KBRA Releases Research – CMBS Loan Performance Trends: May 2025

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the May 2025 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label CMBS in May increased to 7.4% from 7.1% in April. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) increased 85 basis points (bps) to 10.9%. Office and mixed-use sectors saw significant increases to their distress rate this month due to transfers in some single-asset single borrower (SASB) loans, which are detailed in this report.

In May, CMBS loans totaling $3.6 billion were newly added to the distress rate, of which 68% ($2.5 billion) comprised imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (55.4%, $2 billion), followed by mixed-use (29.7%, $1.1 billion), and retail (8.2%, $299 million).

Key observations of the May 2025 performance data are as follows:

• The delinquency rate increased to 7.4% ($24.5 billion) from 7.1% ($23.4 billion) in April.
• The distress rate increased to 10.9% ($35.8 billion) from 10% ($32.8 billion) last month.
• The office distress rate climbed 204 bps this month to 17.2%. The sector saw one of its highest increases in recent months as 1211 Avenue of the Americas ($1 billion in AOTA 2015-1211) was transferred to special servicing ahead of its August maturity date. In conduits, State Farm Portfolio ($323.9 million in four deals) was transferred to the special servicer for nonmonetary default. The increase in distress rate also reflects the addition of three midsize loans ranging from $103.7 million to $211 million, as well as 19 smaller loans under $50 million with an average balance of $22.8 million.
• Mixed-use’s delinquency rate shot up 445 bps mainly due to two SASB loans. JPMCC 2022-NLP Portfolio with $1 billion in JPMCC 2022-NLP became a nonperforming matured balloon and Stonemont Portfolio with $514.7 million in JPMCC 2020-NNN flipped to foreclosure.
• Among all major property types, retail showed the highest decrease in delinquency this month at -92 bps. Significant loans like Destiny USA Phase I and II ($328.8 million and $142.5 million, respectively, in JPMCC 2014-DSTY) and Carolina Place ($142.9 million in two conduits) became performing matured balloons as they are in the process of modifications but remain with the special servicer. The distress rate also saw a decrease as White Marsh Mall with $186.8 million in two conduits returned to the master servicer as an extension was granted with a maturity in May 2027.

In this report, KBRA provides observations across our $340 billion rated universe of U.S. private label CMBS including conduits, single-asset single borrower and large loan transactions.

Click here to view the report.

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About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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