Coronavirus Puts Pressure on $4.6 Billion of Maturing CMBS Loans Backed by Regional Malls



The ongoing Coronavirus Disease (COVID-19) pandemic is affecting every facet of the U.S. economy and commercial real estate is no exception. The possibility that stores will remain closed for a longer period of time is becoming more likely, which pressures about $4.6 billion in regional mall loans packaged in commercial mortgage-backed security (CMBS) transactions that are scheduled to mature through 2021. DBRS Morningstar analyzed these near-term maturities and identified some key characteristics to evaluate the likelihood of either a successful refinance or short- to medium-term extension that could facilitate takeout financing down the road. Sponsor strength and willingness to invest have historically played a critical role in mall performance in general, and we expect those trends to continue for the maturing CMBS mall loans coming due in the next few years. Overall, borrowers are more likely to invest capital in more stable malls with more predictable long-term prospects for success.