New Trepp Tool Shows Where COVID-19 Ripped Open CMBS Exposure

As COVID-19 rages across the country, commercial mortgage-backed securities are feeling feverish. But where are the ecases of the pandemic’s impact on these financial instruments most severe?

The new COVID-19 CMBS Exposure Map from data, analytics, and technology company Trepp breaks down CMBS balances by state, region and property type to help evaluate exposure. The map’s “constantly updated data” comes from Trepp and Johns Hopkins University, according to Trepp.

“If you’re currently invested in a specific property type or curious about a region’s CMBS exposure to an asset class, this map can act as a guide,” according to Trepp. “COVID-19 has given new meaning to this data and now investors can use it as forecasting tool – forming estimates on what property types will see the largest rise in delinquency rates.”

The map’s corresponding dashboard includes two charts that provide an overview of CMBS trends throughout the pandemic. One is the CMBS Delinquency Rate, which allows users to analyze up-to-date measurements of delinquency rate by property type across the US. The second graph shows CMBS loans that qualify as “in grace period” or “beyond grace period” in servicer data.

“While record of this data have always existed, the number was usually smaller in size and usually reflected investors whose payments were slightly late or ‘still in the mail,’” according to Trepp.

Included in Trepp’s announcement is an analysis of CMBS exposure related to the pandemic, looking at the 10 states with the highest number of confirmed coronavirus cases and the 10 states with the lowest. “Of the ten states with the highest number of confirmed coronavirus cases, six were also within the top-ten for states with the highest CMBS exposure,” Trepp says.

As the coronavirus outbreak tore through the economy, CMBS, like virtually every other corner of commercial real estate, ground to a near halt. Thousands of borrowers with loans tied to CMBS have sought relief from their obligations. Retailers, already struggling to find footing in the digital economy, have been particularly hard hit, with their rate of loan defaults rapidly rising.

Some players, however, are finding opportunities amid the downturn. “They basically feel like the world has absorbed the shock we’ve seen so far,” Nathan Whigham, president of EN Capital, said in late April.

The recovery of the CRE business as a whole is expected to trail the economic rebound, depending on the sector.

“It will take several years for vacancy rates to fall back to their pre-crisis levels,” said Richard Barkham, global chief economist and head of Americas Research.