CHICAGO—Chicago-based DBRS, a financial consultant, recently studied how hurricanes impact commercial mortgage-backed security loss and default rates. One conclusion was that, with the “additional stressor of Harvey, the Houston CRE market could be in a particularly tough situation given the existing challenges in a weakened economy resulting from a stagnant energy sector.” The results can be found on its ratings and surveillance platform, IReports.

DBRS also explored the historical effects of major US disasters on CMBS performance. It examined the default rate and associated losses during the periods following Hurricane Katrina, which hit New Orleans in 2005, and Superstorm Sandy, which hit the upper Atlantic coast in 2012.

The firm chose the two states most affected by Katrina – LA and MS – and the three states most affected by Sandy – CT, NJ and NY – to analyze. Based on the data, DBRS found a relatively limited impact on the performance of loans secured by properties in Sandy's path but a significant increase in delinquency and default rates for those properties securing debt in Katrina's path.