“We expected a strong year of European CMBS issuance in 2025, but the first quarter saw the highest volume since the global financial crisis,” said Benjamin Bouchet, a senior director in Scope’s structured finance team, citing three industrial and logistics transactions, two granular RMBS-like deals and a mixed-use deal for EUR 3.3bn.

“Even so, refinancing risk for certain securitised loans maturing in 2025 is still elevated,” Bouchet cautioned, “while other loans have been subject to liability management or other amendments, as borrowers confront the dual challenges of lower asset values and relatively compressed debt yields.”

Loans facing high or very high refinancing risk include the Squaire loan of Taurus 2021-3 DEU, and the Salus loan of ELoC No. 33 DAC.

Two loans have been extended (the Loonie loan of Taurus 2020-1 NL, and the senior loan of Taurus 2017-1 IT) while two have repaid (the Sellar and Viridis loans of Starz 2021-1 and ELoC 38). The Salus and Haus loans of ELoC 33 and EloC 39 are in the process of being extended.

Office, logistics, retail to be most impacted by US tariffs

When it comes to the impact of US tariffs, we do not expect the shift of manufacturing to the US to play out. Re-shoring takes time, and with the next US presidential election less than four years away, that shift becomes more difficult.

“The immediate impact on goods orders will reduce demand for logistics and industrial space, so these segments will likely be the most affected in the short term,” Bouchet said. “Timing also plays a role: comparing the closing vacancy rates and debt yields of securitised industrial and logistics loans from the last five years, vacancy rates are at their highest while yields are close to their lows.”

Pre- 2023 vintages have benefited from rent indexation, such that while vacancies have gone up, debt yields have increased in line with consumer price inflation.

Retail will likely also be among the most affected in the short term although if inflation eases, retail could benefit from any shifts in consumer spending habits.

“The current market volatility backdrop is likely to affect the recent trend of tightening weighted-average note margins (WANM) of CMBS which had been tightening from their 2023 wides,” Bouchet said. The latest offered WANM were 2.50% for UK Logistics 2025-1 and 1.77% for Taurus 2025-1 EU, down respectively from the 3.23% and 3.19% peaks in the UK and continental Europe seen in the third quarter of 2023 once the market re-opened.

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