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CREFC's August 2025 Monthly CMBS Loan Performance Report

September 25, 2025

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

Key takeaways:

DELINQUENCY RATE CONTINUES CLIMB 

• Conduit/SASB CMBS combined delinquency of 7.29%
  • Delinquency rate increased 6 bps in August
  • Sixth consecutive monthly increase; follows increases of 10 bps and 5 bps in July and June, respectively 
  • On a YoY basis, the overall combined delinquency rate is up 185 bps (7.29% vs. 5.44% in August 2024)
• Office delinquency surged 62 bps to 11.66% and tops all property types
  • Office contributed the most among property types to the net increase in delinquency, with newly delinquent loans totaling $2.5B against $1.3B of cures
• Loans in special servicing (SS) decreased 19 bps to 10.29% in August; second consecutive monthly decrease after reaching all-time high in June 2025 (10.57%)

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $636B: 53.4% ($339.7B) conduit CMBS, 46.6% ($296.3B) single-asset/single-borrower (SASB) CMBS.

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

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CRE Securitized Debt Update

September 23, 2025

Private-Label CMBS and CRE CLOs

Two transactions totaling $1.9 billion priced last week:

1. BFLD 2025-5MW, a $1.3 billion SASB backed by a fixed-rate, five-year loan for Brookfield to refinance the 1.7 million square foot Five Manhattan West office building in Manhattan.
2. BMO 2025-5C12, a $638.2 million conduit backed by 45 five-year loans secured by 168 properties from BMO, Argentic, Citi, Deutsche, Key, Starwood, UBS, Greystone, and Natixis.

By the numbers: Year-to-date private-label CMBS and CRE CLO issuance totals $106.7 billion, representing a 42% increase from the $75.1 billion recorded for same-period 2024. 

Spreads Unchanged

• Conduit AAA and A-S spreads were unchanged at +76 and +113, respectively. YTD, AAA and A-S spreads are wider by 1 bp and 8 bps, respectively. 
• Conduit AA and A spreads were unchanged at +160 and +190, respectively. YTD, t each wider by 25 bps.
• Conduit BBB- spreads were unchanged at +475. YTD, wider by 50 bps.
• SASB AAA spreads moved by +0-2 bps to a range of +105 to +132, depending on property type.
• CRE CLO AAA and BBB- spreads were unchanged at +130 and +335, respectively.

Agency CMBS

• Agency issuance totaled $3.2 billion last week, comprising $2 billion of Fannie DUS, $788.4 million of Freddie Multi-PC and ML transactions, and $415 million of Ginnie Mae Project Loan transactions.
• Agency issuance for the year totaled $102.2 billion, 39% higher than the $73.4 billion for the same period last year.

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

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Government Funding: Shutdown Showdown

September 23, 2025 

With just one week remaining before current government funding expires on September 30, lawmakers are coalescing around a continuing resolution (CR) that would extend funding through November 21. However, the Senate may not clear the 60-vote threshold to advance legislation.

• House Action: House Republicans passed the stopgap legislation last week with a 217-212 vote. Two Republicans voted against, while one Democrat voted for the legislation. The Senate later voted down the bill 44-48 with two GOP and one Dem crossing the aisle. 
• Senate Math: Passage in the Senate remains more complex, as at least seven Democrats will need to support the measure to reach the 60-vote threshold. On Friday, the Senate voted down Democrat’s CR to fund the government, extend Obamacare subsidies, and rollback Medicaid cuts made in the July reconciliation bill. 
• Democrats are largely supportive of forcing a shutdown for now, though Sen. John Fetterman (D-PA) has said he will support the CR. 
• White House Position: The Administration has advocated for a longer stopgap through January 31, 2026, but House Republicans favor the shorter November date to retain leverage over final spending decisions. 
  

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CREFC Continues Productive Engagement with Regulators

September 23, 2025

CREFC continues its productive engagement with regulators and policymakers on issues most significant to our members. Through ongoing dialogue, we seek to ensure that member perspectives are represented in the policymaking process and that regulatory outcomes support a healthy, functioning CRE finance market.

• This roundtable was one of several hosted by the Treasury Department on this issue. CREFC CEO Pendergast also attended a high-level discussion on September 8, as covered in CREFC’s September 16 Policy & Capital Markets Briefing.

SEC Discussions on SEC Rule 17g-5 and 17g-7: CREFC also met with leadership at the Securities and Exchange Commission’s (SEC) Office of Credit Ratings (OCR) on September 18. The discussion covered CREFC members’ concerns with SEC Rule 17g-5 and Rule 17g-7.

