KBRA Releases Research – CMBS Loan Performance Trends: January 2024

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the January 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. commercial mortgage-backed securities (CMBS) in January meaningfully climbed from December, rising almost 10% to 4.61%. The total delinquent and specially serviced loan rate (distress rate) also jumped more than 11% to 7.39%. Office experienced the most significant increase, climbing 233 basis points (bps) to 10.88%.

CMBS loans totaling $3.4 billion were newly added to the distress rate this reporting period, and more than one-half (53.7%, $1.8 billion) stemmed from imminent or actual maturity default. As noted, the office sector represented the largest portion (74.7%, $2.5 billion) of newly distressed loans. The mixed-use sector came in second, accounting for 11.3% ($385.2 million) of newly distressed loans, followed by retail at 11.1% ($376.4 million).

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

• The office sector’s distress rate jumped 233 bps to 10.88% from 8.55% in December. This was largely due to 280 Park Avenue ($1.1 billion in PRK 2017-280P) and One Market Plaza ($975 million in OMPT 2017-MKT) having been transferred to special servicing this month, both for imminent maturity default.
• Multifamily experienced a decline of 59 bps in its distress rate. The decrease is primarily driven by the liquidation of the Veritas multifamily portfolio securing GSMS 2021-RENT, which resulted in a reported 43% loss on the original securitized balance. However, the loss includes a substantial reserve holdback that could reverse much of the losses if released.

In this report, KBRA provides observations across our $317.3 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

• CREFC January Conference 2024 – Day 3 Recap
• CREFC January Conference 2024 – Day 2 Recap
• CREFC January Conference 2024 – Day 1 Recap
• 2023 CMBS Loan Maturities: Better by Count
• KBRA CMBS Loss Compendium Update: December 2023
• 5- and 10-Year Deal Credit Metrics

• CMBS Trend Watch: December 2023
• CMBS Loan Performance Trends: December 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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