KBRA Releases Research – CMBS Loan Performance Trends: November 2024
2 Dec 2024 | New York
KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the November 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label commercial mortgage-backed securities (CMBS) in November increased to 5.95%, up 46 basis points (bps) from October. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) also increased by a slightly lower 30 bps to 8.95%. The jump in rates were driven by a second consecutive month of increases exceeding 100 bps in the office delinquency rate and another $1 billion+ of newly distressed office loans, pushing the overall distress rate in the sector to over 14%.
In November, CMBS loans totaling $2.1 billion were newly added to the distress rate, of which 51.4% ($1.1 billion) were due to imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (59.1%, $1.3 billion), followed by mixed-use (21.6%, $462.7 million), retail (7.2%, $155.4 million), and then multifamily (5.7%, $123.4 million).
Key observations of the November 2024 performance data are as follows:
- The delinquency rate increased to 5.95% ($19 billion), compared to 5.49% ($17.5 billion) in October.
- The distress rate increased 30 bps to 8.95% ($28.6 billion), versus 8.65% ($27.5 billion) in October.
- The office distress rate reached 14.18%, with a jump of 95 bps. The increase was widespread with 26 office loans becoming newly distressed, including three with balances above $100 million. These include 225 Bush Street ($350 million across five transactions), 5 Penn Plaza ($260 million, four conduits), and 555 11th Street ($120 million, two conduits).
- The mixed-use distress rate saw the biggest percentage increase of 136 bps with the addition of Prime Storage Fund II ($340 million, CGCMT 2021-PRM2) becoming nonperforming matured balloon after last month’s status of performing matured balloon. Although the loan is mostly secured by self-storage, it is classified as mixed-use, as the loan includes some office.
- The Other property category had the biggest percentage drop of 171 bps, although the sector only represents about 5% of the overall portfolio. The decrease was driven by the return of the Milford Plaza Fee loan ($275 million, two conduits) to the master servicer.
In this report, KBRA provides observations across our $319.6 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.