• Any information provided to one hired rating agency is made available to any other hired agency. Under certain conditions, it is also available to non-hired agencies to encourage unsolicited ratings.
• However, the industry is unaware of any unsolicited ratings since the promulgation of this rule 15 years ago. 
• Additionally, the requirement has unnecessarily impeded information flow and added expense to transaction parties.

Rule 17g-7. The rule aims to enhance transparency and investor protection by requiring rating agencies to provide information about the legal protections available to investors.

• One of the requirements is that rating agencies include in any report accompanying an ABS credit rating a description of (a) the representations, warranties, and enforcement mechanisms available to investors, and (b) how they differ from similar issuances.
• However, these reports do not impact the quality of reps, warranties, and enforcement provisions and is not used widely by investors.
  

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TRIA Reauthorization Hearing Largely Supports Renewal 

September 23, 2025

On September 17, the House Financial Services Subcommittee on Housing and Insurance held a hearing on the re-authorization of the TRIA (Terrorism Risk Insurance Act) program. 

• TRIA is credited with maintaining market stability by keeping terrorism coverage accessible and affordable, which supports continued investment and financing in commercial real estate and infrastructure projects.
•  The hearing included draft text of a bill to reauthorize TRIA through 2034. 

What they’re saying: Republicans and Democrats were largely supportive of TRIA and reauthorizing the program without major changes. A few Republicans had specific questions and critiques on the government’s role in the program, but none voiced outright opposition. 

Witness at the hearing included: 

• Mr. Baird Webel, Specialist in Financial Economics, Congressional Research Service (CRS)
• Mrs. Elizabeth Heck, Chairman, President, and Chief Executive Officer, Greater New York Insurance Companies, on behalf of National Association of Mutual Insurance Companies
• Ms. Michelle Sartain, President, Marsh U.S. and Canada
• Mr. Jason Schupp, Founder and Managing Member, Centers for Better Insurance, LLC
• Commissioner Andrew N. Mais, Connecticut Insurance Department, on behalf of National Association of Insurance Commissioners
  

Questions from other lawmakers focused on whether TRIA remains necessary and what the implications would be for the private insurance market if the program were allowed to expire. 

• The witnesses largely agreed that TRIA must exist for the terrorism insurance market to exist. Members and witnesses noted the immediate aftermath of 9-11 demonstrated the market could not function without a backstop. 
• Several witnesses underscored the importance on how advanced reauthorization is necessary so insurers and reinsurers can make capital allocation decisions and policyholders can make business decisions, such as breaking ground on new buildings. 
• Members of Congress from across the country echoed Rep. Cleaver’s point that TRIA is essential in every state. 

Other topics of note: 

• Cyber Coverage:
  
  • Rep. Ritchie Torres (D-NY) focused his questions on cyber-warfare and cyber attacks and how TRIA classifies these attacks. Witness Schupp said that cyber could be included under TRIA, but the Treasury Secretary has the unreviewable authority to certify what attacks qualify.
  • Rep. Andrew Garbarino (R-NY) said that a cyber insurance backstop could be necessary, but it should be a separate process and not tied to TRIA.
• Bank and Lender Risk: Rep. Troy Downing (R-MT), a former insurance commissioner, pressed witness Baird Webel from the Congressional Research Services on what a market would look like if a federal backstop were no longer needed. 
  • Absent a backstop, Webel suggested that banks and lenders would be taking the risk on balance sheet if they were forced into a choice of writing or not writing a loan without terrorism coverage.
• Captives: Rep. Nydia Velázquez (D-NY) questioned Schupp on the issue of captive insurers gaming the program. Schupp said that captive structures allow large companies to structure their premiums and deductibles to limit their risk while being eligible for large government payouts. 
• Recoupment: Rep. John Rose (R-TN) expressed skepticism on the recoupment mechanism. 

The bottom line: The hearing tone largely supports a smooth pathway to an early and long-term reauthorization. Still, the nature of a government backstop — even on a well-liked program like TRIA — may draw some critics as the legislation moves through the House and Senate. 

