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.
All figures are in U.S. dollars unless otherwise noted.
The commentary is available at www.dbrs.com.
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