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KBRA Releases Research – Conduit Office Loan Defaults: Size Matters

NEW YORK--(BUSINESS WIRE)--KBRA releases a report on office loan defaults by loan size ranking. Although it seems the pandemic is fading, COVID-19 has left a wake of uncertainty for the office asset class as hybrid schedules and remote work arrangements have become more prevalent.

While much has been written on these topics, a more immediate impact to CMBS office collateral has already been observed, as conduit office defaults have increased by more than 130% over the last two years (2021, 2020) relative to the prior eight. Over 70% (72.7%) of office defaults have occurred on loans outside of the largest 10 by loan balance.

Other Key Takeaways:

  • In total, 139 of the 2,349 securitized office loans in the study population defaulted, yielding a default percentage of 5.9%.
  • Smaller balance office loans have defaulted significantly more than larger balance loans, and they generally had weaker credit metrics and were in secondary/tertiary market locations.
  • Of the 1-10 loan grouping, 66.9% are in Tier 1 markets while the 21+ loan grouping has the largest percentage in Tier 3 at 9%.

Click here to view the report.

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About KBRA

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.

Contacts

Larry Kay, Senior Director, CMBS Ratings Surveillance
+1 (646) 731-2452
larry.kay@kbra.com

Roy Chun, Senior Managing Director, CMBS Ratings Surveillance
+1 (646) 731-2376
roy.chun@kbra.com

Eric Thompson, Senior Managing Director, Head of Global Structured Finance Ratings
+1 (646) 731-2555
eric.thompson@kbra.com

Business Development Contact

Michele Patterson, Managing Director
+1 (646) 731-2397
michele.patterson@kbra.com

KBRA

Details
Headquarters: New York City, New York
CEO: Jim Nadler
Employees: 400+
Organization: PRI

Release Versions

Contacts

Larry Kay, Senior Director, CMBS Ratings Surveillance
+1 (646) 731-2452
larry.kay@kbra.com

Roy Chun, Senior Managing Director, CMBS Ratings Surveillance
+1 (646) 731-2376
roy.chun@kbra.com

Eric Thompson, Senior Managing Director, Head of Global Structured Finance Ratings
+1 (646) 731-2555
eric.thompson@kbra.com

Business Development Contact

Michele Patterson, Managing Director
+1 (646) 731-2397
michele.patterson@kbra.com

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