KBRA releases research analyzing recent vintage loans in commercial real estate (CRE) collateralized loan obligations (CLO).

CRE CLO issuance reached $8.4 billion year-to-date (YTD) through Q1 2025—nearly matching the total volume for all of last year. At this pace, annual issuance could exceed all prior years, except 2021’s $45 billion. This would represent a strong turnaround from the recent low of $6.7 billion in 2023. As CRE CLO issuance looks to regain its footing, KBRA analyzed how the recent 2024 and 2025 vintage of loans in these transactions compare to the current stabilized loan market.

The loans in CRE CLOs issued in 2024 and through Q1 2025 will take some time to execute on their business plans, and no one can predict with certainty what the property and lending markets will look like when these loans reach maturity. However, it is worthwhile to benchmark how the refinancing of these loans may fare when and if they reach stabilization. In this benchmarking exercise, KBRA focused on the debt yield (DY) metrics of the CRE CLO loans compared to the DY of similar vintage Freddie Mac K-Deal securitizations (FM) for the multifamily loans and CMBS conduit loans for the other property types. Overall, our analysis shows that nearly one-half of the CRE CLOs do not meet the level of recent DYs in FM and conduits, even if appraiser-estimated stabilized net cash flows (NCF) are achieved. In a previous report, we performed a similar analysis comparing DYs of 2021 to 2022 vintage CRE CLOs to 2023 vintage FM and conduit loans (see CRE CLO Refinance: Challenges Ahead for 2021-2022 Vintage Loans, published October 20, 2023). In that study, the proportion of CRE CLO loans fared much worse, with only one-quarter meeting the 2023 FM and conduit DYs.

Key Takeaways

• The 2024 and YTD 2025 vintage CRE CLOs remain largely backed by multifamily properties (73.1% by loan count), followed by industrial at 11.3% and lodging at 6.5%. The other property types do not account for more than 3% individually.
• The median multifamily loan DY is expected by the appraisers to improve by 50% to reach its stabilized DY of 8.5%, from the issuer-calculated as-is DY of 5.6%. The median industrial DY is expected by the appraisers to increase by nearly 30% to achieve its stabilized debt yield of 10% from the median as-is DY of 7.7%.
• The median appraiser’s stabilized multifamily DY of 8.5% in CRE CLOs is just under the median FM multifamily DY of 8.7%, while the appraiser’s stabilized industrial DY of 10% is meaningfully shy of the median industrial DY of 11.1% in the comparable vintage conduits.
• If each of the loans in the CRE CLO study population achieved their appraisal-estimated stabilized DY estimates, just over one-half (57%) would meet a DY benchmark equal to DY levels where 75% of FM and conduit loans of similar vintage and property type were originated at. If the stabilized NCFs were 10% lower than estimated, the proportion of loans meeting the DY benchmarks would drop to approximately 44%.
• A factor behind the relatively low percentage of CRE CLOs meeting the DY levels of recent FM and conduit loans is the higher percentage of top-tier markets present in CRE CLO multifamily loans compared to FM, as DY requirements are generally lower for top-tier markets. In addition, the dispersion of DYs is wider for CRE CLO MF loans compared to FM, which contributes to more CRE CLO loans falling below the DY benchmark.
• While the DY environment may suggest a challenging picture ahead for the recent CRE CLOs, the securitization structures continue to offer meaningful credit support from subordination and excess spread, allowing for and incentivizing asset management flexibility to modify or buy out nonperforming loans. All of this should continue to support transaction performance.

Click here to view the report.

Recent Publications

• CMBS Loan Performance Trends: March 2025
• CMBS Trend Watch: February 2025
• New York City Leads CMBS Multifamily Issuance as Distress Jumps
• KBRA Examines CMBS GSA Risk Amid Government Cuts

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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