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KBRA Releases Research – CMBS Loan Performance Trends: September 2022

NEW YORK--(BUSINESS WIRE)--KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the September 2022 servicer reporting period. Following two consecutive months of double-digit declines, the delinquency rate among KBRA-rated U.S. commercial mortgage-backed securities (CMBS) for September came in relatively unchanged month over month. The rate ticked down 2 basis points (bps) to 2.76% in September after posting monthly decreases of 16 bps and 17 bps in July and August, respectively, along with a 15-bp increase in June. In this report, KBRA provides observations across our $319.7 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower (SASB), and large loan (LL) transactions.

One notable trend is the continued growth in specially serviced office loans, which is up 11.6% to $2.8 billion since March 2022 among conduit CMBS. Further, office is the sole major property type to experience a rise in special servicing volumes. This is in contrast to other property types, which have experienced decreases in specially serviced volume ranging from 13.4% to 52.4% over the same period. While office/remote work trends have become clearer this year, overall demand for space is down as companies may be hesitant about making long-term commitments for office space, given economic uncertainty. These factors are likely to contribute to increased special service loan transfers in the sector.

By property type, the largest moves in the delinquency rate were reported for lodging (4.19%; -38 bps), retail (5.27%; +17 bps), industrial (0.33%; -16 bps), and mixed-use (3.89%; +9 bps). Looking at the combined percentage of delinquent and specially serviced loans, the rate for retail and mixed-use loans rose 42 bps and 44 bps to 8.59% and 6.3%, respectively, while lodging loans continued its decline (6.26%; -41 bps). The increase in the retail rate continues to be impacted by the mall sector which face issues of obsolescence, struggling retailers, and a weak financing environment for the sector. Additionally, mixed-use properties can frequently include an office component which, as mentioned, faces its own challenges.

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

Catherine Liu, Associate, CMBS Ratings Surveillance
+1 (646) 731-1313
catherine.liu@kbra.com

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

Business Development Contact

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

KBRA

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

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Contacts

Catherine Liu, Associate, CMBS Ratings Surveillance
+1 (646) 731-1313
catherine.liu@kbra.com

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

Business Development Contact

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

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