Profimex Market Review Update – February 2, 2021
Retail and Hotels Stall CMBS Recovery
The good news is that the overall CMBS delinquency rate continuously decreased across all asset classes since June, when it peaked at 5.88%. Also, the delinquency rate today (4.45%) is far off from the rate during the global financial crisis, when it climbed to 8.53%. However, the December 2020 delinquency rates of retail and hotel assets continue to be shockingly high with 12.78% and 19.87%, respectively. While there are several loans, who could slip into delinquency at any time, DBRS Morningstar believes that delinquencies in the retail and hotel sector will continue to decrease. The reason is that the vaccine distribution will start to pick up and consumers are expected to return to shops and to begin traveling again.
NYC hotels ask mayor to stall interest payment on real estate tax debt
The Hotel Association of New York City, led by Vijay Dandapani, asked Mayor Bill de Blasio, to halt interest payments on real estate taxes until the end of the pandemic, when tourists will return to the city. Hotel occupancy continues to be below 10% and a high rate of default is to be expected. “Many hotels, if not most, were forced to escrow money for real property tax, and that’s a condition of your mortgage. And so they had the money at that time, or most did anyway. That’s gone. So, we think there’s going to be high rate of default.”, said Dandapani.