DBRS Morningstar Releases Commentary on How U.S. Conduit Hotel Loans Are More Vulnerable Than Their Single-Borrower Counterparts as the Coronavirus Spreads

DBRS, Inc. (DBRS Morningstar) released a commentary identifying some $2.58 billion in securitized U.S. commercial mortgage conduit hotel loans that have elevated risk because of the potential for decreased revenue as the Coronavirus Disease (COVID-19) spreads. Depending on how far and long the outbreak runs, this could lead to a 25-basis-point uptick in the commercial mortgage-backed securities (CMBS) overall delinquency rate to 1.38% from February's 1.13% if these loans were to default. Unlike the single-asset/single-borrower universe, which we believe will hold up well to a potential 20% decline in net cash flow, the nearly $49 billion in conduit hotel loans could see greater repercussions because of intense competition and higher leverage with lower debt service coverage ratios.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The commentary is available at www.dbrs.com.

For more information on CMBS, visit www.dbrs.com or contact us at info@dbrs.com.

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