CRE Finance Council is a trade association that is...

  • Dedicated exclusively to the nearly $6 trillion commercial real estate finance industry
  • Committed to promoting strong & liquid debt markets across platforms
  • The meeting place for industry professionals
  • The platform for establishing best practices, industry standards & federal policy
  • Comprised of approximately 400 companies and 19,000 individual members
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CREFC's August 2024 Monthly CMBS Loan Performance Report

September 20, 2024


CRE Finance Council has released a report on CMBS loan performance for August.*

Key takeaways:

DELINQUENCY RATE CONTINUES TO INCH UPWARD

  • Conduit/SASB CMBS combined delinquency of 5.44%
    • Delinquency rate increased by 1 bp in August, following an increase of 8 bps in July
    • Delinquency rate has increased in six of the last eight months; on a YOY basis, the overall combined delinquency rate is up 119 bps (5.44% vs. 4.25% in August 2023)
  • Office delinquency rate decreased by 12 bps in August after surging 54 bps and 61 bps in July and June, respectively
    • While there were $1.3 billion in newly delinquent office loans in August, this was counteracted by $1.6 billion of office loans delinquent in the prior month that were cured
    • Office delinquency rate remains elevated at 8% and is up 290 bps YOY
      • Convergence of WFH demand shock, elevated rates (despite the recent Fed rate cut), and a pullback in bank lending will continue to present office financing headwinds
  • August delinquency rate is still 488 bps below the 10.32% peak in June 2020 – the height of pandemic-related lockdowns
  • Loans in special servicing (SS) rose 16 bps to 8.46% in August, up 179 bps YOY
    • SS rate is at a three-year high and has increased every month of 2024, now 168 bps higher than the 6.78% mark at year-end 2023.
  • In a report dated 9/6/24, BofA Global Research examined YTD pay-off trends for conduit loans
    • In one analysis, pay-off rates were calculated by property type and loan size; successful pay-off rates decreased as loan size increased, with office loans facing the most significant challenges
    • BofA notes that the lower pay-off rates for larger loans can also reflect “sponsors of larger loans believing that they have leverage over special servicers”

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $625.3B: 57.1% ($356.8B) conduit CMBS, 42.9% ($268.5B) single-asset/single-borrower (SASB) CMBS.

Click here to download the full report. Contact Raj Aidasani for more information on CMBS loan performance.

 

Contact  

Raj Aidasani
Managing Director, Research
646.884.7566

The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
CREFC's August 2024 Monthly CMBS Loan Performance Report
September 20, 2024
CRE Finance Council has released a report on CMBS loan performance for August.

News

Rohit Narayanan Joins CREFC as Managing Director, Industry Initiatives 

September 17, 2024

Rohit Narayanan
, a commercial real estate finance industry veteran, has joined the CRE Finance Council as Managing Director, Industry Initiatives.

  • Rohit was previously with Lighthouse Advisory and Investments, where he was a Principal with extensive experience in commercial real estate finance, including debt and equity placement, credit underwriting and diligence, and asset management.
  • Before Lighthouse, Rohit worked within Merrill Lynch’s CMBS group in its New York and Toronto offices where he focused on securitization, underwriting, defeasance, and valuation assignments.

“We are thrilled that Rohit Narayanan has joined CREFC, leading our industry initiatives efforts. Rohit will be responsible for managing and collaborating with our Forums and developing new investor reporting regimes, including the development of a standardized CRE CLO Ongoing Report,” said Lisa Pendergast, CREFC’s Executive Director. “We welcome Rohit and look forward to introducing him to our members.”

“I am excited to be working with the CREFC team, helping with its many important initiatives, and serving as a bridge among its constituents,” said Rohit.

Rohit is based in CREFC’s New York City office and can be reached at rnarayanan@crefc.org.

Contact 

Aleksandrs Rozens
Senior Director, Communications
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Rohit Narayanan Joins CREFC as Managing Director, Industry Initiatives
September 17, 2024
Rohit Narayanan, a commercial real estate finance industry veteran, has joined the CRE Finance Council as Managing Director, Industry Initiatives.

