CMBS Trend Watch: May 2021
6/4/2021 · by Kroll Bond Rating Agency · CMBS Performance Metrics · Research and Background Documents
CMBS private label pricing volume ended the month of May at $4.7 billion, bringing the year-to-date (YTD) issuance total to $30.6 billion. On a year-over-year (YoY) basis, volume is up 15.5% from 2020. We currently have visibility of up to 15 deals that may launch this June, including four conduits, four to six single-borrower (SB) transactions, two Freddie Mac K-Series, and as many as three commercial real estate collateralized loan obligation (CRE CLO) transactions. This edition’s Spotlight section includes a double feature: A Tale of Two Cycles, which compares and contrasts the timing between the peak and decline in the unemployment rate and CMBS delinquency rate during the pandemic and global financial crisis (GFC). It then extends this type of analysis with a focus on property type performance, reviewing the trajectory between rents and delinquencies during these two periods. The second Spotlight, Deadline Approaches for New York City Gas Emissions Adjustments, focuses on New York City’s Local Law 97 (part of the Climate Mobilization Act (CMA) which requires that commercial buildings exceeding 25,000 sf adhere to strict carbon emissions rules beginning in 2024. Building owners in New York City can qualify for an adjustment to the building’s annual emissions if they make an application by June 30, 2021. In May, KBRA published pre-sales for five deals ($3.3 billion) including two conduits ($2 billion), one SB transaction ($352 million), one small balance commercial transaction ($264.5 million), and one CRE CLO ($686.4 million). May’s surveillance activity included rating actions on 379 classes. There were 253 KBRA Loans of Concern (K-LOCs) identified during the month. There were also 12 KBRA Performance Outlook (KPO) changes, including 10 to Underperform from Perform and two to Perform from Underperform.