(Editor's Note: This report is S&P Global Ratings' monthly summary update of U.S. CMBS delinquency trends.)
Key Takeaways
- The U.S. CMBS overall delinquency rate rose 35 basis points month over month to 5.6% in November.
- Office loan delinquency rates are approaching their highest levels in our series, but they have not yet reached the all-time high of 10.2% in July 2012.
- By balance, delinquency rates increased for office (94 basis points to 9.7%), lodging (57 basis points to 5.9%), multifamily (71 basis points to 3.4%), and industrial (one basis point to 0.3%) loans and decreased for retail loans (36 basis points to 6.0%).
- Special servicing rates rose for office, multifamily, retail, and industrial loans and decreased for lodging loans.
- The share of loans that were either modified or extended decreased 34 bps month over month to 8.3%.
- Prior months' delinquency reports included commercial real estate collateralized loan obligation loans; this month and moving forward, we are excluding them.
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
Chart 1B
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 $652.8 billion total U.S. CMBS outstanding balance as of November. Table 2 shows the top five modified loans by balance, two of which are backed by retail.
By sector, lodging had the highest modification rate (18.1% by balance) as of November. However, this standout rate is more a function of the legacy modifications that were allowed soon after the onset of the COVID-19 pandemic; it is not an accurate indicator of current sector stress. Retail loans had the second-highest modification rate (14.1%), reflecting a mix of modifications granted due to the pandemic and, of more concern, loans commonly backed by retail malls that are unable to refinance and, therefore, receive extensions. The 6.1% modification rate for office is also revealing, as it indicates that the delinquency rates for those sectors would be notably higher if CMBS servicers weren't granted modifications. Chart 2 shows the breakout of the delinquency rate and modified loan rate by property type.
Chart 2
The largest loan modified in November was White Marsh Mall.
Table 2
Top five modified loans in November 2024 | ||||
---|---|---|---|---|
Property | City | State | Property type | Outstanding balance ($) |
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
Chart 3B
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; $88.7 million) loans.
By property type, DQ composition rates increased year over year for office (to 44.1% from 36.1%) and multifamily (to 7.4% from 6.2%) loans and decreased for retail (to 19.2% from 26.3%), industrial (to 0.5% from 0.6%), and lodging (to 15.8% from 17.8%) loans. Charts 5A and 5B show the year-over-year change in the property type composition for delinquent loans.
Chart 4A
Chart 4B
Chart 5A
Chart 5B
Table 3
Top five loans that moved out of delinquency in November 2024 | ||||
---|---|---|---|---|
Property | City | State | Property type | Outstanding balance ($) |
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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