News

Senate Finance Committee Tax Hearing Portends Heated Partisan Debate

September 17, 2024

The Senate Finance Committee, which is responsible for tax legislation, held a hearing on Sept. 12 titled “The 2025 Tax Policy Debate and Tax Avoidance Strategies,” featuring witnesses from various tax think tanks and advocacy groups.

Why it matters: Both parties are gearing up for a flurry of tax activity in 2025 with the expiration of many individual income tax provisions enacted in 2017. During the hearing, senators and witnesses discussed:

  • The Tax Cuts and Jobs Act (TCJA);
  • 199A Passthrough Deduction;
  • Child Tax Credit (CTC);
  • State and Local Taxes (SALT); and
  • Policy issues, including housing, tax evasion, and stepped-up basis.

What they’re saying: The exchanges preview likely positions ahead of policy action in 2025 (see the story below for more on the presidential tax proposals). Overall, Senators used the questioning to draw out key critiques or arguments on various provisions in play, including Vice President Kamala Harris’ and Democrats’ focus on taxing unrealized gains of the ultra-wealthy.

Real estate came up in some Democratic-led questioning on tax evasion.

  • In his opening statement, Chairman Ron Wyden (D-OR) highlighted “real estate and oil barons” as the “biggest winners” from the 2017 tax law.
  • Witness Bob Lord from Patriotic Millionaires discussed the critique of wealthier earners avoiding taxation. He explained this could be accomplished through “buy-and-hold” assets that grow in value such as real estate and stock portfolios, but the growth, which can be leveraged to borrower money, is not subject to federal income tax.
  • Lord highlighted real estate as a potential income tax avoidance strategy for the wealthy, “the amount of income tax that's avoided through strategies like buy, borrow, die, is, is very, very significant.”

TCJA Extension: The TCJA extension is being championed by Republicans and former President Trump.

  • Wyden challenged the assertion that tax cuts will pay for themselves. Witness Indivar Dutta-Gupta, a fellow at Georgetown University, agreed with Wyden.
  • On the GOP side, Sen. John Thune (R-SD) and Sen. James Lankford (R-OK) questioned Daniel Bunn, Tax Foundation CEO, on the impacts of allowing TCJA to expire. Bunn responded that 62% of households would experience a tax increase of up to $2,800.
  • Bunn also noted, in response to Thune, that TCJA made the tax code more progressive as tax liabilities have been distributed to higher earners.

199A Passthrough Deduction: Ranking Member Mike Crapo (R-ID) questioned Bunn and Jeff Brabant, Vice President of Government Relations at the National Federation of Independent Businesses (NFIB), on the impact of the passthrough deduction for small businesses.

  • The 199A deduction is one of the few business tax provisions expiring after 2025. Certain passthrough entities are allowed to deduct 20% of their qualified income. Renewing the provision may be one of the highest cost items in terms of government revenues.
  • The witness testified that 26 million small businesses claimed the 199A deduction in 2021, including sole proprietorships, partnerships, S-corporations, etc.

Housing: Senator Maggie Hassan (D-NH) asked how Congress should promote workforce housing in upcoming tax packages.

  • Dutta-Gupta responded Congress could ensure the next tax package streamlines and improves the Low Income Housing Tax Credit (LIHTC). He argued that the credit is essential to stabilizing rents and assisting lower-income earners with rents.
  • He added Congress should enact both a supply-side and demand-side response to the housing crisis, as the U.S. is several million units short of housing.

State and Local Tax Deduction (SALT): Sen. George Helmy (D-NJ), the newly-minted replacement for Sen. Bob Menendez, asked about reforming the SALT deduction, currently capped at $10,000, to benefit more working and middle-class families. Dutta Gupta said it is possible, but warned that without a cap or other limitations, the benefits would primarily accrue to the wealthy.

The bottom line: The partisan mix of the Presidency, the Senate, and the House will have a profound impact on tax priorities in 2025.

Contact David McCarthy (dmccarthy@crefc.org) with questions. 

Contact 

David McCarthy
Managing Director, Chief Lobbyist, 
Head of Legislative Affairs
202.448.0855
dmccarthy@crefc.org
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Senate Finance Committee Tax Hearing Portends Heated Partisan Debate
September 17, 2024
The Senate Finance Committee, which is responsible for tax legislation, held a hearing on Sept. 12 titled “The 2025 Tax Policy Debate and Tax Avoidance Strategies”.

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