NEW YORK CITY-According to a review completed by Standard & Poor’s Rating Services, approximately $574.2 million of outstanding CMBS collateral that could be directly affected if the current Department of Defense’s Base Realignment and Closure recommendations are carried out. Base closures account for $246.6 million of the total, while office lease reductions make up the remaining $327.6 million.

Of the 541 CMBS transactions that S&P currently monitors, just 58 contain some exposure to the BRAC proposal. Of these transactions, only a handful have been identified that could be subject to rating actions. This reflects the small percentage of DoD leases in any individual transaction and the dispersion of affected DoD properties across S&P rated CMBS. In total, the $574.2 million of affected CMBS represents approximately 0.2% of S&P outstanding rated CMBS.

S&P recently completed a review of the impact that BRAC recommendations could have on its rated commercial mortgage-backed securities. The BRAC proposal calls for the closure and realignment of several major military bases across the country, and also includes a list of leased office buildings that the DoD plans to vacate. Historically, 85% of the BRAC’s recommended base closures or realignments have become law.

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