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CREFC's June 2025 Monthly CMBS Loan Performance Report

July 23, 2025

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

  

• Conduit/SASB CMBS combined delinquency of 7.13%
  • Delinquency rate increased 5 bps in June
  • Fourth consecutive monthly increase; follows increases of 5 bps and 38 bps in May and April, respectively
  • On a YOY basis, the overall combined delinquency rate is up 178 bps (7.13% vs. 5.35% in June 2024)
• Office delinquency rate rose 49 bps in June to 11.08% and remains the highest delinquency rate of all property types
  • Office delinquency rate set another record high in June, surpassing previous peaks of 11.01% (December 2024) and 10.70% (July 2012)
• Hotel delinquency has been volatile in recent months, rising 42 bps to 6.81% in June after dropping 146 bps in May
• Overall, June delinquency rate still 319 bps below the 10.32% peak in June 2020 – the height of pandemic-related lockdowns
• Loans in special servicing (SS) increased 27 bps to 10.57% in June; SS rate has increased in 16 of the last 18 months and is up 234 bps YOY 
• In a June 27, 2025 report, BofA analyzed YTD conduit repayment trends across multiple dimensions, highlighting payoff rates by property type, loan size, and structure (interest-only vs. amortizing)
  • Of $24.2B in conduit loans maturing in 1H25, 42% paid off at maturity as scheduled, with an additional 26% prepaying with penalty and 4% liquidated, leaving 28% ($6.8B) outstanding past maturity, with office loans performing worst (38% on-time payment) and multifamily best (86%)

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House Committee Examines 15 Years of Dodd-Frank

July 22, 2025

The House Financial Services Committee held a hearing on July 15 titled “Dodd-Frank Turns 15: Lessons Learned and the Road Ahead.”

• Ken Bentsen – Securities Industry and Financial Markets Association (SIFMA)
• Lindsey Johnson – Consumer Bankers Association
• Tom Quaadman – Investment Company Institute
• Dr. Paul Kupiec – American Enterprise Institute
• Dennis Kelleher – Better Markets

The congressional discussion centered on critiques and defenses of the Dodd-Frank Act’s regulatory framework, highlighting partisan divides. Republicans emphasized regulatory overreach and economic stagnation, and Democrats defended the law’s intent and attributed failures to subsequent rollbacks.

• Republican committee members argued that post-Dodd-Frank regulations are overly complex, costly, and ineffective. They cited the March 2023 banking crisis as evidence of failure, stating that regulation inadequately addressed risks like interest-rate exposure and misleading capital metrics.
• Dodd-Frank critics also contended that mid-sized and community banks face disproportionate harm from uniform rules, as compliance costs strain smaller institutions. 
• Democrats highlighted Dodd-Frank’s successes, such as swap market reforms and improved capital resilience. Better Markets’ Kelleher blamed the 2018 Regulatory Relief Act, which exempted banks under $250 billion from the prudential rule, for creating vulnerabilities, arguing industry lobbying and litigation undermined Dodd-Frank’s implementation.
• There was bipartisan interest in shifting the Financial Stability Oversight Council (FSOC) back to an activity-based oversight approach and curbing its authority to designate non-bank entities as systemically important. Witnesses called for improved coordination and clearer regulatory boundaries to prevent duplicative oversight and regulatory overreach.

Specific issues discussed during the hearing included, among others, the Securities and Exchange Commission’s (SEC’s) authority, housing reform, and bank capital standards:

• Rep. Ann Wagner (R-MO) asserted that the SEC under former Chairman Gary Gensler had overstepped its statutory boundaries, citing the Fifth Circuit's unanimous June 2024 decision to vacate the SEC's private fund adviser rule.
• Committee members and witnesses discussed whether Dodd-Frank requirements represented an overcorrection in housing finance regulation and had forced smaller banks to exit the mortgage market. 
• Bank capital requirements were blamed for restricting capital formation and burdening small banks with excessive compliance costs. SIFMA’s Ken Bentsen encouraged regulators to evaluate how various capital and liquidity rules function cumulatively and noted that the July 22 Federal Reserve bank capital conference would be a good starting point for this analysis.

While this hearing made headlines, other policymakers weighed in on related regulatory initiatives.

In a speech at the Exchequer Club in Washington, D.C., Senator Elizabeth Warren warned that she sees similarities between today’s market conditions and those leading up to the Great Financial Crisis:

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CRE Securitized Debt Update

Four transactions totaling $2.1 billion priced last week:

1. BBCMS 2025-5C36, a $613.5 million conduit backed by 31 five-year loans secured by 163 properties from Barclays, LMF Commercial, Citi, UBS, Starwood, SocGen, DB, and Zions.
2. MSBAM 2025-C35, a $597.8 million conduit backed by 40 10-year loans secured by 65 properties from BofA, Argentic, Morgan Stanley, Citi, and Starwood.
3. P11 2025-P11, a $450 million SASB backed by a fixed-rate, five-year loan to Vornado Realty Trust to refinance the 1.2 million-sf PENN 11 office building, at 11 Pennsylvania Plaza in Midtown Manhattan.
4. COMM 2025-SBX, a $435 million SASB backed by a fixed-rate loan for Daniels Real Estate and Nitze-Stagen to refinance Starbucks’ headquarters in Seattle. The loan is structured with a five-year ARD period following the initial three-year IO term.

