KBRA Releases Monthly CMBS Trend Watch

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases August’s CMBS Trend Watch.

August CMBS private label pricing volume came in at $5.7 billion, up 43% over July’s $4.0 billion figure. The year-to-date issuance is $48.8 billion, down 8.9% year-over-year.

Falling interest rates appear to be driving loan demand and helping to spur issuance. Based on our current visibility, up to nine single-borrower (SB) deals, seven conduits, two Freddie Mac K-Series securitizations, and as many as four commercial real estate collateralized loan obligations (CRE CLOs) transactions could launch this month.

In the Spotlight section, we review the greenhouse gas emissions reduction targets enacted through the New York City Climate Mobilization Act (CMA). Under the CMA, which comes into force in 2024, commercial buildings exceeding 25,000 square feet must adhere to strict carbon emissions rules or face fines for noncompliance. The New York City Mayor’s Office of Sustainability said there are approximately 50,000 buildings that meet the size requirement, which account for nearly 70% of the city’s total greenhouse gas emissions.

The Act would require landlords to perform retrofits such as new windows, heating systems, and insulation to make carbon emissions reductions of at least 40% by 2030 before rising to a cut of 60% by 2040 and 80% by 2050.

During the month, KBRA published pre-sales for one conduit ($937 million), one Freddie Mac K-Series ($1.4 billion) and one CRE CLO ($600 million). August’s surveillance activity included actions on 274 rated classes, consisting of 257 affirmations, 11 upgrades, and six downgrades. The activity was effectuated across 30 transactions, including 14 conduits, six single borrowers, four Freddie Mac K-Series, four CRE CLOs, and two re-remics.

As part of surveillance activity in August, KBRA highlighted 41 KBRA Loans of Concern (K-LOCs), which consist of specially serviced and real estate owned (REO) assets as well as non-specially serviced loans in default or at heightened risk of default. There were also 11 KBRA Performance Outlook (KPO) changes, including seven to Underperform from Perform, three to Outperform from Perform, and one to Perform from Underperform.

To view the report, click here.

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts:

Giselle Vuong, Senior Analyst
(646) 731-2435
gvuong@kbra.com

Larry Kay, Senior Director
(646) 731-2452
lkay@kbra.com

Eric Thompson, Senior Managing Director
(646) 731-2355
ethompson@kbra.com

Contacts

Analytical Contacts:

Giselle Vuong, Senior Analyst
(646) 731-2435
gvuong@kbra.com

Larry Kay, Senior Director
(646) 731-2452
lkay@kbra.com

Eric Thompson, Senior Managing Director
(646) 731-2355
ethompson@kbra.com