CRE CLO Issuance Surges to 2025 High

CRE CLO Issuance Rebounds

Trepp reports that the CRE CLO market staged a decisive comeback in 2025, with $30.6B in new issuance, marking a significant recovery from recent years. Multifamily led this surge, while office exposure reached historic lows, reflecting changing investor and lender sentiment.

Trend Toward Multifamily

Multifamily properties made up 70% ($21.5B) of overall CRE CLO issuance in 2025. In contrast, office assets contributed just over 1%, a 94% drop by volume since 2021. Issuers and investors have demonstrated a clear preference for transitional multifamily deals with stable income potential over the typical three-year hold.

Stricter Underwriting Sets the Tone

Despite the rise in CRE CLO activity, 2025 saw more disciplined underwriting. Median loan-to-value ratios dropped from 66.3% in 2021 to 62.25% in 2025, and debt yields increased to nearly 10%. The gap between note and cap rates narrowed, signaling less reliance on future upside and a renewed focus on in-place cash flow. Median note rates rose to 6.00%, but the spread to benchmarks tightened, compressing credit spreads for lenders.

What’s Next

The 2025 CRE CLO cycle featured tighter credit standards and strong issuance volume. These trends set the stage for a more resilient market heading into 2026. Multifamily remained the preferred asset class throughout the year. However, some market watchers see signs that office lending could return in 2026. Lenders continue to focus on risk management and conservative deal sizing. The market also shows growing adaptability to shifting trends across commercial real estate sectors. The uptick in issuance was supported by a broader rebound in the CLO space, which gained momentum throughout the year.