Podcast Center
Video Center
Webcasts
Resource Center
Events
September 12, 2017 at 06:16 AM
A pair of back-to-back hurricanes in the space of a week may cause a near-term rise in CMBS delinquencies, according to Fitch Ratings and S&P Global Ratings. The exposure of billions of dollars in securitized commercial mortgages to the effects of Hurricanes Harvey and Irma comes as maturity performance is largely in line with expectations and the delinquency rate continues to decline.
Exactly how much property has been stricken by flooding, wind damage and other effects of Harvey and Irma isn’t yet clear. Fitch sees Texas Gulf Coast exposure of up to $10.4 billion of CMBS, and as of Monday had not yet released an estimate for the Southeastern states hit by Irma.
S&P has identified 288 loans backing S&P-rated deals with exposure to Harvey, totaling $5.2 billion. Of these loans, 95% are performing. The ratings agency’s initial estimate of S&P-rated collateral exposed to Irma in Florida totals $11.2 billion, with 70 deals representing over 10% of this exposure.
Morningstar Credit Ratings notes that although the Federal Emergency Management Agency hasn’t yet posted a formal disaster declaration in the aftermath of Irma, Morningstar’s initial analysis encompasses as much as $68 billion of CMBS exposure across four states, with Florida accounting for nearly $39 billion of the total. How much of that tally is actually located in areas that were affected by Irma has not been determined; however, the size and magnitude of the storm certainly are factors.
Ironically, the largest metro area in terms of volume of CMBS exposure isn’t in Florida. It’s the Atlanta area, which Morningstar says accounts for $15.3 billion of the $19.38 billion of at-risk CMBS in the state of Georgia. Among Florida metro areas, Orlando edges out Miami for CMBS exposure, with unpaid balances of $6.46 billion and $6.41 billion, respectively.
