KBRA Releases Research – KBRA Examines CMBS GSA Risk Amid Government Cuts

KBRA releases research analyzing the exposure of General Services Administration (GSA) leases for the broader CMBS and commercial real estate collateralized loan obligation (CRE CLO) universe and KBRA-rated transactions. The Trump administration has proposed or implemented executive actions focused on headcount reductions and real estate downsizing by various government agencies and the GSA. These actions will have potentially negative, but still uncertain impacts, on CMBS and commercial real estate collateralized loan obligations (CRE CLO) with GSA leases, which represent $28.7 billion of the $350.6 billion of principal balance outstanding as of February 18, 2025.

According to the December 2024 GSA inventory, the broader universe of GSA leases totals 173.6 million square feet (sf) across 6,483 buildings and 7,535 leases, most of which is office space. KBRA utilized Trepp, KBRA Credit profile (KCP), and internal data to determine its exposure to such leases for the broader CMBS and CRE CLO universe and KBRA-rated transactions. The findings for KBRA-rated CMBS and CRE CLO transactions were as follows:

• Approximately 13.8 million sf of GSA leases on properties securing 201 loans with a combined outstanding loan balance of $15.6 billion, serving as collateral in 195 of the 513 KBRA rated outstanding transactions.
• The exposure in the 195 transactions averaged 15.2% by loan balance in which GSA leases held an average of 17.8% of the respective loan collateral sf.
• Of the 201 loans, 29—totaling $1 billion in loan balance—had at least 50% of their collateral sf leased to the GSA.
• Of the 13.8 million sf of GSA leases, 16.8% expires by year-end 2026, with 46% set to expire within the next five years.
• The Washington, D.C. metro area has the largest GSA-leased space by metropolitan statistical area, totaling 6.2 million sf (primarily office), or about 45% of the total GSA leased space.

Click here to view the report.

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About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1008169

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