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Economy, the Fed, and Rates…

September 23, 2025

The Federal Reserve’s Dovish Pivot

• A “risk-management” rate cut: The Federal Reserve lowered the federal funds rate by a quarter point to 4.00–4.25%, the first reduction of 2025. Chair Jerome Powell framed it as a “risk-management cut,” saying the labor market has “softened” and the risk of a renewed inflation flare-up has diminished.
• More easing expected, but the committee is split: The Fed’s Summary of Economic Projections points to approximately two more quarter-point cuts this year, while seven of 19 policymakers foresee no additional cuts – a fragile consensus that could shift with incoming data.
• Market expects faster cuts than the Fed: Futures markets are pricing in a more aggressive easing cycle than is the Fed. Bets show investors expect the benchmark rate to fall just below 3% by year-end 2026, a path that implies two more rate cuts than Fed officials' median forecast of 3.4%.
• Politics and independence in focus: New Governor Stephen Miran dissented in favor of a half-point cut. His background as a former White House economic adviser sharpened some investor scrutiny of the Fed’s independence. In comments after the meeting, Miran said he does not see “material inflation from tariffs.”
• Balance-sheet runoff continues: In a move that some see as contradictory to easing, the Fed is continuing its quantitative tightening (QT) program, allowing bonds to mature off its balance sheet. Powell said the Fed is “cutting the size of our balance sheet quite marginally,” that reserves remain “abundant,” and that the runoff does not have “significant macroeconomic effects.”
  

• Exuberance at record highs: Global equities pushed to record highs, with valuations described as “priced for perfection” despite current economic and geopolitical risks. The S&P 500 and Nasdaq are up roughly mid-teens year to date, propelled by enthusiasm for artificial intelligence – one firm called it “dotcom on steroids.”
• “Fear of missing out” tone: The rally has broadened to small-cap stocks, emerging markets, and corporate credit. Credit spreads for high-grade issuers are near their tightest since the late 1990s, prompting one manager to say, “you’ve never been paid less to take risk.”
• Optimism with an undercurrent of anxiety: Behind the strength, investors cite concerns about geopolitics, a cooling job market, sticky services inflation, and historic market concentration in a handful of technology leaders. To the good, fund flow data have been sizable but mixed across regions and styles.

Treasury Yields & the Bond Market

• A “Hawkish Cut” Lifts Yields: In a counterintuitive move, Treasury yields rose following the Fed’s rate cut, with the 10-year yield climbing back above 4.1%. The market’s reaction was attributed to Chair Powell’s press conference, where he was perceived as delivering a “hawkish-leaning cut.” He was seen as dismissing urgency for aggressive cuts and signaling the Fed is “not in a sprint” toward easing policy.
• Short-Term vs. Long-Term Divergence: The immediate rise in long-term yields occurred even as futures markets continued to price in a series of cuts to the Fed's short-term policy rate. The divergence shows that while traders expect the Fed to ease, long-term bond investors remain concerned about other factors, such as persistent inflation and rising fiscal deficits, demanding higher compensation to hold longer-duration debt.
• Impact on Mortgage Rates: Mortgage rates, which are closely tied to the 10-year Treasury yield rather than the Fed’s overnight rate, also climbed in the wake of the decision. The average 30-year fixed rate rose to about 6.35% after touching a low of 6.13% earlier in the week.

Economic Crosscurrents

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Senate Deposit Insurance Hearing

September 16, 2025

Last week, the Senate Banking Committee held a hearing to consider proposals to expand and reform bank deposit backstops, including for business accounts. The Sept. 10 hearing entitled Evaluating Perspectives on Deposit Insurance Reform was broadly bipartisan on the need for modernization, though divisions remained over scope and scale.

• The bank failures, along with First Republican, had ripple effects across regional and small banks deposits. 
• Amid higher interest rates and a downturn in the business cycle, commercial real estate lending became a frequent talking point among policymakers when examining the health of regional and small banks. 

What they’re saying: Senators debated reforms to deposit insurance with particular focus on a bipartisan proposal from Sens. Bill Hagerty (R-TN) and Angela Alsobrooks (D-MD) to expand coverage for business checking accounts held by small businesses at community and regional banks. 

• Republicans emphasized that any changes must be narrowly tailored and indexed to inflation, while Democrats called for broader protections to level the playing field with large banks. 
• Both parties agreed community and regional banks face unique pressures, but differed on whether targeted expansion would curb or accelerate deposit flight. 
• Members raised concerns about moral hazard and systemic risk, while also pointing to liquidity backstops, reciprocal deposits, and CDFIs as complementary tools.