By the numbers: Year-to-date private-label CMBS and CRE CLO issuance totaled $84.1 billion, representing a 65% increase from the $51.1 billion recorded for same-period 2024. 

Spreads Narrow

• Conduit AAA and A-S spreads both tightened by 2 bps to +83 and +113, respectively. YTD, they both remain wider by 8 bps.
• Conduit AA and A spreads were unchanged at +160 and +200, respectively. YTD, they are wider by 25 bps and 35 bps, respectively.
• Conduit BBB- spreads were unchanged at +500. YTD, they are wider by 75 bps.
• SASB AAA spreads were tighter by 2 - 4 bps to a range of +103 to +130, depending on property type.
• CRE CLO AAA and BBB- spreads were unchanged at +135 and +375, respectively.

Agency CMBS

• Agency issuance totaled $4.5 billion last week, comprising $2.5 billion of Fannie DUS, $1.7 billion of Freddie K, SB, and Multi-PC transactions, and $273.2 million of Ginnie Mae transactions.
• Agency issuance for the year totaled $76 billion, 38% higher than the $54.9 billion for the same period last year

June 2025 Delinquency Update

CMBS

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The Economy, the Fed, and Rates

Economic Data & Inflation

• New graduate job market softens: Unemployment among recent college graduates stood at 5.8% in March 2025 – roughly double the 2.8% rate for all degree holders and 50% higher than spring 2022. Tech majors – which had long been pitched as a “sure thing” – are hardest hit, with computer science and engineering unemployment rates running above 7%.
• Retail spending rebounds: Headline retail sales rose 0.6% m/m in June 2025, beating forecasts as 10 of 13 major categories posted gains.
• Inflation expectations improve: Consumer sentiment climbed to a five-month high, and consumers now expect prices to rise at an annual rate of 4.4% over the next year, down from 5% in May and the lowest reading since February.
• Construction activity diverges: Housing starts rebounded 4.6% in June to a 1.32 million annualized rate thanks to the strength of multifamily building, while single-family starts slid to 883k – their weakest pace since early 2023 – as builders work through bloated inventories.

Federal Reserve Policy

• Waller pushes for a July cut: Governor Christopher Waller signaled he would dissent if colleagues leave rates unchanged at the July meeting, arguing “the private sector is not doing as well as everybody thinks it is.” He added that most recent job growth has come from the public sector and compared the situation to his earlier dissent on slowing balance sheet runoff.
• Market expectations re-price: CME Fed funds futures now price only one – maybe two – 25 bp cuts by year end, versus two-to-three at the start of July, and assign virtually zero probability to easing at the July meeting despite Waller’s stance.

Treasury Yields & Dollar Dynamics

• Dollar stages a July recovery: After its worst first half since 1973, the dollar index has gained 1.6% month-to-date, marking its first monthly rise of 2025 amid firmer U.S. data.
• Powell rumor volatility roils bonds: Wednesday chatter that the White House might remove Fed Chair Jerome Powell steepened the curve sharply – the 2-year yield fell ~10 bps while the 30-year rose ~10 bps in under 30 minutes – before retracing. By week’s end, the 2-year was down 2 bps at 3.87%, the 10-year up 1 bp at 4.42%, as Waller’s Friday comments nudged short-end yields lower again.
• Foreign exchange realignment: The usual positive correlation between Treasury yields and the dollar has weakened; Bank of America warns credibility concerns could keep the greenback volatile, noting “We are bearish over the medium term but the risk of a summer rally has risen.”

Implications for the CRE Finance Market

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House Hearing: Modernizing the HOME Program

July 22, 2025

The House Financial Services Committee's Housing Subcommittee held a hearing on the modernization of the HOME Investment Partnerships Program, highlighting necessary reforms.

Why it matters: The HOME Program is crucial in addressing the national housing shortage by providing gap funding needed for affordable housing projects. 

• The HOME Program is the federal government’s largest block grant program dedicated to creating affordable housing for low-income Americans. 
• The Department of Housing and Urban Development (HUD) administers formula-based funding to states and localities to build, rehabilitate, or preserve affordable rental and ownership housing.
• The program has not been reauthorized since 1992, leading to outdated requirements that increase costs and delay projects.
• Subcommittee Chair Mike Flood (R-NE) and Ranking Member Emanuel Cleaver (D-MO) have made reauthorization a bipartisan priority. 

