KBRA Releases Research – CMBS Loan Performance Trends: August 2024

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the August 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. commercial mortgage-backed securities (CMBS) in August declined marginally to 4.98%, down 11 basis points (bps) from July, while the total delinquent and specially serviced loan rate (distress rate) increased 32 bps to 8.36%.

In August, CMBS loans totaling $1.7 billion were newly added to the distress rate, of which 64.6% ($1.1 billion) was due to imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (54.5%, $928.8 million), followed by multifamily at 29.4% ($500.7 million) and retail at 11.9% ($203 million).

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

• The delinquency rate declined marginally to 4.98% ($15.5 billion), compared to 5.09% ($15.8 billion) in July.
• The distress rate increased 32 bps to 8.36% ($26.1 billion), versus 8.04% ($25 billion) in July.
• The office distress rate closed in on the 12% mark with a jump of 89 bps. This came as multiple loans became newly distressed this month, the largest of which included two office properties with the same sponsor, RFR Holding LLC:; Stamford Plaza Portfolio ($247.4 million in three conduits) and 17 State Street ($180 million in two conduits). Both loans became non-performing matured balloons after failing to pay off at maturity this month.
• Multifamily experienced the largest distress rate increase (100 bps) after dropping 110 bps last month. The increase included the addition of 20 Broad Street ($220 million in Hamlet 2020-CRE1) as a newly specially serviced loan, as well as six loans totaling $141.8 million that were delinquent in June 2024 and, brought current in July, but which subsequently transferred to the special servicer.
• Mixed-use experienced the largest improvement in its distress rate (-92 bps). The decline included the transfer back to the master servicer of the City Square and Clay Street loan ($90 million in two conduits), which is secured by a mixed-use (office and retail) property in Oakland, California.

In this report, KBRA provides observations across our $327.2 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

• CMBS ARAs: Trending Higher
• KBRA CMBS Loss Compendium Update: June 2024
• Appraisal Values of Distressed Loans Highlight CMBS Stress
• CMBS Trend Watch: July 2024
• CMBS Loan Performance Trends: July 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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