KBRA Releases Research – CMBS Loan Performance Trends: July 2024

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the July 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. CMBS in July remained steady at 5.09%, up 2 basis points (bps) from June, while the total delinquent and specially serviced loan rate (distress rate) decreased 41 bps to 8.04%. A meaningful part of the drop in the distress rate is attributable to two loans totaling $1.4 billion that were returned to the master servicer following modification.

In July, CMBS loans totaling $1.3 billion were newly added to the distress rate, 62.9% ($809 million) of which was due to imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (64.4%, $828.2 million), followed by retail at 10% ($129.1 million), and then lodging at 9% ($115.4 million).

Other key observations of the July 2024 performance data are as follows:

• The delinquency rate remained steady at 5.09% ($15.8 billion), compared to 5.07% ($15.5 billion) in June.
• The distress rate moved down by 41 bps to 8.04% ($25 billion), compared to 8.45% ($25.8 billion) in June.
• Mixed-use experienced the largest improvement in its distress rate (136 bps). The decline was driven by the transfer back to the master servicer of the Columbus Square Portfolio loan ($367.2 million), which is secured by a mixed-use portfolio located in New York City. The loan, which is participated across four conduits, was modified and had its maturity extended.
• The office distress rate also experienced a meaningful 46-bp drop but remains over 11% as 280 Park Avenue ($1.1 billion in PRK 2017-280P), which was modified and extended, was returned to the master servicer. However, this was offset by the ongoing maturity-related office special servicing transfers, which include the Bank of America Plaza ($400 million in four conduits) and 200 Fifth Avenue ($200 million in two conduits).
• Multifamily also saw a drop in its distress rate by 110 bps to 6.5%, as $152.3 million of loans became current after reporting 30+ days delinquent last month for the first time. However, a meaningful part of the rate decrease can be attributed to the 10% growth in KBRA’s rated multifamily universe, which includes two SASBs totaling $3.5 billion.

In this report, KBRA provides observations across our $326.3 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

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• Manufactured Home Communities—Affordable Housing Alternative, but Limited Supply
• CREFC 2024: Are We At An Inflection Point?
• Appraisal Values of Distressed Loans Highlight CMBS Stress
• KBRA CMBS Rating Transitions: 13 Years In
• CMBS Trend Watch: June 2024
• CMBS Loan Performance Trends: June 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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