KBRA Research: CMBS Delinquency Rate Down


The KBRA report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the May 2023 servicer reporting period shows the delinquency rate among KBRA-rated U.S. commercial mortgage-backed securities (CMBS) decreased 23 basis points (bps) in June to 3.59% from the prior month.

The improvement closely followed May’s sharp rise, one of the largest monthly increases since the figure last peaked in June 2020. Meanwhile, the total delinquent and specially serviced loan rate climbed higher, breaching 6% with a 12-bp month-over-month (MoM) increase.

In June, a total of $2.2 billion CMBS loans were either transferred to specially servicing or became newly delinquent – 61.7% ($1.4 billion) of which were due to imminent or actual maturity default. Office accounts for over one-half of the newly specially serviced and newly delinquent loans, at 50.8% ($1.1 billion), while retail properties came in second at 22% ($488.9 million).

Other key observations of the June 2023 performance data:

  • The decrease in the delinquency rate was broad, with retail, mixed-use, office and lodging properties all declining more than 20 bps MoM.
  • One of the larger loans that is no longer reported as delinquent is the $782.8 million 375 Park Avenue loan, a Class-A office property (the Seagram Building) in New York City. The loan has been extended. It is now reported as current but remains with the special servicer.
  • As with 375 Park Avenue, many of the prior month’s delinquent loans that are now categorized as current or performing matured remain with the special servicer.
  • In addition, there continues to be loans being transferred to special servicing for imminent payment or maturity default.

In this report, KBRA provides observations across its $316 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower (SASB) and large loan (LL) transactions.

Photo by Patrick Nouhailler, CC BY-SA 3.0.

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