A loan-level analysis of recent CMBS originations reveals where lenders are demanding cushion and where buyers are accepting negative leverage.
Debt yields on recently originated CMBS loans have firmed to a weighted-average 10.3% across property types, even as interest rates continue to exceed implied cap rates for multifamily, industrial, retail, and self-storage assets — a condition known as negative leverage. CRED iQ’s proprietary analysis of approximately 3,700 loans totaling $94.7 billion in principal balance illustrates how lenders, borrowers, and appraisers are repricing CRE credit in a higher-for-longer rate regime.
Balance-Weighted Underwriting Metrics by Property Type
| Property Type | Interest Rate | Debt Yield | Cap Rate | Spread (bps) | Loan Count |
| Multifamily | 5.85% | 8.87% | 5.27% | (57) | 2,962 |
| Office | 5.80% | 15.75% | 6.58% | +78 | 90 |
| Retail | 6.06% | 12.51% | 5.81% | (25) | 207 |
| Industrial | 6.15% | 12.01% | 5.35% | (80) | 124 |
| Hotel | 7.33% | 14.30% | 8.19% | +86 | 161 |
| Self Storage | 6.19% | 11.88% | 5.57% | (63) | 154 |
| All Property Types | 5.95% | 10.33% | 5.57% | (38) | 3,698 |
Source: CRED iQ proprietary loan analytics platform. Negative spreads shown in parentheses.
How Do Debt Yields Vary by CMBS Property Type?
Debt yield — underwritten NOI divided by loan balance — is the most critical cushion metric for CMBS bondholders because it normalizes for interest rate volatility. Office leads all property types at a balance-weighted 15.75% debt yield, reflecting lender insistence on substantial NOI coverage to absorb continued office leasing risk. Hotel follows at 14.30%, consistent with the sector’s traditional volatility premium. Retail (12.51%), Industrial (12.01%), and Self Storage (11.88%) cluster in the low-teens, while Multifamily prints at 8.87% — the lowest of the group, reflecting both agency-dominant execution and tighter proceeds discipline.
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What Are Current CMBS Interest Rates by Asset Class?
Balance-weighted note rates range from 5.80% on office and 5.85% on multifamily to 7.33% on hotel loans. The 150-basis-point gap between multifamily and hotel pricing reflects the market’s risk-based tiering: stabilized multifamily collateral, particularly within Freddie Mac K-series and conduit execution, continues to benefit from the most favorable pricing. Retail, industrial, and self-storage loans price in a narrow 6.06%–6.19% band, sitting between the multifamily floor and hotel ceiling.
Why Does Negative Leverage Matter for CRE Investors?
Four of six property types show balance-weighted cap rates below their loan coupons: multifamily (-57 bps), retail (-25 bps), industrial (-80 bps), and self storage (-63 bps). Only office (+78 bps) and hotel (+86 bps) offer positive leverage. Negative leverage means new acquisitions cannot be financed accretively without underwriting NOI growth or near-term refinancing relief. Industrial’s negative spread is particularly notable — strong demand fundamentals have kept cap rates at 5.35%, while loan coupons at 6.15% reflect Treasury-driven all-in costs.
What Do Cap Rates Reveal About CRE Valuations?
Implied cap rates derived from underwritten NOI divided by appraised value average 5.57% across the dataset. Hotel leads at 8.19%, followed by office at 6.58%, retail at 5.81%, self storage at 5.57%, industrial at 5.35%, and multifamily at 5.27%. The narrow 8-basis-point dispersion between multifamily and industrial suggests appraisers continue to treat institutional-quality rental residential and warehouse product as near-substitutes from a valuation standpoint, even as financing costs diverge sharply by asset class.
Key Takeaways
CRED iQ’s loan-level analysis confirms debt yield discipline has been restored across CMBS conduit and agency underwriting in 2025. Negative leverage, however, remains the dominant market condition, signaling that most originations are being underwritten on forward NOI growth and eventual refinancing relief rather than accretive day-one economics. Until cap rates re-rate higher or the yield curve shifts meaningfully lower, property-level cash-on-cash returns at origination will continue to lag pre-2022 benchmarks for all but the most specialized asset types.
All data and analysis attributed to CRED iQ’s proprietary loan analytics platform. Figures reflect balance-weighted averages of CMBS conduit, agency, and SB loans with complete loan-level NOI, valuation, and pricing data.
About CRED iQ
CRED iQ is a leading commercial real estate (CRE) data and analytics platform designed to bring transparency, structure, and actionable intelligence to complex CRE debt markets. The platform aggregates and normalizes loan- and property-level data across CMBS, CRE CLO, Agency, and private debt, enabling investors, lenders, servicers, and advisors to analyze risk, performance, and opportunities within a single, unified environment.
CRED iQ specializes in advanced analytics for loan surveillance, distress tracking, special servicing activity, and workout strategies, with a particular focus on identifying early warning signals and resolution outcomes across the CRE lifecycle. By combining institutional-grade data infrastructure with AI-driven insights, CRED iQ helps market participants move beyond static reporting toward dynamic, forward-looking decision-making.
Users leverage CRED iQ to monitor delinquency trends, track foreclosures and REO pipelines, evaluate modification and extension activity, and assess portfolio exposure at the property, sponsor, and market level. The platform is built for speed, scalability, and precision—reducing manual research while increasing confidence in investment, underwriting, and asset management decisions.
Trusted by leading institutional investors, lenders, and advisory firms, CRED iQ delivers the data foundation required to navigate today’s evolving CRE market. For professionals seeking a comprehensive commercial real estate analytics platform with deep coverage of distressed debt, special servicing, and AI-powered insights, CRED iQ provides a differentiated, execution-ready solution.
