U.S. CRE CLO credit continues to outperform the broader CMBS market, although sluggish business plan execution remains the sector’s key credit concern, Fitch Ratings reported. The sector is on course for its most active year since 2021, supported by strong collective tailwinds, including rising demand for transitional bridge lending, expanding bank back-leverage facilities, deep private credit dry powder, strengthening investor appetite and new collateral managers entering the space.
“Credit resilience stems from high multifamily loan concentration (76% of Fitch’s portfolio), reinforced by active collateral management and loan modifications, including issuer buyout activity,” according to Fitch. “Where borrowers cannot secure permanent takeout financing, assets continue to rotate within and across CRE CLO platforms, with bridge-to-bridge financing giving collateral managers additional flexibility in an uncertain rate environment.”
CLO modification volume rose 68.6% as of July 2026 compared to year-end 2025. Fitch said the accelerating trend underscores borrowers’ continued reliance on extension options and performance-test waivers to manage transitional assets pending improved exit conditions. Meanwhile, delinquencies and special servicing volume both declined to below 1%.
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