KBRA Says CMBS Ended 2024 on High Note
(Illustration courtesy of KBRA)
KBRA, New York, reported commercial mortgage-backed securities ended the year on a high note, as issuance exceeded $100 billion in 2024—a level experienced only once since the global financial crisis.
Moreover, 2024’s $104.1 billion in issuance marks a 164% year-over-year increase. Commercial real estate collateralized loan obligations also saw an uptick in issuance, ending the year at $8.7 billion, up 29.9% from a year before.
“The momentum is continuing in 2025, and based on our current visibility, January could see up to 17 rated deals including eight single-borrower, five conduits, three CRE CLO, and one Freddie Mac (Agency),” KBRA’s Trend Watch (subscription) for December 2024 said.
KBRA published pre-sales for five deals ($4.4 billion) in December, including three conduits ($2.6 billion), one SB ($615 million) and one Agency ($1.2 billion). December’s surveillance activity included rating reviews of 521 securities issued in connection with 41 transactions. Of the 521 ratings, 464 were affirmed, 53 were downgraded, and four were upgraded. In addition, 22 ratings were placed on Watch Downgrade across three deals. The activity was effectuated across 41 transactions including 28 conduits, eight SBs, three Agencies, and two CRE CLO transactions.
The report also reviews the rating transitions that occurred in 2024. KBRA-rated U.S. CRE securitizations—encompassing traditional CMBS (conduits, SB, large loan (LL)), Freddie Mac K- Series, CRE CLO, and single-family rental—experienced record high downgrades in 2024. “The downgrades were predominantly concentrated in conduit and SB transactions at non-investment grade and low IG levels, while other sectors and high IG ratings continued to exhibit greater stability,” KBRA said. “The continued climb in the CMBS distress rate, which increased 260 bps over the year, contributed to the downgrades.”
The CMBS distress rate, including both delinquent loans and loans that are current but with a special servicer, finished 2024 at 9.3%, up from 6.7% the year prior, KBRA noted.
