Tag Archives: CMBS

Mall and Hotel Loans Are Blowing up Commercial Mortgage-Backed Securities, by Wolf Richter

Posted on July 5, 2020 | 1 comment

The debt implosion is just getting started, but in the commercial mortgage-backed securities market it’s picking up steam. From Wolf Richter at wolfstreet.com:

CMBS delinquency rates for retail properties spiked to 18% and for hotel properties to 24%.

he delinquency rate for Commercial Mortgage Backed Securities (CMBS) spiked by 317 basis points to 10.3% in June, after having spiked by 481 basis points in May, which had been the largest month-to-month spike in the data going back to 2009, according to Trepp, which tracks securitized mortgages for institutional clients.

Another 4.1% of the underlying loans missed the June payment deadline. Because they’re not yet 30 days past-due – they’re marked in “grace” period or “beyond grace” period – they’re not yet included in the delinquent pile. A loan that is in the “grace” period or in the “beyond grace” period could revert to “current” in July without a payment being made, if the borrower enters into a forbearance agreement with the loan servicer. If the borrower fails to obtain a forbearance agreement, the loan will be added to the pile of 30-plus days delinquent loans:

Trepp suggested that this still might get a little worse, but more slowly, and not much worse. “So perhaps we have reached terminal delinquency velocity,” as the report put it, where “most of the borrowers that felt the need for debt service relief have requested it.”

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Posted in Banking, Business, Collapse, Debt, Economy, Financial markets

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Post-Lockdown New Normal: Many Brick & Mortar Stores Will Not Reopen, CMBS will Default, Mess to Ensue, by Wolf Richter

Posted on March 31, 2020 | 1 comment

The coronavirus will be the end of many brick and mortar stores and their jobs. From Wolf Richter at wolfstreet.com:

Neither the Fed nor the Treasury can bail out brick-and-mortar retailers.

Macy’s announced today that it would lay off “the majority” of its 123,000 employees after it had closed all its Macy’s, Bloomingdale’s and Bluemercury stores on March 18. Even before the lockdowns, its headcount was already down 17% from four years ago, in line with the decline of its brick-and-mortar operations. It said these stores would “remain closed until we have clear line of sight on when it is safe to reopen.”

Whenever that may be. But “at least through May,” the furloughed employees who were already enrolled in its health benefits program “will continue to receive coverage with the company covering 100% of the premium.” And it said, “We expect to bring colleagues back on a staggered basis as business resumes.” That is, if business at these brick-and-mortar stores resumes.

Department stores have been on a 20-year downward spiral that has ended for many of them in bankruptcy court where they got dismembered and sold off in pieces. The survivors, which have been shuttering their brick-and-mortar stores for years, are now getting hit by the lockdowns.

The chart depicts the brick-and-mortar business that Macy’s, Nordstrom, Kohl’s, JCPenney, Neiman Marcus, Sears, Bon-Ton Stores, Barney’s and others are in – or were in. Over the past 20 years, department store revenues declined by 43%. And now they’re getting whacked for good by the lockdowns. That declining line of revenues is going to make a 90-degree downward kink in Q1, Q2 and Q3, to violate the WOLF STREET beer-bug dictum that “Nothing Goes to Heck in a Straight Line”:

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Posted in Business, Collapse, Economy

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