CRE Markets Hurting Despite FED Help

  • Ratings agencies are growing especially concerned about the commercial mortgage-backed securities (CMBS) market — the business side of the residential mortgage-backed securities market that touched off the 2008 global financial crisis.

  • The FED has stepped in to provide liquidity to the CMBS market, however, industry experts argue the backstop is not enough and that markets are still strained.

  • Nearly one-quarter of loans backed by U.S. hotels in CMBS were at least 30 days delinquent for June, while the delinquency rate for all property types reached 10.32%, just short of the all-time high of 10.34%, according to Trepp.

  • Meanwhile, CRE-services firms (such as CBRE, JLL, CW) will be delivering Q2 earnings and they are expected to be UGLY.

  • “During the last recession, you saw an 80 percent to 90 percent drop in real estate transactions over a two-year period,” said William Blair analyst Stephen Sheldon. “This time you’ve seen nearly the same decline in a much shorter time frame year-over-year.”

  • Cushman reported a 70 percent decline in net income in the first quarter. Declines in leasing and capital markets business were buoyed by steady income from property management. As of May, the firm had put acquisitions and mergers on hold.

#Economy #CapitalMarkets #Covid19 #RCA #TRD #CMBS

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