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News

CREFC's May 2025 Monthly CMBS Loan Performance Report

June 30, 2025

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

Key takeaways: 

DELINQUENCY RATE INCHES UP 


CMBS Delinquency and Special Servicing Line Graph

  • Conduit/SASB CMBS combined delinquency of 7.08%
    • Delinquency rate increased 5 bps in May
    • Third consecutive monthly increase; follows increases of 38 bps and 35 bps in April and March, respectively
    • On a YOY basis, the overall combined delinquency rate is up 211 bps (7.08% vs. 4.97% in May 2024)
  • Multifamily delinquency rate declined by 46 bps in May to 6.11%
    • Multifamily rate is still 441 bps higher than it was one year ago
  • Hotel loans saw a large decrease in delinquency, down 146 bps to 6.39% 
  • Office delinquency rate rose 31 bps in May to 10.59% and remains the highest delinquency rate of all property types
  • Overall May delinquency rate still 324 bps below the 10.32% peak in June 2020 – the height of pandemic-related lockdowns
  • Loans in special servicing (SS) increased 13 bps to 10.30% in May; SS rate has increased in 15 of the last 18 months and is up 209 bps YOY 
  • BofA analyzed conduit loan repayment trends by original maturity year and found growing signs of stress
    • Elevated interest rates and slowing cash flow growth are already impairing borrowers’ ability to refinance
    • So far, 2025 has posted the lowest repayment rate since the GFC
*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $634.3B: 54.7% ($347.1B) conduit CMBS, 45.3% ($287.2B) 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. © 2025 CRE Finance Council. All rights reserved.
CREFC's May 2025 Monthly CMBS Loan Performance Report
June 30, 2025
CRE Finance Council has released a report on CMBS loan performance for May.

News

Proposed Section 899 Retaliatory Tax Withdrawn 

June 27, 2025





Treasury Secretary Scott Bessent on June 26 posted on X.com that he has asked Congress to remove the Section 899 retaliatory tax from the One Big Beautiful Bill Act (OBBB). 

Chairmen of the congressional tax committees, Rep. Jason Smith (R-MO) and Sen. Mike Crapo (R-ID) issued a statement shortly after confirming the removal of the provision: 

We applaud President Trump and his team for protecting the interests of American workers and businesses after years of congressional Republicans sounding the alarm on the Biden Administration’s unilateral global tax surrender under Pillar 2. Reaching a joint understanding with the G7 means the U.S. can reclaim tens of billions of dollars that had been ceded from our tax base by Democrats’ America-Last policy.
Why it matters: Section 899 was a provision in the OBBB that would have imposed retaliatory income taxes on foreign investments and companies in the U.S. Click here for more background on the issue.
 
  • CREFC and other real estate trade groups raised concerns the provision could chill investment in U.S. real estate debt and equity through a combination of increased costs and uncertainty as to whether the tax will apply to certain countries. Click here for the letter.
  • The global tax deal agreement helps accomplish policymakers’ goals of fair international tax treatment while avoiding negative consequences to inbound U.S. investment. 

What they’re saying: CREFC and other industry groups worked to sound the alarm on potential unintended consequences of the provision after it passed the House and survived in a first draft of the Senate text. See below for a selection of press coverage on the issue highlighting commercial real estate:

The bottom line: The global tax agreement and removal of Section 899 are positive developments for the industry and should provide greater certainty to international investors deploying capital in the U.S. 

  • Congress is still aiming for a July 4th date to deliver the OBBB to President Donald Trump.
  • Lawmakers still must resolve SALT, energy credits, and Medicaid disagreements among their membership, but they remain optimistic on passage by Independence Day.

CREFC will continue to monitor the progress of the OBBB and let members know of any provisions that may impact CRE finance markets.

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. © 2025 CRE Finance Council. All rights reserved.
Proposed Section 899 Retaliatory Tax Withdrawn
June 27, 2025
U.S. Treasury Secretary Scott Bessent asked Congress to remove Section 899 from the One Big Beautiful Bill legislation. This effectively kills the provision that would have applied increased taxes on foreign investments and companies in the U.S.

