📢Good Morning,
The CMBS market hit a post-GFC record with $58.8B issued in H1 2025, led by trophy single-asset deals like Rockefeller Center’s $3.5B refinancing. Yet this surge comes alongside mounting stress: overall CMBS delinquency climbed to 7.3%, with office loans at 11.7%, both all-time highs.
Investors are rewarding top collateral while pushing weaker assets into special servicing, underscoring a bifurcated debt market.
$58.8B H1 2025 issuance (proj. ~$120B for FY) vs. $39B in 2023 — highest since 2007.
SASB share: 74% of 2025 issuance, with 13 mega-deals >$1B.
Office delinquency: 11.7% (Aug 2025) — new record.
Overall CMBS delinquency: 7.3% (Aug) vs. ~3% in 2022.
Spreads: AAA SASB ~120 bps over Treasuries; BBB- >600 bps for office-heavy pools.
Metric | Value | Context |
|---|---|---|
Issuance H1 2025 | $58.8B | Highest post-GFC |
SASB share | 74% | Trophy-driven |
Office delinquency | 11.7% | Record high |
Overall delinquency | 7.3% | More than doubled since 2022 |
AAA SASB spread | ~120 bps | Tight pricing |
BBB- spread | >600 bps | Shut for weak credits |
Returns / Performance Trends
SASB deals offered attractive yields vs. corporate credit, pulling investors back. AAA tranches at ~6% yields outperform equivalently rated corporates (~5%).
Meanwhile, delinquent legacy loans show heavy NOI declines, especially in 2015–17 vintage office CMBS.
Lending / Capital Conditions
Banks’ retreat opened space for CMBS, now the go-to for large office or retail trophy refinancings. Risk retention reforms (5% hold) aligned originators and kept structures tighter. Extensions remain common: servicers prefer workouts to fire sales.
Transaction Activity & Investor Flows
Opportunistic investors are circling the $23B in “limbo” loans, many stuck at maturity default. Negotiated note sales and discounted payoffs are becoming channels for distressed buying.
Broader Implications
The CMBS market has split: prime collateral gets deep liquidity, weaker assets face limbo. This “K-shaped” recovery is stabilizing the broader system but leaving pain concentrated in older, troubled pools
$58.8B issued H1 2025 → securitization at 15-year high.
11.7% office delinquency → worst on record, driving overall stress.
74% SASB share → market is trophy-focused.
AAA spreads ~120 bps → investors still hungry for best-in-class paper.
$23B loans in limbo → workout pipeline fuels distress opportunity.
SASB issuance should stay robust into 2026; potential for new issuance records if Fed cuts.
Office delinquency may peak near 13–14% in late 2025.
Conduit issuance remains muted until risk appetite returns.
Note sales and discounted payoffs likely rise into 2026, giving distressed buyers entry.
Regulatory reforms proving durable; no systemic collapse expected.
Chart 1 – Issuance vs Delinquency (2007–2025)
Chart 2 – Office CMBS Delinquency by City (Aug 2025)
