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According to Moody’s, CMBS loans backed by retail properties are the worst performing asset class.
Bloomberg – CMBS loans backed by retail properties continued to have the highest cumulative loss severity among the five major CMBS property types during 2Q, at 49.4%, Moody’s analysts Keith Banhazl and Matthew Halpern write in research note.
Among the five main property types — office, retail, multifamily, industrial, and hotel — retail continued to be the worst-performing, with additional losses of $566.2m in 2Q 2017 and a cumulative loss severity of 49.4%
In 2Q, 60 loans backed by retail properties liquidated with an aggregate loss amount of $577.6m and loss severities of 62.9%, the highest quarterly loss severity among the property types.
Five loans backed by troubled malls liquidated during 2Q, with an average loss severity of 66.2%, significantly higher than the average loss severity of 59.8% for the other 55 liquidated loans backed by other retail property types.
A loan backed by an enclosed regional mall located in Long Island, New York known as The Source and securitized in CMAT 1999-C1, represented both the largest dollar loss and disposition balance among retail loans liquidated in 2Q
During 2Q, 168 overall CMBS loans liquidated with a weighted-average loss severity of 42.5%, compared with 36.1% in Q1 2017. After a dip in the previous quarter, the severity reverted closer to the cumulative weighted-average loss severity for all loans liquidated through June 30, 2017 of 42.7%
CMBS loans backed by multifamily properties had the lowest cumulative severity in 2Q, at 33.8%
NOTE: Moody’s data tracks loan losses upon liquidation and cumulative deal losses in conduit and fusion transactions in US CMBS. It reports on liquidations that took place from Jan. 1, 2000 to June 30, 2017.
This goes along with the August Moody’s report “Delinquencies among US CMBS conduit/fusion loans fall in July; Washington D.C. has highest rate among large MSAs”
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