Quarterly U.S. CRE CLO Report: Q2 2022

Sharply widening spreads, rising interest rates, and global macroeconomic disruptions related to Russia's invasion of Ukraine have slowed the pace of commercial real estate collateralized loan obligation (CRE CLO) issuance. Q2 2022 issuance of $8.7 billion was down a staggering -35.5% from Q2 2021 issuance of $13.5 billion. However, a strong Q1 2022 has assuaged the aggregate mid-year figures, which posted only a -4.2% decline from the first half of 2021. Multifamily collateral continued to dominate in transactions at 80.1% of all loans contributed into CRE CLOs, which was also an increase from 75.0% the prior quarter. The summer lull has come at a convenient time, allowing issuers to regroup after the volatile past several months and look ahead to the later part of Q3 2022 and into the end of the year, when volume is expected to rebound. The delinquency rate tumbled 88 basis points to 1.18% in Q1 2022 after rising above 2% in December 2021 for the first time since March 2021, while the special servicing rate has remained subdued at 0.37% as of Q2 2022, not surpassing 0.5% since May 2021.