Hagerty–Alsobrooks Proposal

• Sens. Hagerty and Alsobrooks highlighted their bipartisan bill to insure business checking accounts, particularly payroll accounts, up to $20 million at small banks. Senators examined whether the $250,000 deposit insurance cap remains appropriate, with discussion centered on targeted coverage for payroll and business operating accounts. 
• Committee Chair Tim Scott (R-SC) argued that any reform should be indexed to inflation and narrowly designed to deter destabilizing runs without creating blanket guarantees, while warning of the cost to smaller banks. 
• Ranking Member Elizabeth Warren (D-MA) strongly supported expanding coverage for small-business transaction accounts, stressing that local firms should not be left exposed while venture-backed corporations like Silicon Valley Bank were made whole. 
• Witnesses Bob Harrison, CEO, First Hawaiian Bank and Peter Rice, CEO, Hanscom Federal Credit Union, endorsed a $20 million payroll account cap as a workable threshold. Nicholas J. Podsiadly, a partner at Jones Day, cautioned that such a level may be excessive. 
• Overall, members agreed depositor confidence is essential, though Republicans leaned toward targeted, indexed reforms while Democrats pressed for broader coverage to protect communities and workers.

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Section 899 Again? Officials Float Return of “Revenge Tax” 

September 16, 2025

The Section 899 tax provision removed from the One Big Beautiful Bill Act (OBBBA) could see a revival if U.S. companies are still subject to certain global minimum taxes. 

• The provision responded to unfair taxes by increasing the rate of tax applicable to certain taxpayers connected to a foreign jurisdiction. Section 899 was included in the House-passed version of the OBBBA and a draft Senate bill before being removed. 
• CREFC and other trade partners warned of negative impacts on foreign investment if the provision was passed without change. The provision could have chilled investment in U.S. real estate debt and equity through a combination of increased costs and uncertainty as to whether the tax applied to certain countries.
• The provision was removed at the request of Treasury Secretary Scott Bessent after apparently securing commitments from G7 countries for fair global tax treatment. 

Yes, but: According to reporting by Bloomberg Tax, House Ways and Means Chairman Jason Smith (R-MO) relayed that GOP members of his committee discussed the prospect with Kenneth Kies, assistant secretary for tax policy at Treasury and acting IRS chief counsel. 

• Smith and Rep. Ron Estes (R-KS) have been proponents of Section 899 powers as a means to secure fair international tax treatment for U.S. companies. 
• Both lawmakers floated the prospect of including the provision in a second reconciliation package or a year-end government funding bill.
  

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Government Funding Update

September 16, 2025

With 14 days to go until a government shutdown, lawmakers are considering a short-term funding deal that would keep federal operations running through November 21, sources confirmed this weekend. The proposed continuing resolution (CR) would buy more time for Congress to negotiate full-year appropriations. 

• House Republicans just released the legislative text of their CR. 

Why it matters: The new plan comes as negotiations between the White House and Capitol Hill remain tense. The Trump administration has pushed for a longer stopgap bill running through January 31, 2026, but House Republicans appear to favor the shorter extension to maintain leverage over spending priorities. 

• While no deal is finalized, leadership aides say the November 21 CR is gaining traction in both chambers as the most realistic path to avoid a shutdown when current funding expires September 30. Its passage in the House can be done without Democratic support.
• However, in the Senate seven Democrats will need to work with Republicans to pass any bill, to reach the 60 -vote threshold to pass this bill, and their support is far from guaranteed.
• Without action, many federal agencies would face closure, with services halted and employees furloughed. Lawmakers have seven legislative days remaining to find a path, as they are out of town next week on recess.
  

If you want to make it about trying to get an extension so we actually have time to try and run a normal appropriations process and get some of the bills passed under regular order, then I think you want to have it as clean as possible.

Source: The Hill

In addition, the Trump administrations use of pocket recissions is being litigated in court. The controversial technique allows the President to claw back congressionally appropriated funds. Democrats argue that their use of this provisions could make spending negotiations moot, as they could just retract the funds later.

Democrats have focused their criticism on the GOP regarding healthcare, and have said they will not vote for any spending measure that failures to address the extension of Affordable Care Act subsidies, which expire on Jan. 1, 2026. They warn that if this is not addressed, millions of Americans will be forced to pay more for health coverage. 

What’s next: The upcoming days will be crucial as lawmakers negotiate to avoid a government shutdown, with key issues such as the extension of Affordable Care Act subsidies and the Trump administration's use of pocket recissions shaping the discussions.

Contact James Montfort (jmontfort@crefc.org) with any questions.

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