Debt yields on newly originated CMBS loans have strengthened as lenders reassert underwriting discipline in a higher-rate environment, even as negative leverage remains widespread across most property types, according to a CRED iQ analysis of roughly 3,700 recent originations totaling $94.7 billion.
Across the dataset, weighted-average debt yield has risen to 10.3%, reflecting tighter credit standards in conduit and agency execution. CRED iQ notes that debt yield — calculated as net operating income divided by loan balance — remains a key underwriting metric for CMBS investors because it provides a direct measure of cash-flow cushion independent of interest rate movements.
Despite that tightening, four of six major property types — multifamily, retail, industrial and self-storage — continue to show negative leverage, where loan coupons exceed underwritten cap rates. CRED iQ's analysis indicates this means most new acquisitions are not immediately cash-flow accretive and instead rely on NOI growth or eventual refinancing relief to improve returns.
Office and hotel are the only property types showing positive leverage in the current dataset, with cap rates exceeding borrowing costs by 78 basis points and 86 basis points, respectively. Those spreads largely reflect elevated risk premiums across both sectors, particularly ongoing uncertainty around office leasing fundamentals and hotel cash flow volatility.
Interest rates on new CMBS loans are generally clustered between 5.8% and 7.33%, with office (5.8%) and multifamily (5.85%) at the low end and hotel (7.33%) at the high end.
Debt yield levels further illustrate lender discipline across asset classes. Office leads at a 15.75% balance-weighted debt yield, followed by hotels at 14.3%, reflecting lenders' demand for stronger NOI coverage in more volatile collateral types. Retail (12.51%), industrial (12.01%) and self-storage (11.88%) sit in the low-teens, while multifamily prints at 8.87%, the lowest among major property types and consistent with agency-heavy execution and tighter proceeds constraints.
Multifamily also dominates origination volume, accounting for nearly 3,000 of the 3,700 loans analyzed by CRED iQ, but posts one of the tightest negative spreads at -57 basis points between cap rates and borrowing costs. Industrial, despite strong demand fundamentals, shows a wider negative spread of -80 basis points, driven by the gap between still-strong pricing and higher all-in financing costs.
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