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KBRA Releases Research – CMBS Loan Performance Trends: July 2025

1 Aug 2025   |   New York

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KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the July 2025 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label commercial mortgage-backed securities (CMBS) in July increased to 7.5% from 7.3% in June. However, the total delinquent plus current but specially serviced loan rate (collectively, the distress rate) only increased 7 basis points (bps) to 10.6%. The conduit mixed-use delinquency rate increased 146 bps month-over-month (MoM) to 13.2%, largely due to the Columbus Square Portfolio ($293.5 million in three conduits (KBRA-rated) out of $361.2 million total), which became delinquent.

In July, CMBS loans totaling $1.4 billion were newly added to the distress rate, of which 57.7% ($790.4 million) involved imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (35.6%, $487.4 million), followed by retail (27.2%, $372.6 million) and mixed-use (22.7%, $310.5 million).

Key observations of the July 2025 performance data are as follows:

  • The delinquency rate increased to 7.5% ($24.6 billion) from 7.3% ($23.9 billion) in June.
  • The distress rate remained stable at 10.6% ($34.7 billion).
  • The office delinquency rate decreased 34 bps this month to 11.8%. The sector registered its first monthly improvement after a three-month streak of rising delinquencies. Among KBRA-rated loans, Federal Center Plaza ($130 million in COMM 2013-CR6) and One Riverway ($68.8 million in COMM 2015-CR22) became performing matured balloon this month. The Federal Center Plaza loan borrower was granted a 12-month forbearance in May, contingent on the outcome of anchor lease negotiations.
  • The retail delinquency rate increased 97 bps this month to 6.1%. However, the current but specially serviced rate decreased 63 bps to 3.2%, which resulted from several specially serviced loans becoming delinquent. Notably, Walden Galleria ($210.5 million in JPMCC 2012-WLDN, KBRA-rated) is now in foreclosure as it failed to pay off at its May 2025 maturity. Tucson Mall ($179.3 million in BBUBS 2012-TFT) became nonperforming matured this month as its forbearance agreement was terminated and the special servicer is evaluating enforcement options including filing for receivership.
  • Eight lodging loans became delinquent this month, of which two loans were already in special servicing. The delinquent loans range from $4.3 million to $26.8 million with an average balance of $12.4 million; four loans have a balance above $14 million and four loans are below $6 million. The two loans that were already specially serviced, Hilton Garden Inn Pittsburgh/Southpointe ($26.8 million in GSMS 2015-GC32) and Motel 6 Tropicana ($22.4 million in BMARK 2023-V2), are the two largest loans in this mix.

In this report, KBRA provides observations across our $335.7 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower, and large loan transactions.

Click here to view the report.

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KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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