CMBS delinquency rates experienced consistent month-over-month increases throughout 2024, particularly in the latter half of the year. However, the early months of 2025 have shown signs of easing, with the market appearing less stressed compared to the previous year's trend.
As Moody’s wrote, delinquency rates kept increasing monthly, fueled by high interest rates, a “significant” percentage of maturities, slowing property revenue growth, and a continuing slow recovery for office properties.
Conduit delinquencies grew from 5% in 2023 to 7.61% in 2024. Office was the major factor in most increases in overall conduit delinquency last year, but it increased by only 18 basis points in January after an average monthly increase of 50 basis points in 2024.
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Multifamily had seen large increases in delinquency rates by the end of last year. Between August 2023 and the end of 2024, conduit multifamily loans had a delinquency rate that more than doubled from 1.82%. Industrial loans increased to 0.60%, but that’s still below the maximum level of 0.74% in 2024.
Offsetting the increases in office, multifamily, and industrial were decreases in conduit hotel (down nine basis points to 8.24%), retail (down 21 basis points to 8.24%), and mixed-use and other property types (29 basis points to 7.33%).
Another area of some change is the large-loan, single-asset, single-borrower (LLSASB) segment, where rates were down 43 basis points to 7.45%. However, December had seen a 143 basis point increase, so it would take over a full percentage point to return to November’s rate.
Looking at SASB loans, the industrial rate was up to 6.59% but that was mostly the result of a single $2 billion deal. The borrower has two remaining extensions and will most likely be extended. Rates for other types all fell.
The delinquency rate for CMBS LLSASB office loans was down by 381 basis points to 8.9%, more than making up for a 200-basis-point increase in December 2024. LLSASB multifamily fell by 317 basis points to 7.6%. Retail LLSASB delinquency was down by 232 basis points. The hotel LLSASB delinquency decreased by 14 basis points to 7.5%.
Conduit CMBS loans saw maturity defaults as the majority of delinquencies decreased from 46.34% in December 2024 to 46.28% in January 2025. In 2018, only 11% of the delinquencies were by maturity. Loans that were more than 60 days delinquent were only 13.14%. For LLSASB loans, maturity defaults were 71% of all LLSASB delinquencies in January.
In January, $5.9 billion in CMBS loans were either more than 60 days delinquent or delinquent at maturity, changed from $6.9 billion in December 2024. With $640 million newly delinquent by at least 60 days, $1.4 billion previously that were more than 60 days delinquent were brought current. About $5 billion didn’t pay off at maturity, while $5.3 billion of previous maturity defaults were made current.
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