Quarterly U.S. CRE CLO Report: Q3 2024 New Issuance Hits a Two-Year High While Seasoned Transactions Continue to Show Signs of Stress

In Q3 2024, commercial real estate (CRE) collateralized loan obligation (CLO) transactions experienced a noticeable uptick in issuance at $4.55 billion, up from the issuance volume of $678.4 million in Q2 2024 and marking the highest quarterly issuance over the past two years. There were six CRE CLO transactions issued in Q3 2024 including four managed CRE CLO transactions and two static transactions. Most of the collateral in the Q3 2024 transactions are multifamily properties, at 76.1% of all loans contributed to CRE CLOs, an increase from 51.1% in the prior quarter. The remaining property types comprised industrial, lodging, office, retail, and mixed use. Total issuance year to date in 2024 totals $4.55 billion.

The delinquency rate continued to increase to 11.70% in Q3 2024, moving up by 314 basis points (bps) from 8.56% in Q2 2024. At quarter-end September 2024, 157 loans totaling $4.94 billion were flagged as delinquent for the first time. The Q3 2024 special servicing rate increased to 5.57% from 5.10% in Q2 2024, up by 47 bps. As of the Q3 2024 reporting, the overall loan modification rate for CRE CLOs continued on an upward trend, increasing to 22.53% as of September 2024 from 18.66% in the prior quarter.