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SF Credit Brief: U.S. CMBS Delinquency Rate Rose 35 Basis Points To 5.6% In November 2024; Office Rate Is Nearing 10.0%

Covered Bonds Uncovered

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SF Credit Brief: U.S. CMBS Delinquency Rate Rose 35 Basis Points To 5.6% In November 2024; Office Rate Is Nearing 10.0%

(Editor's Note: This report is S&P Global Ratings' monthly summary update of U.S. CMBS delinquency trends.)

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The Overall Delinquency Rate Rose 35 Bps

In this report, S&P Global Ratings provides its observations and analyses of the U.S. private-label commercial mortgage-backed securities (CMBS) universe, which totaled $652.8 billion as of November 2024 (a net increase of $1.32 billion month over month). The overall U.S. CMBS delinquency (DQ) rate rose 35 basis points (bps) month over month to 5.6% in November and soared 139 bps year over year (a 36.9% increase by DQ balance). By dollar amount, total delinquencies grew to $36.7 billion, representing net month-over-month and year-over-year increases of $2.4 billion and $9.9 billion, respectively (see charts 1A and 1B).

Chart 1A

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Chart 1B

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Several Large Loans Moved Into Delinquency

The overall DQ rate increased in November with an additional 149 loans ($4.8 billion) becoming delinquent. Table 1 shows the top five of these loans by balance.

Table 1

Top five newly delinquent loans in November 2024
Property City State Property type Delinquency balance ($)
JPMCC 2021-NYAH Portfolio Various New York Multifamily 392,382,500
AMA Plaza Chicago Illinois Office 370,000,000
225 Bush San Francisco California Office 350,000,000
New York Hospitality Portfolio New York New York Lodging 280,000,000
Ashford Hospitality Trust Portfolio Various Various Lodging 256,200,000

Delinquent And Modified Or Extended Loans

Modified loans represented approximately 8.3% ($54.2 billion) of the $652.8 billion total U.S. CMBS outstanding balance as of November. Table 2 shows the top five modified loans by balance, two of which are backed by retail.

By sector, lodging had the highest modification rate (18.1% by balance) as of November. However, this standout rate is more a function of the legacy modifications that were allowed soon after the onset of the COVID-19 pandemic; it is not an accurate indicator of current sector stress. Retail loans had the second-highest modification rate (14.1%), reflecting a mix of modifications granted due to the pandemic and, of more concern, loans commonly backed by retail malls that are unable to refinance and, therefore, receive extensions. The 6.1% modification rate for office is also revealing, as it indicates that the delinquency rates for those sectors would be notably higher if CMBS servicers weren't granted modifications. Chart 2 shows the breakout of the delinquency rate and modified loan rate by property type.

Chart 2

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The largest loan modified in November was White Marsh Mall.

Table 2

Top five modified loans in November 2024
Property City State Property type Outstanding balance ($)
White Marsh Mall Baltimore Maryland Retail 186,842,822
5599 San Felipe Houston Texas Office 72,976,928
One Stockton San Francisco California Retail 66,000,000
Four Points Tucson Tucson Arizona Lodging 9,248,381
Regis Houze Apartments Detroit Michigan Multiple 4,459,795

The Special Servicing Rate Increased By 36 Bps

The overall special servicing rate increased 36 bps month over month to 8.6% in November (see charts 3A and 3B). By sector, the special servicing rate rose for office (61 bps to 14.2%), multifamily (90 bps to 5.8%), retail (26 bps to 11.0%), and industrial loans (0.1 bp at 0.4%) and decreased for lodging loans (4 bps to 7.2%). The overall special servicing rate remains below the 9.5% peak of September 2020.

The largest loan to move into special servicing in November was 1515 Broadway. The loan is secured by the borrower's fee simple interest in a 1.7 million-sq.-ft. class A office building in Times Square in the Midtown West submarket of New York City. As of June 30, 2024, the property was 96.3% leased to Viacom, and its lease expires on June 30, 2031. The $900 million loan has an original term of 144 months, and it is scheduled to mature in March 6, 2025.

The loan transferred to the special servicing on November 2024 due to upcoming maturity, and as of Sept. 9, 2024, the borrower is considering options, including refinance or extension.

Chart 3A

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Chart 3B

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DQ Rates Increased For Four Sectors

By balance, the overall DQ rate increased for office (94 bps to 9.7%; 361 loans; $16.2 billion), lodging (57 bps to 5.9%; 134 loans; $5.8 billion), multifamily (71 bps to 3.4%; 97 loans; $2.7 billion), and industrial (one bp to 0.3%; 14 loans; $179.9 million) loans and decreased for retail loans (36 bps to 6.0%; 267 loans; $7.1 billion). Charts 4A and 4B show the historical DQ rate trend by property type.

There were 149 newly delinquent loans totaling $4.8 billion in November, led by office loans (57 loans; $2.2 billion), which were followed by retail (34 loans; $390.3 million), lodging (18 loans; $977.5 million), multifamily (17 loans; $657.0 million), and industrial (five loans; $88.7 million) loans.

By property type, DQ composition rates increased year over year for office (to 44.1% from 36.1%) and multifamily (to 7.4% from 6.2%) loans and decreased for retail (to 19.2% from 26.3%), industrial (to 0.5% from 0.6%), and lodging (to 15.8% from 17.8%) loans. Charts 5A and 5B show the year-over-year change in the property type composition for delinquent loans.

Chart 4A

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Chart 4B

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Chart 5A

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Chart 5B

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Table 3

Top five loans that moved out of delinquency in November 2024
Property City State Property type Outstanding balance ($)
PFHP Portfolio Various Various Lodging 204,000,000
The Prince Building New York New York Multiple 200,000,000
Holyoke Mall Holyoke Massachusetts Retail 161,872,468
65 Broadway New York New York Office 136,000,000
Eastview Mall and Commons Victor New York Retail 120,000,000

This report does not constitute a rating action.

Primary Credit Analyst:Senay Dawit, New York + 1 (212) 438 0132;
senay.dawit@spglobal.com
Secondary Contacts:Mei Yolles, New York + 1 (212) 438 0307;
mei.yolles@spglobal.com
Tamara A Hoffman, New York + 1 (212) 438 3365;
tamara.hoffman@spglobal.com
Lourdes Karam, Chicago + 1 (312) 233 7022;
Lourdes.Karam@spglobal.com
Research Contact:James M Manzi, CFA, Washington D.C. + 1 (202) 383 2028;
james.manzi@spglobal.com

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