Rates check
The 2-year UST added 5 bps to 4.24%, the 5-year rose 4 bps to 4.43%, and the 10-year climbed 5 bps to 4.74%. SOFR ticked up 2 bps to 3.65%, while Prime held flat at 6.75%. For CRE borrowers, the relentless grind higher in the belly and long end means permanent debt is pricing well north of 6.5% for even top-tier assets. Floating-rate execution is getting squeezed too — SOFR at 3.65% plus widening spreads pushes all-in coupons toward 7%, compressing debt yields and forcing sponsors to either bring more equity or sit on the sidelines. The 10-year’s march toward 5% (Mortgage Professional America) is the axis around which every deal’s debt service coverage ratio now turns.
The big story
The office CMBS delinquency rate has re-spiked to 12.2%, far exceeding the financial crisis peak (Wolf Street). This isn’t just another grim stat — it signals the end of extend-and-pretend. Lenders are losing patience with modification requests as maturities hit against a backdrop of 5%+ 10-year yields and stagnant office fundamentals. Forced sales and foreclosures are accelerating, which will finally reset values and create a wave of distressed-debt opportunities. Brokers and sponsors should expect bid-ask spreads to widen further in the near term as sellers capitulate. The takeaway: the clearing price for legacy office is being discovered in real time, and it’s well below where most loans were underwritten.
Worth knowing
- The Federal Reserve hiked rates for the first time since 2023, lifting the benchmark to 3.75%–4.00%, with analysts seeing more tightening ahead (HousingWire).
- Mortgage rates have officially hit 7.5%, the highest since April 2024, directly increasing debt costs for acquisitions and refinancings across all CRE sectors (Mortgage News Daily).
- Realterm and Starwood Property Trust co-originated a record $672 million IOS financing, signaling deep liquidity for niche industrial product even as broader markets tighten (Connect CRE).
- Soaring yields have stranded REITs in M&A no-man’s-land, with few portfolio transactions expected until rates stabilize (Bisnow).
- Scale Lending provided a $68 million construction loan for a New Jersey multifamily project, showing debt is still available for suburban multifamily — but terms are tightening (Commercial Observer).
One number
12.2% — The office CMBS delinquency rate, now worse than the financial crisis peak, as the extend-and-pretend era finally unravels.