News

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

Key takeaways:

DELINQUENCY RATE DOWN SLIGHTLY IN MARCH

• Conduit/SASB CMBS combined delinquency of 4.67%
• Delinquency rate down 4 bps in March, following an increase of 5 bps in the month prior
• On a YOY basis, the overall combined delinquency rate is up 158 bps (4.67% vs. 3.09% in March 2023)
• Office delinquency rate did not increase in March – only the second time in the last 12 months
• Office delinquency rate was down 5 bps to 6.58% in March, following increases of 33 bps and 48 bps the prior two months, respectively, and is 397 bps higher on a YOY basis
• Convergence of work-from-home (WFH)-induced demand shock, high benchmark, mortgage, and cap rates, and a pullback in bank lending will continue to present office headwinds
• Delinquency rate is still 565 bps below 10.32% peak in June 2020 – the height of pandemic-related lockdowns
• Loans in special servicing (SS) rose to 7.31% in March, up 17 bps from prior month and 176 bps higher on a YOY basis
• As per servicers, loans transferring to SS primarily related to current market dynamics; office loans dominate new entries
• Servicers say most loans with COVID-related forbearances have returned to original loan terms and are performing as expected
• Loans still in forbearance or modified are generally paying as required
• Delinquency and SS rates for SASB continue to climb
• SASB delinquency rate of 4.42% in March vs. 1.80% in year prior; SASB SS rate of 7.04% vs. 5.11% in year prior. SASB distress driven by floating-rate loans challenged with securing new interest-rate cap and swap agreements at higher strike rates and continued challenges in the office sector (much of which is financed by SASB CMBS).
• Conduit delinquency has also climbed but at more measured pace: 4.84% delinquency vs. 3.95% in year prior; 7.50% SS vs. 5.84% in year prior
• Loans in-foreclosure and REO asset rates remain low at 1.28% and 0.91%, respectively
• Office delinquency and SS rates will continue to increase as more loans with near-term maturity dates have difficulty refinancing; foreclosure and REO rates expected to trend upward as a result

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $614.5B: 58.3% ($358.3B) conduit CMBS, 41.7% ($256.2B) single-asset/single-borrower (SASB) CMBS.

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