Quarterly U.S. CRE CLO Report: Q4 2024 New Issuance Takes a Breath, While Seasoned Transactions Report Minor Decrease in Delinquency That is Overshadowed by a Rising Special Servicing

In Q4 2024, commercial real estate (CRE) collateralized loan obligation (CLO) transactions issuance continued though the momentum slowed lower than highs of Q3 2024. In Q4 2024 Issuance volume totaled $1.90 billion, down from the issuance volume of $4.55 billion in Q3 2024. The final quarter had two transactions in comparison to the six from the prior quarter. Most of the collateral in the Q4 2024 transactions are multifamily properties, at 74.22% of all loans contributed to CRE CLOs, a decrease from 76.12% in the prior quarter. The remaining property types comprised industrial, lodging, retail, and mixed use.

The delinquency rate decreased to 10.69% in Q4 2024, moving down by 100 basis points (bps) from 11.70% in Q3 2024. At quarter-end December 2024, 126 loans totaling $3.38 billion were flagged as delinquent for the first time. This includes loans past their maturity dates (nonperforming matured balloon and performing matured balloon). The Q4 2024 special servicing rate increased to 7.93% from 5.57% in Q3 2024, up by 236 bps. As of the Q4 2024 reporting, the overall loan modification rate for CRE CLOs continued on an upward trend, increasing to 25.08% as of December 2024 from 22.53% in the prior quarter.