CRE CLO Distress Rate Drops 230 Basis Points in June

The commercial real estate collateralized loan obligation (CRE CLO) market is experiencing a fluctuating 2025, with distress and delinquency rates reflecting the challenges of a shifting economic landscape. 

According to CRED iQ’s June 2025 CRE CLO Distress Report, the distress rate — encompassing loans 30-plus days delinquent, past maturity or in special servicing — dropped significantly by 230 basis points (bps) to 10.9 percent from 13.2 percent in May. This follows a volatile pattern, with an 80 bps rise in May and reductions in three of the past four months, leaving investors questioning the market’s long-term trajectory. 

Delinquency rates, a critical indicator, fell 260 bps to 8.4 percent in June, while the special servicing rate declined 40 bps to 6.7 percent. These improvements are underpinned by a surge in current loans, with 20.9 percent ($1.4 billion) of CRE CLO loans current, up 660 bps from $979.3 million in May. 

However, 59.3 percent of loans have surpassed their maturity dates, with 26.5 percent classified as “performing matured” (up from 14.4 percent) and 32.8 percent as “nonperforming matured” (down from 50 percent). Pre-maturity delinquencies also eased to 17.7 percent from 19.1 percent. 

This volatility stems from loans originated in 2021 and 2022, when low interest rates and high valuations fueled aggressive lending. These floating-rate, three-year loans are now hitting maturity walls in a high rate environment, complicating refinancing. 

Borrowers are increasingly relying on extension options or month-to-month arrangements to avoid default, as seen in the case of the Harmon at 370 apartments in Las Vegas. The $91.4 million multifamily loan on the Harmon at 370, with a $12.9 million future funding commitment, transitioned to performing matured status in June 2025 due to failure to pay off at maturity. 

Historical data from CRED iQ highlights the broader trend. Distress rates climbed from 8.6 percent in January 2024 to 15.1 percent in January 2025, driven by maturing loans and rising rates. 

For investors and lenders, the CRE CLO market’s seesaw trends underscore the need for vigilance. Platforms like CRED iQ provide critical insights into loan performance, helping stakeholders navigate risks and seize opportunities in this resilient yet volatile market.

Mike Haas is the founder and CEO of CRED iQ.