Report: Full Accounting of COVID-19 Crisis Shows Extent of Pain for Hotels, Malls

While there has been much discussion on the broad-ranging effect the coronavirus pandemic has had on global economies within such a short period, commercial real estate (CRE) market participants have been looking for meaningful data as a gauge of how much the pandemic had taken a toll on property financials in 2020.

Report Methodology

To assess the impact of the coronavirus pandemicon CRE property performance, Trepp examined servicer remittance on 13,215 CMBS loans for which fiscal year-end financials for both 2019 and 2020 were provided. Due to the time lag normally associated with the reporting of financial information in servicer data, the sample size analyzed amounts to more than 50% coverage of the outstanding private-label CMBS universe by loan count.

2020 year-over-year percentagesfor each loan were calculated based on fiscal year net operating income (NOI), net cash flow (NCF), revenue, expense, and occupancy data, and measures were taken to remove loans with annual growth changes exceeding (+/-) 200% and to account for duplicate records of complex loan structures. Key financial metrics for the resulting sample set were then aggregated according to property type and subtype, US region, MSA size, and major city/state categories.

Trepp Findings

Across the top five major property types and property subsectors, our findings on the magnitude of the impact of travel limitations, federally-imposed business closures, and other social mitigation public health policies on CRE and CMBS in 2020 were generally in line with broader market expectations. On average, overall NOI, revenue, and occupancy behind CMBS loans contracted by 10.3%, 6.9%, and 5.3%, respectively, between 2019 and 2020.

Consistent with the narratives surrounding the outsized disruption the pandemic had on lodging and retail, a more granular breakdown of the numbers does indeed show that those two hardest-hit property types posted the largest annual declines for these financial benchmarks across the board.

In 2020, average NOI and occupancy for lodging loans fell by 70.5% and 35.6%, respectively, from the year prior.

Instantly access Trepp's latest analysisto see year-over-year CMBS financial reviewof net operating income, cash flow, revenue, expense, and occupancy data analyzed by property type, ranked by city/state, and to see average occupancy levels across all major property types and MSAs.

Disclaimer: The information provided is based on information generally available to the public from sources believed to be reliable.

Public link

Please use the above public link if you want to share this noodl on another website.