What they’re saying: Chairman Flood’s priority is to increase housing supply, and his opening statement outlined four themes that increase housing costs in the HOME program: 

1. Environmental review requirements that delay a project's start and often drive up costs.
2. Build America, Buy America rules that drive up the cost of critical construction materials.
3. Davis-Bacon regulations that are much more costly due to the associated reporting requirements than they are for the actual cost of paying prevailing wages.
4. Section 3 contractor requirements that make it more difficult to find workers to do the job, particularly in rural areas with workforce challenges.

The big picture: Witnesses from various housing organizations stressed the need for modern solutions to streamline processes.

• Proposals include simplifying environmental reviews and adjusting Davis-Bacon thresholds to reduce administrative burdens.
• Republicans and Democrats were largely aligned with the potential reforms, though some Democrats criticized the Trump administration and congressional appropriators for seeking to defund the HOME program. 

What's next: The Committee is considering new legislation — the Home Reform Act of 2025 — aimed at updating the program and improving its effectiveness.

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Crypto Legislation: Real Estate Considerations 

July 22, 2025

The House passed a trio of cryptocurrency, tokenization, and digital commodity-related bills last week after some midweek drama and false starts that delayed action.

Why it matters: Crypto has been a key priority for the administration and has attracted bipartisan support. The Stablecoin bill, which had previously passed the Senate, will become law with the President’s signature.

• The market structure bill, which has only passed the House, intends to cover a broader array of digital assets and set up a regulatory structure for coin and token issuance and exchange.
• The impacts for CRE finance include potential blockchain and tokenization for recordkeeping. The legislation also includes a number of studies on how blockchain might apply to existing securities markets.

By the numbers: The House Freedom Caucus delayed consideration of the bills over concerns with central bank digital currency (CBDC), but joined to advance the legislation after assurances from the White House and GOP leadership. 

• The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (H.R. 1582) passed by a vote of 308-122 with the support of 102 Democrats. Twelve Republicans voted against passage.
• The Digital Asset Market Clarity (CLARITY) Act of 2025 (H.R. 3633), which addresses market structure, passed by a vote of 294-134 with the support of 78 Democrats.
• The Anti-CBDC Surveillance State Act (H.R. 1919) passed by a vote of 219-210 with the support of two Democrats.

What's next: The GENIUS Act will head to the President's desk, while the CLARITY Act and the Anti-CBDC Surveillance State Act will head to the Senate for consideration.

Go deeper: The CLARITY Act would set up a regulatory framework for digital assets split between the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC). Click here for a Congressional Research Services overview of the legislation. 

• The CFTC would have a central role in regulating digital commodities and related intermediaries.
• The SEC would maintain authority over primary market crypto transactions, subject to a new limited exemption from SEC registration requirements for fundraising. 
• The bill would require a study on non-fungible tokens (NFTs), including how they have integrated with traditional markets, including real estate. 

The bottom line: The GENIUS Act is the first significant step toward a federal regulatory apparatus on digital assets. House proponents hope to press the Senate to act expediently on the market structure portions, though some Democrats have been skeptical of crypto and critical of President Donald Trump’s business dealings in the space. 

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CREFC’s Lisa Pendergast Named to PERE’s List of 100 Most Influential

July 15, 2025

CRE Finance Council President and CEO Lisa Pendergast was included in PERE’s 100 Most Influential, a list of finance industry participants who made the biggest mark on institutional private real estate capital markets in the past decade. 

Why it matters: The list of leaders in finance includes Fed Chair Jerome Powell, former Fed Chair and U.S. Secretary of the Treasury Janet Yellen, and Blackstone President and CEO Jonathan Gray.

PERE unveiled its list of 100 influential industry participants on June 30. 

What is it: PERE 100 Most Influential highlights the contributions of industry participants considered to have had the greatest influence on the direction of real estate capital markets from 2016 to 2025. The list of influential industry leaders is part of the publication’s celebration of its 20th anniversary.

In its acknowledgement of Ms. Pendergast’s work, PERE highlighted her leadership of the CRE Finance Council and critical role in transitioning it from a mostly commercial mortgage-backed securities and alternative-lender focused industry group to one that encompasses a wide range of debt providers and investors. 

PERE specifically recognized Ms. Pendergast’s efforts to increase educational programming for the industry association’s members and her work to make the CRE finance industry more inclusive with initiatives such as CREFC’s Women’s Network.

