate has increased in every month of 2024 and is now 145 bps higher than the 6.78% mark at year-end 2023.

• In a report dated 6/28/24, 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 can also “reflect a degree of strategy on the borrower's part, with borrowers anticipating that special servicers will be more likely to negotiate loan extensions or modifications….”

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $611.6B: 57.8% ($353.6B) conduit CMBS, 42.2% ($258B) single-asset/single-borrower (SASB) CMBS.

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