The delinquency rate among U.S. CMBS climbed meaningfully in January from December, rising almost 10% to 4.61%, Kroll Bond Rating Agency (KBRA) reported. The total delinquent and specially serviced loan rate—i.e. the distress rate as measured by KBRA across its $317.3-billion rated universe of CMBS–also jumped more than 11% to 7.39%.  

 CMBS loans totaling $3.4 billion were newly added to the distress rate this reporting period, and more than half (53.7%, $1.8 billion) stemmed from imminent or actual maturity default. The office sector represented the largest portion (74.7%, $2.5 billion) of newly distressed loans, with the sector’s distress rate climbing 233 basis points to 10.8% from 8.55% in December, driven largely by 280 Park Ave. in Manhattan and One Market Plaza in San Francisco.  

The mixed-use sector came in second, accounting for 11.3% ($385.2 million) of newly distressed loans, followed by retail at 11.1% ($376.4 million). Conversely, multifamily experienced a month-over-month decline of 59 bps in its distress rate.  

The decrease was primarily driven by the liquidation of the Veritas multifamily portfolio securing GSMS 2021-RENT, which resulted in a reported 43% loss on the original securitized balance. However, the loss includes a substantial reserve holdback that could reverse much of the losses if released, according to KBRA. 

Pictured: 280 Park Ave.

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