(Editor's Note: This report is S&P Global Ratings' monthly summary update of U.S. CMBS delinquency trends.)
Key Takeaways
- The U.S. CMBS overall delinquency rate rose 34 bps month over month to 5.2% in September.
- By balance, DQ rates increased for retail (85 bps to 6.6%), office (55 bps to 8.2%), lodging (34 bps to 5.4%), and multifamily (19 bps to 4.2%); and decreased for industrial (8 bps to 0.3%).
- Special servicing rates rose for lodging, office, retail, multifamily, and industrial loans.
- The share of loans that were either modified or extended increased 9 bps month over month to 10.4%.
The Overall Delinquency Rate Rose 34 Bps
In this report, S&P Global Ratings provides its observations and analyses of the U.S. private-label commercial mortgage-backed securities (CMBS) universe, which totaled $724.7 billion as of September 2024 (a net increase of $500 million month over month). The overall U.S. CMBS delinquency (DQ) rate rose 34 basis points (bps) month over month to 5.2% in September 2024 and soared 145 bps year over year (a 38.5% increase by DQ balance). By dollar amount, total delinquencies grew to $38.0 billion, representing net month-over-month and year-over-year increases of $2.5 billion and $10.6 billion, respectively (see charts 1A and 1B).
Chart 1A
Chart 1B
Several Large Loans Moved Into Delinquency
The overall DQ rate increased in September with an additional 154 loans ($4.4 billion) becoming delinquent. Table 1 shows the top five of these loans by balance.
Table 1
Top five newly delinquent loans in September 2024 | ||||
---|---|---|---|---|
Property | City | State | Property type | Delinquency balance ($) |
Bank of America Plaza | Los Angeles | California | Office | 400,000,000 |
Destiny USA Phase I | Syracuse | New York | Retail | 300,000,000 |
20 Broad Street | New York | New York | Multifamily | 220,000,000 |
Eastview Mall and Commons | Victor | New York | Retail | 210,000,000 |
Sunvalley Shopping Center | Concord | California | Retail | 139,975,809 |
Delinquent And Modified Or Extended Loans
Modified loans represented approximately 10.4% ($75.4 billion) of the $724.7 billion total U.S. CMBS outstanding balance as of September 2024. Table 2 shows the top five modified loans by balance; three of which are backed by multifamily.
By sector, lodging had the highest modification rate (20.9% by balance) as of September. However, this standout rate is more a function of the legacy modifications that were allowed soon after the onset of the COVID-19 pandemic and is not an accurate indicator of current sector stress. Retail loans had the second-highest modification rate (14.5%), reflecting a mix of modifications granted due to the pandemic and, of more concern, for loans commonly backed by retail malls that are unable to refinance and, therefore, receive extensions. The 7.6% and 10.0% modification rates for office and multifamily, respectively, are also revealing, as they indicate that the delinquency rates for those sectors would be notably higher if CMBS servicers weren't granted modifications. Chart 2 shows the breakout of the delinquency rate and modified loan rate by property type.
Chart 2
The largest loan modified in September was GVA Sunrise Portfolio Pool C.
Table 2
Top five modified loans in September 2024 | ||||
---|---|---|---|---|
Property | City | State | Property type | Outstanding balance ($) |
GVA Sunrise Portfolio Pool C | Various | Various | Multifamily | 148,944,680 |
RiverTown Crossings Mall | Grandville | Michigan | Retail | 121,108,425 |
25 Broadway | New York | New York | Office | 116,640,000 |
Portofino Place | West Palm Beach | Florida | Multifamily | 115,000,000 |
100 York | Jenkintown | Pennsylvania | Multifamily | 90,000,000 |
The Special Servicing Rate Increased By 25 Bps
The overall special servicing rate increased 25 bps month over month to 7.7% in September (see charts 3A and 3B). By sector, the special servicing rate rose for lodging (45 bps to 6.7%), office (45 bps to 12.3%), retail (25 bps to 10.6%), multifamily (16 bps to 4.8%), and industrial loans (10 bps to 0.4%). The overall special servicing rate remains below the 9.5% peak of September 2020.
The largest loan to move into special servicing in September 2024 is 150 East 42nd Street. The loan is secured by the borrower's ground leasehold and sub-subleasehold interests in a 1.7 million sq. ft. class A office property located at 150 East 42nd St. in Midtown, Manhattan. Occupancy at the property was 89.2% as of the June 2024 rent roll and the NCF DSC was 1.35x as of March 2024.
The loan was transferred to the special servicer on Sept. 5, 2024, due to imminent monetary default. There are ongoing discussions between the servicer and the borrower on possible extension options.
Chart 3A
Chart 3B
DQ Rates Increased For Four Sectors
By balance, the overall DQ rate increased for retail (85 bps to 6.6%; 273 loans; $7.9 billion), office (55 bps to 8.2%; 342 loans; $14.4 billion), lodging (34 bps to 5.4%; 134 loans; $5.5 billion), and multifamily loans (19 bps to 4.2%; 211 loans; $5.6 billion); and decreased for industrial loans (8 bps to 0.3%; 13 loans; $0.2 billion). Charts 4A and 4B show the historical DQ rate trend by property type.
There were 154 newly delinquent loans totaling $4.4 billion in September, led by multifamily (49 loans; $1.2 billion), retail (38 loans; $1.4 billion), office (32 loans; $1.3 billion), lodging (12 loans; $265.5 million), and industrial loans (four loans; $66.1 million).
By property type, DQ composition rates increased year over year for office (to 37.75% from 37.26%) and multifamily (to 14.74% from 6.37%) loans; and decreased for retail (to 20.77% from 28.42%), lodging (to 14.49% from 17.31%) loans, and industrial (to 0.50% from 0.54%) loans. Charts 5A and 5B show the year-over-year change in the property type composition for delinquent loans.
Chart 4A
Chart 4B
Chart 5A
Chart 5B
Table 3
Top five loans that moved out of delinquency in September 2024 | ||||
---|---|---|---|---|
Property | City | State | Property type | Outstanding balance ($) |
JPMCC 2021-NYAH Portfolio | Various | New York | Multifamily | 392,382,500 |
Santa Monica Place | Santa Monica | California | Retail | 300,000,000 |
Lafayette Centre | Washington | District of Columbia | Office | 243,000,000 |
Tucson Mall | Tucson | Arizona | Retail | 190,792,717 |
Core Office Portfolio | Various | Various | Multiple | 148,069,281 |
This report does not constitute a rating action.
Primary Credit Analyst: | Senay Dawit, New York + 1 (212) 438 0132; senay.dawit@spglobal.com |
Secondary Contacts: | Amanda Blatz, New York; amanda.blatz@spglobal.com |
Tamara A Hoffman, New York + 1 (212) 438 3365; tamara.hoffman@spglobal.com | |
Research Contact: | James M Manzi, CFA, Washington D.C. + 1 (202) 383 2028; james.manzi@spglobal.com |
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