CMBS Collateral Monthly: May 2025: Loss Severity Ticks Up to 51% YTD

Research evidence excerpt

CMBS Collateral Monthly: May 2025: Loss Severity Ticks Up to 51% YTD

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16 Jun 2026 16:00:05 ET │ 19 pages

CMBS Collateral Monthly

May 2025: Loss Severity Ticks Up to 51% YTD

CITI'S TAKE

Jeffrey Berenbaum AC

Conduit loss severity has been edging higher this year, with the median loss +1-212-816-8399

severity in 2026 reaching 51% through May from 45% seen at the end of jeffrey.s.berenbaum@citi.com

2025. Office and retail loan resolutions are still driving the increase. Loan

modifications represent a critical tool for special servicers to manage Aditi Memani

distressed assets and mitigate potential losses. Only 30% of the loans +1212-723-9356

disposed of with a loss this year had been modified. We provide conduit aditi.memani@citi.com

delinquency rates by property type, loan status, vintage, and state. We also

highlight some recent loan developments, including special servicing

transfers, delinquency status changes, and modifications.

Loan Modifications Mitigate Losses — Using loan modification to limit losses is

especially true for office and retail loans. An analysis of 2026 dispositions shows

that modified office loans realized a 43% loss severity, compared to 58% for their

unmodified counterparts. A similar trend appeared in retail, where modified loans

had a 48% loss severity, while unmodified loans registered a 56% loss.

Conduit Delinquency Rises to 8.6% — The conduit delinquency rate increased

month-over-month, rising to 8.6% in May from 8.3%. The total delinquent balance

edged up to $29.1B. Industrial sector loans deteriorated the most, with their

delinquency rate increasing by 76bp to 3.1%. Multifamily and hotel loans improved

in May, with their delinquency rates decreasing by 27bp and 14bp, respectively.