KBRA Releases Research – CMBS Loan Performance Trends: October 2024

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the October 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label commercial mortgage-backed securities (CMBS) in October increased to 5.48%, up 16 basis points (bps) from September. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) was relatively flat with an 11-bp increase to 8.63%. The increases were led by a 113-bp jump in the office delinquency rate pushing the overall distress rate in the sector to over 13%.

In October, CMBS loans totaling $2 billion were newly added to the distress rate, of which 44.3% ($902.4 million) were due to imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (53.3%, $1.1 billion), followed by retail (22.8%, $464.4 million) and then multifamily (9.6%, $194.7 million).

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

• The delinquency rate increased to 5.48% ($17.5 billion), compared to 5.32% ($16.7 billion) in September.
• The distress rate increased 11 bps to 8.63% ($27.6 billion), versus 8.52% ($26.8 billion) in September.
• The office distress rate reached 13%, with a jump of 85 bps. The increase was widespread with 20 office loans transferring to the special servicer this reporting period, including five that had balances at or above $100 million. These include Worldwide Plaza ($940 million in four conduits and one SASB (not KBRA-rated)), 805 Third Avenue ($275 million, three conduits and one LL), 3 Park Avenue ($182 million, four conduits), Park Square ($160 million, two conduits), and 141 Livingston ($100 million, three conduits).
• The mixed-use distress rate saw a big improvement with a drop of 237 bps to 11.91%, mainly due to the full payoff of two specially serviced loans. These include 731 Lexington Avenue ($490 million, DBCG 2017-BBG) and Greene Town Center ($113.6 million, two conduits), both of which the borrower paid off in full after maturity.

In this report, KBRA provides observations across our $333.2 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

• Metro-Level CRE Loan Distress: Varied Pace of Deterioration
• Data Center MEP: More Than Meets the Eye
• CMBS Trend Watch: September 2024
• CMBS Loan Performance Trends: September 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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