KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the May 2024 servicer reporting period. The delinquency rate among KBRA-rated CMBS in May increased slightly to 4.71%, up 4 basis points (bps) from April. Similarly, the total delinquent and specially serviced loan rate (distress rate) increased 16 bps to 8.45%. While most property types experienced an increase in distress rate month-over-month (MoM), office took a slight reprieve with a 28-bp drop to 11.26% after four consecutive months of increases. The decrease was mostly due to the return of One Market Plaza ($850 million in OMPT 2017-1MKT) to the master servicer after the loan was modified, the terms of which included an maturity extension and principal paydown.

CMBS loans totaling $2.2 billion contributed to the increase in the distress rate this reporting period, with over two-thirds (67%, $1.5 billion) stemming from imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (35.6%, $784.5 million), followed by mixed-use (27.9%, $615.3 million) and retail (23.3%, $513.5 million).

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

• The delinquency rate increased 4 bps to 4.71% ($14 billion), compared to 4.67% ($13.9 billion) in April.
• The distress rate increased 16 bps to 8.45% ($25.2 billion), compared to 8.29% ($24.7 billion) in April.
• Mixed-use saw the biggest increase in distress rate, with a sharp increase of 170 bps. This is largely due to the transfer of 731 Lexington Avenue, known as the Bloomberg headquarters ($500 million in DBCG 2017-BBG), which had its ratings placed on Watch Developing earlier this month and is discussed further below.
• The retail sector had the sharpest increase in delinquency rate, primarily the result of Bronx Terminal Market’s ($380 million) failure to pay off at its maturity earlier this May. In addition, Providence Place Mall ($254.9 million in DBUBS 2011-LC3, large loan (LL)), which was transferred to special servicing in April 2024 for imminent maturity default, is now reporting as nonperforming matured after failing to pay off this month.

In this report, KBRA provides observations across our $315.9 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower (SASB), and LL transactions.

Click here to view the report.

Related Publications

• Full-Year 2023 CMBS Conduit Subordinate Debt Hits Multiyear Low
• CMBS Trend Watch: April 2024
• CMBS Loan Performance Trends: April 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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