Quarterly U.S. CRE CLO Report: Q1 2024 New Issuance Remains Dormant While Seasoned Transactions Continue to Show Signs of Stress

There were two commercial real estate (CRE) collateralized loan obligations (CLO) transactions in Q1 2024. This quarter’s deals—MF1 2024-FL14 and GSTNE 2024-HC3 —totaled $1.55 billion, nearly the same as the Q4 2023 issuance of $1.6 billion. Both transactions are managed. The MF1 2024-FL14 transaction primarily comprised multifamily loans while the GSTNE 2024-HC3 transaction consisted primarily of senior housing properties (skilled nursing, assisted living, and memory care).

The delinquency rate continued to tick higher to 7.45%, moving up by 127 basis points (bps) from Q4 2023. At quarter-end March 2024, 119 loans totaling $3.74 billion were flagged as delinquent for the first time. This includes loans past their maturity dates (non-performing matured balloon and performing matured balloon). The Q1 2024 special servicing rate increased to 4.32% from 3.19%, up by 113 bps from Q4 2023. As of the Q1 2024 reporting, the overall loan modification rate for CRE CLOs continued on an upward trend, increasing from 13.08% last quarter to 15.21% as of March 2024.