KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the December 2023 servicer reporting period. The delinquency rate among KBRA-rated U.S. CMBS in December pulled back to 4.21%, fully offsetting November’s 19-basis point (bp) increase. The total delinquent and specially serviced loan rate (distress rate) also declined from November to 6.65%, a drop of 25 bps. The improved distress rate was broad based, with five of seven sectors experiencing declines. The exceptions were multifamily and industrial, which increased for a second straight month.

CMBS loans totaling $1.6 billion were newly added to the distress rate this reporting period, and slightly under one-half (46.1%, $736.3 million) stemmed from imminent or actual maturity default. The office sector continues to represent the largest portion (44.5%, $710.5 million) of the newly distressed loans, with 34.4% ($244.7 million) due to imminent or actual maturity default. The mixed-use sector came in second, accounting for 25.3% ($404.3 million) of the newly distressed loans, followed by retail (15.2%, $243.2 million).

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

• The office sector distress rate reversed course and improved by 29 bps to 8.55%, following an increase in November. The decrease was primarily driven by four office loans, totaling $472.3 million in loan balance, having been returned to the master servicer. The largest three are Aspiria Office Campus ($232.5 million in JPMCC 2021-BOLT), Federal Center Plaza ($130 million in COMM 2013-CR6), and Gateway Center ($95.8 million in JPMCC 2013-C10), all of which are discussed further in the report.
• Mixed-use saw a big swing in its delinquency and distress rate. The delinquency rate dropped 223 bps as the Prime Storage Fund II ($340 million in CGCMT 2021-PRM2) became a performing matured balloon after being listed as 30+ days delinquent last month. On the other hand, the distress rate experienced a 194-bp increase as Columbus Square Portfolio ($370.6 million in four 2014 vintage conduit transactions) transferred to the special servicer for imminent maturity default. The portfolio is backed by five condominium buildings that contain retail, community facility, and parking garage spaces on the Upper West Side of New York City.

In this report, KBRA provides observations across our $317.4 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

• 2024 CMBS Sector Outlook: Cloudy, With a Glimmer of Hope
• CMBS Trend Watch: November 2023
• CMBS Loan Performance Trends: November 2023

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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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