Office loans posted the weakest maturity outcomes among major property types in the first quarter of 2026, Kroll Bond Rating Agency (KBRA) reported. Of the $2.21 billion in non-defeased conduit CMBS office loans that matured, 68% failed to pay off on time, highlighting ongoing office market distress. Conversely, KBRA reported, “our findings suggest that markets remain liquid for higher quality properties.”
Among office loans that paid off at maturity in Q1 2026, there were weighted average (WA) metrics of 96% occupancy, a debt service coverage ratio (DSCR) of 1.84 and a debt yield (DY) of 11%, reported KBRA. Although these metrics supported stronger maturity outcomes, they still trailed the credit profile of newly securitized debt.
In contrast, office loans that failed to pay off at maturity exhibited materially weaker credit profiles. These loans carried a WA DSCR of 1.26, DY of 7%, and substantially lower occupancy of 66%. “We view these loans as significantly overleveraged, with an average KBRA loan-to-value (KLTV) of 170% based on our proprietary collateral values,” KBRA reported.
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