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CRE Securitized Debt Update

Private-Label CMBS and CRE CLOs

1. BX 2025-VLT7, a $1.5 billion SASB backed by a floating-rate loan for Blackstone’s QTS to refinance two new, single-tenant data centers in Atlanta and Sandston, VA. The loan will have a term of two years, with three one-year extension options prior to the Anticipated Repayment Date, followed by two additional one-year options.
2. BBCMS 2025-C35, a $795.3 million conduit backed by 33 10-year loans secured by 80 properties from Barclays, UBS, DB, JPM, Starwood, SocGen, Goldman, BofA, and LMF Commercial.
3. WFCM 2025-5C5, a $596 million conduit backed by 32 five-year loans secured by 46 properties from Wells, Argentic, Citi, UBS, BMO, Greystone, Zions, Benefit Street, and Natixis.
4. WFCM 2025-AGLN, a $300 million SASB backed by a floating-rate, five-year loan (at full extension) for Agellan, a subsidiary of Almadev, on 28 industrial properties and one office property totaling 4.2 million sf in seven states.

By the numbers: Year-to-date private-label CMBS and CRE CLO issuance totaled $82 billion, representing a 63% increase from the $50.4 billion recorded for the same period in 2024. 

Spreads Hold Steady

• Conduit AAA and A-S spreads were unchanged at +85 and +115. YTD, they are both wider by 10 bps.
• Conduit AA spreads were unchanged at +160 while A spreads were tighter by 5 bps to +200. YTD, they are wider by 25 bps and 35 bps, respectively.
• Conduit BBB- spreads were tighter by 15 bps to +500. YTD, they are wider by 75 bps.
• SASB AAA spreads were tighter by 1 - 2 bps to a range of +105 to +134, depending on property type.
• CRE CLO AAA and BBB- spreads were unchanged at +135-140 and +375, respectively.

Agency CMBS

• Agency issuance totaled $2.7 billion last week, comprising $1.4 billion of Freddie K, ML, and Multi-PC transactions, $841 million of Fannie DUS, and $450.7 million of Ginnie transactions.
• Agency issuance for the year totaled $71 billion, 35% higher than the $52.5 billion for the same period last year.

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ICYMI: Trump Signs One Big Beautiful Bill Act

July 15, 2025

The Republican reconciliation legislation — One Big Beautiful Bill Act (OBBBA) — passed the Senate 51-50 (with Vice President Vance breaking the tie) and the House 218-214. President Donald Trump signed it into law on July 4th.

• SALT: The law largely preserves the $40,000 deduction for those making under $500,000 in House language. Notably, after five years, it permanently reverts to a $10,000 deduction. It also removed the House prohibition that would have limited state workarounds for certain pass-through entities.
• Energy Tax Credits: The treatment of many energy-related tax credits remained one of the stickiest issues for lawmakers. While the delicate balance struck ensured passage, jockeying will continue as Treasury implements rulemaking and members of the Freedom Caucus seek to codify some of the side agreements purportedly struck in the early morning hours.
  
• Medicaid and Overall Spending: The changes to Medicaid are the primary driver of budget savings, but deficit hawks complained the cuts are not deep enough, while some moderates were concerned the cuts go too far. Sen. Tillis’s main objection to the bill was that too many people would lose health insurance. Murkowski and Collins were also concerned about the Medicaid provisions.

• Section 899: The retaliatory tax on foreign entities was removed from the bill during Senate consideration.
• 199A Passthrough: The qualified business income deduction remains at 20% and was made permanent.
• Low-Income Housing Tax Credit (LIHTC) Boost: The law permanently increases the state housing credit ceiling by 12.5% and lowers the tax-exempt bond requirements, similar to the 2024 Wyden-Smith Bill.
• Renews Opportunity Zones: The program was made permanent with periodically-updated zone designations, starting on Jan. 1, 2027, and ending on Dec. 31, 2033.
• Bonus Depreciation Made Permanent: Allows full expensing of qualifying property.
  
• Interest Expense Deduction: Increases the cap on the deductibility of business interest expense under 163(j) for taxable years beginning after 2024 and before 2030 by allowing the EBITDA definition of taxable income.
  • Note that the 2017 TCJA law allows real property trade or business to elect not to be subject to the cap, but they must be depreciated using the alternative depreciation system.
• Immediate Factory Expensing: The qualified production property allows full, immediate expensing for certain manufacturing buildings with construction beginning in 2025 through 2029 and placed into service.
  • The legislation limits the deduction to owner-occupied facilities that manufacture, produce, or refine any tangible personal property.
  • Office space associated with the facility is explicitly excluded from the definition. It also excludes leased facilities.

• No 899 Retaliatory Tax: CREFC and other organizations pushed back against the provision, which was removed, that could have had a chilling impact on foreign investment into the U.S.
• No Business SALT Cap: There are no provisions to cap business state and local income or property taxes.
• No Carried Interest Rollback: President Trump had reiterated his push to close this “loophole” in a call last week with Speaker Mike Johnson (R-LA). However, the OBBBA does not change carried interest treatment.

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