KBRA Releases Research – CMBS Loan Performance Trends: March 2025

NEW YORK--(BUSINESS WIRE)--KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the March 2025 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label CMBS in March increased to 6.8% from 6.6% in February. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) increased 24 basis points (bps) to 9.8%. The mixed-use sector’s delinquency rate jumped 192 bps to 9.8% from 7.9%. A total of 14 mixed-use loans ($675.9 million) fell delinquent, of which three ($185.7 million) were already in special servicing. The multifamily delinquency rate (6.6%) decreased meaningfully since last month (7.9%), but the distress rate (9.8%) remains elevated above its historical level.

In March, CMBS loans totaling $2.3 billion were newly added to the distress rate, of which 53.4% ($1.2 billion) comprised imminent or actual maturity default. The retail sector experienced the highest volume of newly distressed loans (25.6%, $581.7 million), followed by office (24.2%, $549.8 million), and mixed-use (21.6%, $490.3 million).

Key observations of the March 2025 performance data are as follows:

• The delinquency rate increased to 6.8% ($22.1 billion) from 6.6% ($21.6 billion) in February.
• The distress rate increased to 9.8% ($32 billion) from 9.5% ($31.2 billion) last month.
• The office distress rate fell below 15% for the first time since November but remains well above the year-ago rate of 11.3%.
• The lodging sector saw an 84-bp increase in the distress rate, mainly due to the Starwood Capital Group Hotel Portfolio loan ($577.3 million in 13 conduits (seven KBRA-rated deals)) and Hilton Garden Inn W. 54th Street ($155 million in three conduits (two KBRA-rated)). The Starwood portfolio transferred to the special servicer for imminent default; the special servicer and borrower are negotiating modification terms. Hilton Garden Inn W. 54th Street was transferred for imminent monetary default as the borrower was unable to pay off the loan at the March 2025 maturity date.
• The retail sector recorded a 53-bp rise in distress rate, driven by Westfield Wheaton ($234.6 million in three conduits) and Westfield Trumbull ($152.3 million in three conduits). Both loans are backed by super-regional malls and became delinquent when they matured in March and became nonperforming matured balloons.

In this report, KBRA provides observations across our $339.1 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower (SASB), and large loan (LL) transactions.

Click here to view the report.

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About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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