All information is as of March 31, 2025, unless stated otherwise. *Rated by S&P Global Ratings. §Please find details in the "Specially Serviced Loans" section.

New Issuance

Four new transactions closed during the first quarter of 2025, three of which are rated by S&P Global Ratings. Pembroke Property Finance 3 DAC, which we rate, is a granular transaction and is therefore not included in the loan statistics of the report.

Table 1

Table 2

Surveillance

Table 3

The outstanding S&P Global Ratings-rated European CMBS balance increased to £19.7 billion from £19.5 billion over the past quarter. The increase is due to the addition of new loans. Also, the class A5 notes (£0.6 billion balance) of the single loan in the Land Securities Capital Markets PLC transaction were redeemed in the first quarter of 2025.

Table 4

Chart 1

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Table 5

Table 6

Loans maturing in the next 12 months

Viridis (European Loan Conduit No. 38) DAC

The loan has been extended three times, once for six months and then for one month. Since then, the loan has been further extended and the loan is due to mature on April 20, 2025. The loan fully repaid in April 2025.

Salus (European Loan Conduit No. 33) DAC

The loan had previously been extended twice--once for a 12-month period and then for an additional three months to April 2025. Noteholders have a consent solicitation that would further extend the loan, leaving a one-year tail period. On April 8, 2025, we placed all ratings in the transaction on CreditWatch negative ahead of the consent solicitation. The consent solicitation has been agreed and will now be implemented. We will review the consent solicitation terms and the transaction accordingly and resolve the CreditWatch negative placements. In our view, refinancing the loan has proven challenging due to higher interest rates and declining office property values, although the collateral is a well-located and a good-quality office property in Central London.

Starz Mortgage Securities 2021-1 DAC (Zamek loan)

The loan matures in April 2025 and has no extension option available. Its current loan-to-value (LTV) ratio is 69.2%, following an updated valuation in January 2024. The loan is hedged with an interest rate cap at 0.88% until loan maturity, which is expected to increase upon refinancing. However, the high occupancy rate (97.6% in the February 2025 investor report) of the two secured residential properties in the U.K., as well as the strength of the residential market should support the loan's refinance prospects in 2025.

Bruegel 2021 DAC

The loan is set to mature in May 2025 after the borrower exercised its first one-year extension option, with one more loan extension option remaining. Our S&P Value (as of June 2023) is 8.7% higher than at closing, underpinned by sustainable rental income generated and relatively low vacancy of the assets (predominantly office buildings) located in the Netherlands. However, we are cautious about the negative effects on office space demand due to the hybrid working trend and economic downturn. The loan benefits from a low interest burden based on a 1.5% interest rate cap, which remains unchanged upon loan extension. The transaction's LTV ratio of 57.3% is based on a new valuation from July 2024. Its debt yield of 13.7% remains healthy due to the secured commercial properties' overall good location and quality. Therefore, the loan is likely to be extended for a further year.

UNITE (USAF) II PLC

The loan is secured on 34 student accommodation buildings spread across England, Scotland, and Wales. The borrower is an indirect subsidiary of UNITE U.K. Student Accommodation Fund (USAF), the U.K.'s largest specialist student accommodation fund. Its historical interest coverage ratio (ICR) of 2.7x according to the March 2025 investor report is backed up by the 97.3% occupancy of the portfolio in the academic year 2024/2025, along with positive U.K. student accommodation market demand. Moreover, the loan has a low leverage of 31%. We believe this loan is in a good position to refinance when it matures in June 2025.

DECO 2019-RAM DAC

The loan has been extended for one year until July 2025, with no further extension options remaining. The borrower significantly prepaid the loan and note balance on the May 2023 interest payment date (IPD), which satisfied the LTV ratio and ICR covenants. The securitized loan LTV ratio has further improved to 17.2% on the January 2025 IPD from 17.7% last quarter. The ICR for the loan is strong at 8.06x. We believe the loan is in a very good position to refinance.

Taurus 2019-4 FIN DAC

A further one-year extension to August 2025 beyond the loan's initial extended maturity was granted, subject to certain amendments including required hedging conditions. The smaller office property was sold in February 2024 and the only remaining asset is a shopping center in Finland, whose vacancy deteriorated to 12.0% on the November IPD from close to 10% about half a year ago. The weighted-average lease term to break is short at 3.2 years, but the debt yield is 11.7%. The considerably higher reported leverage of 68.2% since 2024 was due to the release of almost all the trapped cash. Overall, we believe this loan's refinancing prospects have turned less promising, given the relatively high leverage post the release of the trapped cash.

Frost CMBS 2021-1 DAC

The loan (denominated in British pound sterling and euro) is secured on three cold-storage facilities in England, Germany, and France. It was extended to November 2025, with one one-year extension option remaining. The new interest rate swaps are in place with rates of 2.567% and 2.532%, respectively, for the Argentan and Rheine portions of the EUR Loan and 4.283% for the GBP Loan, compared to the older interest rate cap at 2% for all the loans. The servicer reports a moderate LTV ratio of 60.9% and a debt yield of 8.9x. We believe the special tenant needs for such properties will support the loan's second extension later in 2025.

Highways 2021 PLC

This is the first transaction backed by U.K. motorway service stations that we have rated. The loan was extended for the second time (and the new loan maturity date is in December 2025) with complied hedging conditions and can be further extended once by one year. All the properties are leased to a single tenant, Welcome Break, which reports an EBITDAR of 1.9x its rent. Given the underlying tenant's stable performance and the EBITDAR, we believe the loan will be extended again. The latest valuation of the underlying properties in December 2023 showed a 3.5% decrease from the December 2022 one.

Taurus 2021-3 DEU DAC

The loan was set to mature in December 2024 with no extension options exercisable. According to the latest special notice in December 2024, the loan has been extended for one year subject to several loan extension conditions including a cash trap, a reserve of €14.5 million being put in place, the rental income from the hotel being placed in a rental income account, as well as 100% of the hotel disposal proceeds being applied in prepayment of the loan. The loan is secured by the Squaire building complex adjoining Frankfurt Airport, comprising primarily office space and two hotels. The vacancy rate is high at 19% and the debt yield continues to deteriorate and is currently 7.0x and close to the covenant of 6.7x. The anticipated declining cash flow from the office space particularly challenges this loan's refinancing prospects upon its extended maturity in December 2025.

Specially Serviced Loans

In the first quarter of 2025, there remained one loan in special servicing, the same as in Q4 2024.

The Maroon loan in Elizabeth Finance 2018 DAC is solely secured by U.K. retail assets (see table 7). It remains in the special servicing index this quarter but will be removed from next quarter. The ratings on all classes of the notes in the transaction were withdrawn at the beginning of April 2025 after we lowered the ratings on the notes to 'D (sf)'.

Table 7

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Appendix

Notes on our data

All information is as of March 31, 2025, unless stated otherwise.

The figure for the loans in European CMBS transactions that we rate excludes the loans in small-loan transactions Dutch property Finance 2022-CMBS1 B.V., Pembroke Property Finance 3 DAC, Sandwell Commercial Finance No. 2 PLC, and Diversity Funding No. 1 Ltd.

1.0 and 2.0 loans  Loans originated from the year 2009 onward are classified as 2.0 loans. All other loans originated before this period are defined as 1.0 loans.

Currency  Starting from Q1 2023, we changed the reporting currency to British pound sterling given U.K. transactions represent a majority share of our rated European CMBS transactions.

Table 8