KBRA Releases Research – CMBS Loan Performance Trends: September 2024

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the September 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label commercial mortgage-backed securities (CMBS) in September increased to 5.32%, up 34 basis points (bps) from August. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) showed a smaller increase of 16 bps to 8.52%, with office breaching the 12% mark.

In September, CMBS loans totaling $1.6 billion were newly added to the distress rate, of which 57.5% ($907.5 million) was due to imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (38.6%, $608.5 million), followed closely by retail at 34.4% ($542.2 million), and then industrial at 8.5% ($133.7 million).

Key observations of the September 2024 performance data are as follows:

• The delinquency rate increased to 5.32% ($16.7 billion), compared to 4.98% ($15.5 billion) in August.
• The distress rate increased 16 bps to 8.52% ($26.8 billion), versus 8.36% ($26.1 billion) in August.
• The office distress rate crossed the 12% mark with a jump of 26 bps. The largest new loans that joined the distress rate were Gateway Center ($94 million, JPMCC 2013-C10) and 3000 Post Oak ($80 million, across three conduits), which were transferred to special servicing due to imminent defaults. While the amount of distressed office loans continues to increase, it is notable that there were six specially serviced office loans fully resolved this reporting period, totaling $137.9 million. The loss amounts ranged from zero on Excelsior Crossing ($88 million original balance, COMM 2014-UBS2) to 53.5% on HSBC – Brandon, Florida ($17.8 million, MSC 2015-MS1). While the amount is relatively small compared to the $11.3 billion of office in specially servicing, it may be an indication that the office market valuations have hit a point where sellers and buyers are willing to transact.
• Retail experienced the highest increase in distress rate compared to all other sectors this month, with 41 bps to 8.51%. The largest new loans that joined the distress rate include Colorado Mills ($118.9 million, WFCM 2014-LC18 and WFRBS 2014-C25) and Coastal Grand Mall ($99.3 million, GSMS 2014-GC24).
• Multifamily saw the biggest decline in its distress rate compared to all other sectors this month, dropping 30 bps to 7.2%. However, the aggregate amount of multifamily distress did not change much month-over-month. The rate reduction was mostly influenced by an increase in multifamily new issuance activity.

In this report, KBRA provides observations across our $329.1 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower (SASB), and large loan (LL) transactions.

Click here to view the report.

Related Publications

• CMBS ARAs: Trending Higher
• KBRA CMBS Loss Compendium Update: June 2024
• Appraisal Values of Distressed Loans Highlight CMBS Stress
• CMBS Trend Watch: August 2024
• CMBS Loan Performance Trends: August 2024

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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