News

Economy, The Fed and Rates

June 24, 2025


The Economy, the Fed, and Rates…

Economic Data & Inflation

  • PCE and CPI Signals Mixed: May’s PCE is expected to tick up to 2.3% headline and 2.6% core. CPI came in at 2.4% YoY in May, slightly below forecasts. Tariff effects haven’t yet fully filtered into inflation. ING noted:

This is very much the calm before the storm, with tariff-induced price hikes expected to become visible from July.
  • Consumer and Housing Weakness: Recent data indicate a cooling economy. May retail sales declined 0.9%, and housing starts plunged 9.8%. Homebuilder sentiment has fallen, and inventories of unsold homes are rising. 
Immigration Policy

  • Economic Impact: According to Deutsche Bank's George Saravelos, President Trump's immigration crackdown poses a more significant long-term threat to the U.S. economy than tariffs, as it "represents a far more sustained negative supply shock for the economy than tariffs."
  • Immigration Pullback = Structural Drag: Evercore ISI projects America's foreign-born population could drop by ~500,000 annually over the next three years. Net immigration to the U.S. is expected to turn negative in 2025 for the first time in at least half a century.
  • Macro Impact: Lower immigration will reduce potential GDP growth from 2% to approximately 1.5% in 2026, according to Morgan Stanley estimates.
Federal Reserve Policy 

  • Policy Divide Widens: The Fed held rates steady (4.25%–4.5%), but officials are split. Ten FOMC members expect two cuts in 2025; nine forecast one or none. Christopher J. Waller, a Trump-appointed governor, is pushing for a July cut:
 
We’ve been on pause for six months … We haven’t seen [tariff-driven inflation]. We should be basing policy on the data.
  • Powell in Patience Mode: Chair Powell emphasized uncertainty and reaffirmed a wait-and-see approach:
No one holds these rate paths with a lot of conviction… We expect a meaningful increase in inflation in coming months.
  • Political Pressure Mounts: Trump has publicly berated Powell and is advocating for cuts up to 3.5 percentage points.
  • Futures Markets: Despite Trump's calls for immediate cuts, traders are pricing in two quarter-point cuts this year, beginning in October.
Geopolitical Risks & Market Reaction

  • Middle East Escalation: U.S. strikes on Iranian nuclear sites have escalated tensions. Markets are watching for the potential closure of the Strait of Hormuz (20% of global oil passes through it). Bloomberg Economics warns, “If Hormuz is shut, crude could soar past $130 … CPI could hit 4%.”
  • Investor Behavior: Despite multiple shocks, equity markets remain steady. As noted by Tom Essaye at The Sevens Report,
Unless investors fear the conflict will spread and engulf the entire region and dramatically reduce oil supplies, then rising geopolitical tensions won’t be a material negative on this market.
Treasury & Bond Markets

  • Treasury Yields Remain High: 10-year Treasury yields remain elevated at ~4.4%, despite expectations for a Fed rate cut, reflecting skepticism in the bond market about fiscal sustainability.
  • Bond Traders Hedging U.S. Default Risk: The bond market, not just the Fed, needs convincing on rate cuts. As Mike Sanders of Madison Investments noted:
The Fed controls the short end, but inflation expectations and term premium drive the long end.

  • Options Market Bets: Despite concerns, some traders are positioning for a decline in long-term rates. Large trades have targeted a decrease in the 10-year Treasury yield to ~4.15% by the end of July, according to Bloomberg.
CRE Finance Market Implications

  • Spreading Distress: The CRE sector is facing mounting pressure, with distress rising 23% year-over-year to over $116 billion, the highest level in more than a decade. The pain, which began in the office sector, has spread to multifamily, as the FDIC cited it as an increasing source of concern.
  • Policy and Lending Headwinds: Policy uncertainty is hampering CRE activity. The Fed’s Beige Book survey noted that demand for warehouses has been affected by potential tariffs. Furthermore, a proposed measure in a House bill (Section 899), a "revenge tax," could increase taxes on foreign investors, which may "trigger wider foreign investor pullbacks, impacting all U.S. real estate lenders," according to Green Street.
  • Rise of Private Credit: The growth in "shadow lending" in CRE is being closely monitored, with the Financial Stability Board warning that it "may amplify and transmit shocks to banks" if the credit cycle turns.
You can download CREFC’s one-page MarketMetrics, which includes statistics covering the economy and the CRE debt capital markets, here.

Contact Raj Aidasani (raidasani@crefc.org) with any questions.
 

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. © 2025 CRE Finance Council. All rights reserved.
Economy, The Fed and Rates
June 24, 2025
May’s PCE is expected to tick up to 2.3% headline and 2.6% core.

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