News

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

Key takeaways:

DELINQUENCY RATE CONTINUES UPHILL CLIMB

• Conduit/SASB CMBS combined delinquency of 5.70%
• Delinquency rate increased by 26 bps in September
• Delinquency rate has increased in seven of the last nine months; on a YOY basis, the overall combined delinquency rate is up 131 bps (5.70% vs. 4.39% in September 2023)

• Office delinquency rate surged 39 bps in September to 8.36% after climbing 12 bps and 54 bps in August and July, respectively
• Office loans accounted for 37% of the $2B net increase in the overall dollar amount of delinquent loans in September
• Office delinquency rate is up 278 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

• September delinquency rate is still 462 bps below the 10.32% peak in June 2020 – the height of pandemic-related lockdowns

• Loans in special servicing (SS) rose 33 bps to 8.79% in September, second-largest uptick of 2024 and up 192 bps YOY
• SS rate is at highest level since April 2021 and has increased every month of 2024; now 201 bps higher than the 6.78% mark at year-end 2023

• In a report dated 10/4/24, 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
• BofA notes that the lower pay-off rates for larger loans also reflect “sponsors of larger loans believing they have leverage over special servicers”

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $614.2B: 57.2% ($351.1B) conduit CMBS, 42.8% ($263.1B) single-asset/single-borrower (SASB) CMBS.

Click here to download the full report.

Contact Raj Aidasani for more information on CMBS loan performance.