So far in July, $12B of CMBS loans have become newly delinquent, according to credit rating agency KBRA, up 34 basis points from June to a new rate of 3.93%, Reuters reports.

Including those loans entering special servicing in July, the rate of troubled securitized loans is now 6.44%, up for the fourth month in a row, the agency reported.

Office-associated loans accounted for 35% of those either delinquent or newly entering special servicing, totaling $898.4M. Retail-associated loans totaled $683.4M, or 26.4%.

The total special servicing balance on multiloan commercial mortgage-backed securities was up by $830.7M during July to a total of $14B. That represents the highest spike in special servicing since August 2020, according to KBRA.

The recent upward movement in delinquencies may represent only a fraction of the troubles to come, especially in the office sector, as vacancies are persistently high and valuations fall. Other property types are facing downward pressure as well, especially in the overbuilt retail sector, but no sector is completely immune.

"Property owners are facing higher vacancy, reduced net operating income, falling prices and rising capitalization rates," Brian Lane, Wells Fargo Investment Institute's lead analyst for private credit, wrote recently, as reported by Morningstar.

"While valuations have started to decline in most property types, there is likely more downside," Lane wrote.

Lane further characterized the $1T in CRE loans due by the end of 2024 as a “wall of worry.”