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COVID-19 CMBS Update

Week three and basically, the economy is in “wait and see” mode.  While the government is doing its share to try to keep those affected by the impact of the virus afloat, the lack of vision on when we will peak, or when this will end, is daunting.  I can’t say that much has changed from week two in the lending world, but here is some information that I have compiled:

  1. For CMBS, the Master Servicers are setting up internal teams to review the immediate requests for relief.  That is positive in my opinion, as it will save Borrowers time and money if they are able to get initial relief without loans being transferred to the Special Servicer.  My only issue is - will this be enough?   Not knowing when this will be over, it will be hard for Borrowers to commit to a set relief period.

  2. The SBA will offer two loan programs and the new CARES Act will be available through banks to provide small business relief to tenants.  If you are reforecasting for your lender, you will need to disclose not only your third-party relief, but also your tenant(s), if you are looking for mortgage relief.

  3. Freddie Mac announced a 90 day forbearance period for it’s Borrowers to likely try to prevent broad scale defaults.   That said, if the Borrower accepts the arrangement, there are specific conditions and a non-negotiable forbearance agreement.

  4. We have talked about the impact on hotels over the past week, but this week several major retailers announced they would be unable to make payments on their obligations.   In the coming weeks, I anticipate we will see more retail distress announced.

Unlike 2009, the problem is known, but the future is not.   We continue to work with Borrowers of CMBS for a long-term relief solution.  Please give us a call if you would like to speak about your specific situation


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