CMBS Distress Rate Hits Record High of 11.5%
The CRED iQ research team evaluated payment statuses reported for each loan securitized by commercial mortgage-backed securities (CMBS) financing, along with special servicing status as part of our monthly distress update.
The CRED iQ overall distress rate added 90 basis points (bps) in January, continuing the upward trend by logging its fourth straight record high of 11.5 percent. The delinquency rate ticked up from 10.6 percent in the December print. The special servicing rate added 50 bps last month and now stands at 10.3 percent, which compares to a 6.7 percent in the same period a year ago.
Following its largest overall distress rate increase of the year in December, the office segment’s overall distress rate continued to climb, albeit more modestly. The office distress rate added 50 bps to reach 17.7 percent, and office remains the most distressed property type.
The data shows the self-storage category roaring to the second position with a 14.2 percent overall distress rating (after spending most of the year below 1 percent).
However, the self-storage data is skewed by a single portfolio consisting of 16 self-storage properties in the Chelsea submarket of New York backed by a $2.08 billion single-borrower loan that was not paid off at the January 2025 maturity date, leading to a performing matured payment status. Servicer commentary indicates the first of three one-year extension options is being exercised.
Multifamily saw a 40 basis point increase to 12.9 percent, which would account for second place if the self-storage anomaly is removed from the equation. The multifamily segment was at just a 2.6 percent distress rate in January 2024.
Retail turned in a mostly flat month-over-month print at 10.8 percent — enough to hold on to third place.
Not far behind and closing fast is the hotel sector, which added another 50 bps, notching a 10.4 percent overall distress rate.
Industrial uncharacteristically added 80 bps, the largest increase among major property types. The sector’s distress rate however stands at only 1.6 percent.
When it came to payment status, January saw an increase in loans that are marked as current, rising from 13.5 percent in December to 14.7 percent as of Jan. 31..
Combining current with “late but in the grace period” and “late by less than 30 days delinquent,” this “wider current” metric regained its footing, notching 22.7 percent — an upswing of 310 basis points.
Combining performing matured with nonperforming matured, January saw a modest decrease from 62.2 percent in December to 61.7 percent in January
Analysis methodology
CRED iQ’s distress rate factors in all CMBS properties that are securitized in conduits and single-borrower large loan deal types. CRED iQ tracks Freddie Mac, Fannie Mae, Ginnie Mae and CRE CLO loan metrics in separate analyses.
CRED iQ’s distress rate aggregates the two indicators of distress — delinquency rate and specially serviced rate — yielding the distress rate. The index includes any loan with a payment status of 30-plus days delinquent or worse, any loan actively with the special servicer, and includes nonperforming and performing loans that have failed to pay off at maturity.
Mike Haas is the founder and CEO of CRED iQ.
