(Editor's Note: This report is S&P Global Ratings' monthly summary update of U.S. CMBS delinquency trends.)
Key Takeaways
- The overall U.S. CMBS delinquency rate increased 14 bps month over month to 5.5% in March.
- By balance, delinquency rates increased for multifamily (81 bps to 4.7%), retail (31 bps to 6.8%), and industrial (24 bps to 0.6%), and decreased for lodging (14 bps to 5.3%) and office (8 bps to 8.3%).
- Special servicing rates rose for lodging and multifamily, and decreased for retail, office, and industrial. Meanwhile, the share of loans that were either modified or extended increased 26 bps to 8.5%.
- Our delinquency rate does not include performing matured balloon loans, which represent 133 loans (1.9% by balance).
The Overall Delinquency Rate Increased 14 Basis Points (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 $668.3 billion as of March 2025 (a net increase of $7.3 billion month over month). The overall U.S. CMBS delinquency rate (DQ) increased 14.3 bps to 5.5% in March and increased 120 bps year over year. By dollar amount, total delinquencies were $36.61 billion, representing a net month-over-month increase of $1.3 billion (3.8%) and year-over-year increase of $9.4 billion (34.6%) (see charts 1A and 1B).
Multifamily loan delinquency rates are the highest they have been since December 2015 but are well below the all-time high of 16.0% in January 2011. Office DQ rates declined for the third consecutive month to 8.3% in March, after reaching 9.9% in December, which was near the all-time high of 10.2% recorded in July 2012.
Performing matured balloon loans represented 133 loans (1.9% by balance). Although these loans did not pay off at their maturity date, they are technically not delinquent on debt service payments and, thus, are not included in our overall delinquency rate.
Chart 1A
Chart 1B
Several Large Loans Moved Into Delinquency
The overall DQ rate increased in March with an additional 158 loans ($5.0 billion) becoming delinquent. Table 1 shows the top five newly delinquent loans by balance.
Table 1
| Top five newly delinquent loans in March 2025 | ||||
|---|---|---|---|---|
| Property | City | State | Property type | Delinquency balance ($) |
| Parkmerced | San Francisco | California | Multifamily | 955,000,000 |
| 535-545 Fifth Avenue | New York | New York | Multiple | 310,000,000 |
| Santa Monica Place | Santa Monica | California | Retail | 300,000,000 |
| Westfield Wheaton | Wheaton | Maryland | Retail | 234,617,526 |
| The Cove at Tiburon | Tiburon | California | Multifamily | 210,000,000 |
Parkmerced was the largest loan to move into delinquency in March. The loan is secured by the fee simple interest in a 3,221-unit student housing complex in San Francisco, built in 1949. The property was appraised at $2.11 billion during securitization in 2019, but a re-appraisal in July 2024 revealed a value of only $1.39 billion. The property has faced occupancy challenges since 2020, decreasing to 76% from 94%, with a recovery to 83% as of September 2023. The debt service coverage ratio (DSCR) based on net cash flow was reported at 0.47x, with projected net cash flow for 2023 at $36.1 million, which is less than half of what is needed to service the senior debt. The loan was transferred to special servicing due to low occupancy and the impending maturity in December, leading to the appointment of a receiver by the court as foreclosure proceedings were initiated. The total mortgage of $1.5 billion is divided among eight CMBS transactions, with a significant portion securitized through MRCD Mortgage Trust, 2019-PARK, while $275 million in mezzanine debt has been written down to zero. The property, owned by a group led by Maximus Real Estate Partners since 2014, was initially acquired for $1.5 billion, financed with $1.2 billion, which was refinanced in 2019. Efforts to negotiate a loan modification have failed, and a swap option intended to protect the interest rate on refinancing has been liquidated to cover debt service and potential capital expenses.
Delinquent And Modified Or Extended Loans
Modified loans represented approximately 8.5% ($56.7 billion) of the $668.3 billion total U.S. CMBS outstanding balance as of March. The share of loans that were either modified or extended increased 26 bps month over month to 8.5%. Table 2 shows the top five modified loans by balance, which are all backed by office.
By sector, lodging had the highest modification rate (16.2% by balance). However, this standout rate is more a function of the legacy modifications that were allowed soon after the onset of the COVID-19 pandemic; it is not an accurate indicator of current sector stress. Additionally, the modification rate for lodging has seen a significant decline of 8.1% since March 2024. In contrast, the modification rate for office loans has experienced the most significant increase during the same period, rising by 3.2%.
Retail loans had the second-highest modification rate (13.2%), 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 8.3% modification rate for office loans indicates that the DQ rates for this sector would be notably higher if CMBS servicers weren't granted modifications. Chart 2 shows the breakout of the DQ rate and modified loan rate by property type.
