KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the June 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. commercial mortgage-backed securities (CMBS) in June increased to 5.07%, up 36 basis points (bps) from May, while the total delinquent and specially serviced loan rate (distress rate) held steady at 8.45%. The distress rate did not experience any movement, as the delinquency rate jump was offset by the decrease in the current and specially serviced rate, much of it due to already specially serviced loans becoming delinquent. These included loans that had their status change from performing matured balloon to nonperforming matured balloon.

In June, CMBS loans totaling $1.6 billion were newly added to the distress rate, 35.9% ($559.8 million) of which was due to imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (39.1%, $609.6 million), followed by retail at 25.7% ($400.2 million), and then multifamily at 14.4% ($224.1 million).

Other key observations of the June 2024 performance data are as follows:

• The delinquency rate increased 36 bps to 5.1% ($15.5 billion), compared to 4.71% ($14 billion) in May.
• The distress rate remained steady at 8.45% ($25.8 billion), compared to 8.45% ($25.2 billion) in May.
• Multifamily saw the biggest increase in distress rate, by 45 bps. This was driven by 10 loans totaling $211.7 million turning 30+ days delinquent, which have not yet been transferred to the special servicer as of the June reporting date. Notably, eight were in 2023 or 2024 vintage conduits.
• The office distress rate, which saw a fair amount of movement between the delinquent and the current and specially serviced designations, netted an increase of 23 bps to 11.49%, with newly distress loans including the Lafayette Centre ($243 million in three conduits) and Merritt on the River Portfolio ($197.7 million in Hamlet 2022-CRE1).
• The mixed-use sector’s distress rate declined 28 bps, an improvement from last month when it was up 170 bps.

In this report, KBRA provides observations across our $321.9 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower (SASB), and large loan (LL) transactions.

Click here to view the report.

Related Publications

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• CREFC 2024: Are We At An Inflection Point?
• Appraisal Values of Distressed Loans Highlight CMBS Stress
• KBRA CMBS Rating Transitions: 13 Years In
• CMBS Trend Watch: May 2024
• CMBS Loan Performance Trends: May 2024

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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