The commercial mortgage-backed securities (CMBS) distress rate increased from 10.3% in April to 11.0% in May, according to CRED iQ’s latest analysis. The latest print reverses a three-month trend of distress rate reductions.
The underlying metrics saw increases as well with the delinquency rate rising by 40 basis points to 8.4% and our special service rate notched a 30-basis point increase to 10.2%.
Below, we unpack the trends shaping the CMBS landscape and their implications for investors, lenders, and property owners.
Distress Rate Trends: A Reversal
CRED iQ’s distress rate, a composite metric capturing loans 30+ days delinquent (or worse) and those in special servicing, increased by 70 basis points to 11.0% in the latest reporting period. The trend reversal, which is further supported by increases in delinquencies and special servicing underscores the heightened volatility of CRE sector. These upticks highlight the need for vigilance as underlying pressures persist.
Payment Status Breakdown: Some Positive Signs
The CRED iQ research team analyzed the payment status of approximately $58 billion in distressed CMBS loans. The core objective of our research was to achieve a clear view of the current state of payment status reasons and associated near-term trending.
Our team then explored each payment status reason from a historical perspective. We wanted to understand the trending/evolution of each category dating back to February of 2024. Our team built a heat which reveals trends for each category, to potential argument current forecasting models.
Current Loans: Encouragingly, $10.4 billion (17.9%) are current, up from $8.3 billion (15.7%) in the prior month.
Delinquent Loans: $14.7 billion (25.3%) are delinquent, including those within grace periods, holding steady month-over-month –a 40 BPS decrease from a percentage basis
Matured Loans: $33 billion of CMBS loans have passed their maturity date. Of these, 18.1% are performing (up from 16.6%), while 38.6% are non-performing (down from 42%), indicating a notable swing toward non-performance.
Loan Highlight
The $39.9 million Encino Financial Center loan, backed by a 227,223 SF office property in the Los Angeles market highlights maturity-related challenges. Set to mature in May 2025, the loan defaulted to non-performing mature status and transferred to the special servicer. Year end 2024 financials reported a DSCR of 1.67 and 87% occupancy.
CRED iQ’s Methodology: A Comprehensive Approach
CRED iQ’s distress rate provides a holistic view of CMBS performance by combining delinquency (30+ days past due) and special servicing activity, including both performing and non-performing loans that fail to pay off at maturity. Our analysis focuses on conduit and single-borrower large loan structures, while separately tracking Freddie Mac, Fannie Mae, Ginnie Mae, and CRE CLO metrics. This granular approach ensures CRE professionals have a clear, actionable understanding of market dynamics.
Stay Informed with CRED iQ
As the CRE sector continues to adapt to macroeconomic shifts, CRED iQ’s comprehensive analytics offer a critical resource for decision-makers. For a deeper dive into our data or to discuss how these trends impact your portfolio, contact our team today. Stay tuned for our next update, where we’ll continue to track the metrics driving the CMBS market.
For more information, visit CRED iQ or reach out to our research team.
About CRED iQ
CRED iQ is a market data provider that offers a robust suite of data and software solutions tailored for commercial real estate and finance professionals.
With over $2.3 trillion of CRE loans, CRED iQ delivers instant access to a comprehensive range of financial data and analytics for millions of properties in every market. CRED iQ’s data and analytical capabilities are instrumental in helping investors, lenders and brokers make informed and strategic decisions critical to their business.
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