Non-Agency CMBS Issuance Closes Out Impressive 1st Half
Steve Baumgartner, Jul 2025 - 4 min read 
Non-Agency CMBS Market Overview
Strong June performance catapulted June 2025 CMBS issuance to the biggest first half since the pre-financial crisis peak in 2007. This performance becomes even more impressive given significant distractions along the way. These spanned from rapidly shifting policies from Washington as well as continued global unrest, including escalating conflict between Israel and Iran.
June’s robust $7.7 billion issuance brought total first-half volume to $59.3 billion. According to Commercial Mortgage Alert, this represents a commanding surge of over 28% more than 2024’s $46.3 billion. This milestone underscores the market’s remarkable momentum and resilience. Specifically, it sustains exceptional growth despite persistent headwinds from global instability and policy uncertainty.
Source: Commercial Mortgage Alert, Morningstar Credit
Source: Commercial Mortgage Alert, Morningstar Credit
Deal Composition Analysis
Single Asset Single Borrower (SASB)
SASB deals continued their market dominance in June, with 12 of the 14 deals that priced. These accounted for $6.4 billion of the $7.7 billion issued in the month. This extends the established trend. Data from Morningstar Credit shows SASB now represents approximately 83% of June volume. Furthermore, it maintains its commanding year-to-date share of over 70% of total issuance. This surpasses even 2024’s substantial two-thirds market share. The sustained preference underscores investors’ appetite for concentrated exposure to high-quality, large-scale commercial real estate assets.
Conduit Deals
June saw 2 conduit deals totaling $1.25 billion, with individual transaction sizes of $698 million and $556 million. Both consisted of 5-year loans. While the larger deal represents a return to a more reasonable size, the smaller offering continues the troubling pattern of diminished deal sizes. This pattern has plagued the conduit market. The $556 million transaction echoes May’s concerning trend. Issuers still struggle to achieve consistent, substantial transaction scales. The average deal size of $625 million masks this underlying inconsistency. Consequently, this suggests that loan aggregation challenges persist across the conduit space.
Source: Commercial Mortgage Alert, Morningstar Credit
CRE CLO Market
CRE CLO activity moderated in June with a single managed pool pricing for $925 million. Specifically, this represents a notable decline from May’s exceptional $4.9 billion across 5 transactions.
Despite the quieter month, the total 2025 CRE CLO issuance reached $17.3 billion. Analysis from Trepp indicates this substantially exceeds the combined volumes of 2023 and 2024. Nevertheless, the June slowdown reflects timing considerations rather than weakening fundamentals. Moreover, market participants report a robust forward pipeline. Therefore, this suggests renewed activity in the coming months.
Source: Commercial Mortgage Alert, Morningstar Credit
Market Analysis and Outlook
Credit and Spread Environment
The CMBS market continues to navigate a complex credit landscape. Specifically, June 2025 CMBS issuance delivered strong volumes. These occurred alongside some property type-specific yet persistent underlying credit pressures.
Moreover, CMBS spreads have exhibited some minor volatility while maintaining their general tightening trend. This reflects continued investor confidence. Furthermore, the market’s relative value proposition versus corporate credit remains attractive. Consequently, this supports sustained investor appetite.
Sustained Market Momentum
June’s performance validates the resilience the market demonstrated in May’s recovery from April’s “Liberation Day” disruption. Specifically, the market’s ability to deliver another strong month helped achieve the best first half since 2007. Therefore, this confirms that May’s recovery was not merely a temporary rebound. Instead, it indicates fundamental market strength.
Forward-Looking Considerations
The first half’s exceptional performance positions the market favorably for the remainder of 2025. However, several key dynamics warrant monitoring:
Positive Drivers:
- Robust forward-looking pipelines support strong issuance expectations
- Strong investor appetite for SASB deals provides a clear path for execution for high-quality assets with strong sponsors
- Relative value to other asset classes and corporates maintains investor interest
Risk Factors:
- Persistent policy uncertainty and geopolitical tensions
- Property type and geographic location-driven performance issues will continue to weigh on seasoned loan performance
- Higher interest rates will continue to pressure maturing loans
Conclusion
June 2025 CMBS issuance delivered a strong finish to an exceptional first half. This reinforces the CMBS market’s place as a resilient and adaptable financing mechanism. With 2025 already substantially outpacing 2024 performance, the market appears well-positioned for what could prove to be the strongest post-GFC year for transaction volumes. This assumes credit concerns remain manageable and policy volatility subsides.