Chart 2
Willis Tower was the largest loan modified in March and has recently been transferred to special servicing due to its upcoming final maturity date of March 9, 2025. The borrower and special servicer have agreed to modify and extend the loan term for an additional three years, with the new maturity date set for March 9, 2028.
Worldwide Plaza, the second largest loan to be modified, matures on Nov. 6, 2027. Modification terms have been proposed and accepted by the borrower, allowing for the utilization of loan reserves to cover monthly operating expenses and debt service shortfalls through the secured debt, with plans to return the loan to the master servicer.
Table 2
| Top five modified loans in March 2025 | ||||
|---|---|---|---|---|
| Property | City | State | Property type | Outstanding balance ($) |
| Willis Tower | Chicago | Illinois | Office | 1,325,000,000 |
| Worldwide Plaza | New York | New York | Office | 905,000,000 |
| CBS Studio Center | Los Angeles | California | Office | 395,200,000 |
| 9800 Wilshire | Beverly Hills | California | Office | 55,000,000 |
| Chemours HQ | Wilmington | Delaware | Office | 48,524,928 |
The Special Servicing Rate Decreased By 15 Bps
The overall special servicing rate decreased 15 bps month over month to 9.0% in March (see charts 3A and 3B). By sector, the special servicing rate rose for lodging (65 bps to 7.8%) and multifamily (7 bps to 7.0%) and decreased for office (79 bps to 14.4%), retail (12 bps to 10.1%), and industrial (1 bp to 0.6%). The overall special servicing rate remains below the 9.5% peak of September 2020.
The largest loan to move into special servicing in March was Starwood Capital Group Hotel Portfolio. The loan is secured by the borrowers' fee simple leasehold and operating leasehold interests in 65 hotels, ranging from limited-service to extended-stay hotels, totaling 6,336 rooms across 21 states with 14 different franchises throughout the continental U.S. The hotel's performance is still recovering post-pandemic; the portfolio's reported year-end 2023 net operating income and net cash flow were 37% and 41% lower, respectively, than year-end 2019. As of the year-to-date period ended September 2024, the average portfolio occupancy was 63% compared to 75% in 2019, while the debt service coverage was 1.47x.
The loan was transferred to special servicing on Feb. 24, 2025, due to imminent default. The servicer is actively negotiating modification terms with the borrower.
Chart 3A
Chart 3B
DQ Rates Increased For Retail And Industrial
By balance, the overall DQ rate increased for multifamily (81 bps to 4.72%; 128 loans; $3.8 billion), retail (31 bps to 6.8%; 269 loans; $8.2 billion), and industrial (24 bps to 0.6%; 25 loans; $344.1 million), and decreased for lodging (14 bps to 5.3%; 133 loans; $5.3 billion) and office (8 bps to 8.3%; 381 loans; $14.3 billion). Charts 4A and 4B show the historical DQ rate trend by property type.
There were 158 newly delinquent loans totaling $5.0 billion in March, led by office (48 loans; $1.3 billion), retail (37 loans; $1.1 billion), multifamily (24 loans; $1.4 billion), lodging (16 loans; $358.9 million), and industrial loans (seven loans; $163.2 million).
By property type, DQ composition rates increased year over year for office (to 39.01% from 38.37%), multifamily (to 8.04% from 10.43%), and industrial (to 0.94% from 0.75%), and decreased for lodging (to 14.44% from 17.98%) and retail (to 22.34% from 22.60%). Charts 5A and 5B show the year-over-year change in the property type composition for delinquent loans.
Chart 4A
Chart 4B
Chart 5A
Chart 5B
Table 3
| Top five loans that moved out of delinquency in March 2025 | ||||
|---|---|---|---|---|
| Property | City | State | Property type | Outstanding balance ($) |
| CBS Studio Center | Los Angeles | California | Other | 395,200,000 |
| New York Hospitality Portfolio | New York | New York | Lodging | 275,000,000 |
| 180 Water | New York | New York | Multifamily | 265,000,000 |
| Park West Village | New York | New York | Multifamily | 254,000,000 |
| Amazon Phase VII | Seattle | Washington | Office | 160,000,000 |
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: | Mei Yolles, New York +1 (212) 438-0307; mei.yolles@spglobal.com |
| Tamara A Hoffman, New York + 1 (212) 438 3365; tamara.hoffman@spglobal.com | |
| Lourdes Karam, Chicago +1-312-233-7022; Lourdes.Karam@spglobal.com | |
| Research Contact: | James M Manzi, CFA, Washington D.C. + 1 (202) 383 2028; james.manzi@spglobal.com |
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