News

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

Key takeaways:

DELINQUENCY RATE NEARS 6%

• Conduit/SASB CMBS combined delinquency of 5.98%
• Delinquency rate increased 28 bps in October and has increased in eight of the last 10 months
• On a YOY basis, the overall combined delinquency rate is up 135 bps (5.98% vs. 4.63% in October 2023)

• Office delinquency rate surged 101 bps in October to 9.37% after climbing 39 bps in September
• Office loans accounted for more than 60% of the $1B net increase in the overall dollar amount of delinquent loans in October
• Office delinquency rate is up 362 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

• October delinquency rate is still 434 bps below the 10.32% peak in June 2020 – the height of pandemic-related lockdowns

• Loans in special servicing (SS) rose 35 bps to 9.14% in October, second-largest uptick of 2024 after April’s 80 bp increase
• SS rate is at highest level since April 2021 and has increased every month of 2024; now 236 bps higher than the 6.78% mark at year-end 2023

• In a report dated 11/1/24, 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; as shown below, successful pay-off rates decreased as loan size increased, with office loans facing the most significant challenges
• Among interest-only (IO) loans, only 54% paid off, well below the 61% across the overall sample; among amortizing loans, a higher 79% paid off on time

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $625B: 56.7% ($354.3B) conduit CMBS, 43.3% ($270.7B) single-asset/single-borrower (SASB) CMBS.

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