Trepp, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets has released its latest research examining how the CRE and CMBS sectors were impacted by the Great Financial Crisis and comparing the disruption to what we are seeing amid the coronavirus crisis. Instantly download the full report here: https://info.trepp.com/gfc-vs-covid-cre-cmbs-report-october-2020-pr.
With the devastating impact and lessons learned from the 2007-2009 economic downturn still fresh on the minds of Wall Street, the current COVID-19 market crisis has drawn a fair amount of comparisons to the Great Financial Crisis (GFC).
In this report, Trepp analyzes delinquencies, spreads, losses, cumulative appraisal reduction amounts (ARA), and new structural and regulatory enhancements from the Great Financial Crisis and compares to the current crisis caused by the pandemic.
“For the CRE and CMBS sectors, the COVID crisis has had a broad-ranging disturbance and has accelerated existing trends in an increasingly digitalized world, such as the shift away from brick-and-mortar retail spurred by e-commerce growth, while also reversing other industry trends, including a flight to less densely populated suburban areas,” said Catherine Liu, Associate Research Manager.
“The current market disruption has forced property owners to repurpose or find creative uses for space in malls and hotels that are expected to remain vacant for now to adapt to a changing and unpredictable industry landscape,” Liu says.
During the GFC, the distress took a notably longer time to play out as CMBS delinquencies and special servicing rates didn’t reach their peak of 10.34% and 13.36% until mid-2012, several years after the start of the turmoil in 2008.
By comparison, due to a near-complete shutdown of parts of the economy earlier this year, lodging and retail became the two property segments that were immediately hit hard by mitigation policies preventing travel and large social gatherings. This culminated in the fastest rise in delinquency rates we’ve seen in CMBS history, with 30+ day delinquency rates hitting a near all-time high of 10.32% by June 2020.
To instantly access the complete report to see the Trepp analysis, click here: https://info.trepp.com/gfc-vs-covid-cre-cmbs-report-october-2020-pr
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