Investors still underestimate the wide-reaching implications of a COVID-driven commercial real estate (CRE) meltdown.
In May, the 30-plus day delinquency rate on commercial mortgage-backed securities (CMBS) leapt 481 basis points, the biggest month-over-month spike in data going back to 2009. In June, the rate jumped another 317 basis points. The delinquency rate now sits at 10.3%, matching the peak during the GFC, according to Goldman Sachs.
Yet, as grave as the headline numbers are, the granular data suggests the pain is likely to get much worse. Retail and hotels account for an outsized percentage of delinquencies, with respective rates of 18.1% and 24.3%. Offices have seen rates rise only slightly, from 1.92% in April to 2.66% in June. The same is true for multifamily properties, rising from 2.11% in June 2019 to 2.66% this June.
Given the plethora...
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