KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the July 2023 servicer reporting period. After a slight improvement in June, the delinquency rate among KBRA-rated U.S. CMBS rose sharply in July to 3.93%, a 34-basis point (bp) increase. The total delinquent and specially serviced loan rate continued trending upward for the fourth straight month to 6.44%, with a 37-bp month-over-month (MoM) increase.

In July, CMBS loans totaling $2.6 billion were either transferred to special servicing or became newly delinquent, 51.9% ($1.3 billion) of which was due to imminent or actual maturity default. Office continues to have the highest exposure, accounting for 34.7% ($898.4 million) of the newly specially serviced and newly delinquent loans, while retail properties came in second at 26.4% ($683.4 million), and mixed-use came in third at 23.7% ($613.9 million).

Other key observations of the July 2023 performance data are as follows:

• All property types, excluding lodging and industrial, have seen an increase in the MoM delinquency rate. Notably, mixed-use properties saw a 201-bp delinquency rate increase, primarily driven by the payment default of the $588 million Westfield San Francisco Centre loan, secured by a mixed-use retail and office property in the Union Square submarket of San Francisco. The loan collateralizes DBJPM 2016-SFC, a single-asset single borrower (SASB) transaction, and is also participated across five conduits.
• During the July remittance period, multiple office properties have been transferred to special servicing due to imminent monetary default, including Prudential Plaza ($388.6 million across six conduits), 315 West 36th Street ($77 million in BMARK 2018-B3 and COMM 2018-COR3), Hall Office Portfolio ($56.4 million in BMARK 2021-B31), and 600 Vine ($50 million in CSAIL 2017-CX10 and CSAIL 2018-CX11). As a result, the total delinquent and specially serviced loan rate for office has increased 56 bps MoM to 7.22%.

In this report, KBRA provides observations across our $314.8 billion rated universe of U.S. private label CMBS including conduits, SASB, and large loan (LL) transactions.

Click here to view the report.

Related Publications

• CMBS Trend Watch: June 2023
• CMBS Loan Performance Trends: June 2023
• KBRA CMBS Loss Compendium Update: June 2023

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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