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Collateralized loan obligation issuance tied to commercial real estate so far this year is on pace to trounce that seen in 2024.
Roughly $7.4B in commercial property-backed CLOs had been issued as of March 14, a 374% increase compared to the same period in 2024, Commercial Observer reported, citing Morningstar data. In all of 2024, just $8.7B in the same type of loan packages were issued.
New CLOs announced this month by Blackstone Mortgage Trust and TPG Real Estate Finance Trust indicate the trend is likely to continue as debt markets thaw.
BXMT announced it was launching its first CLO since 2021, a $1B vehicle backed by 90 commercial buildings, and TPG priced a $1.1B CLO.
Securities backed by CRE loans are generally having a good 2025. A March 18 alert published by the CRE Finance Council pointed to five CMBS and CLO deals priced in the week of March 10 totaling $3.8B. The transactions brought total CMBS and CRE CLO issuance in 2025 up to $40.1B, a 114% increase over 2024’s mid-March total of $18.7B.
The last couple of years of CLO news has largely been dominated by stories of distress, as these typically floating-rate loans were hard-hit by the Federal Reserve's interest rate hikes. The distress rate for loans bundled into CRE CLOs eclipsed 10% at the end of March 2024 as opposed to 1.7% in July 2023, Bisnow reported last year.
But as the Fed has thus far paused on interest rate increases, lenders have “seized on better sentiment and thinning risk premiums to issue several new deals,” Bloomberg reported earlier this month.
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