TRD Insights: These metro areas are seeing the most CMBS loan distress

The coronavirus pandemic has thrown tens of billions of dollars in commercial-mortgage backed securities debt into special servicing, and even more loans have fallen behind on their monthly payments.

The economic impact of shutdowns and social distancing has hit some sectors far more than others, and the geographic distribution of distress has also been uneven, as a new report from Trepp shows.

The New York City metropolitan area, an early epicenter of the U.S. outbreak and home to much of the country’s priciest real estate, has unsurprisingly seen the biggest impact in terms of monetary value, with $6.8 billion in delinquent CMBS loans. Apart from countless hotels and retail properties, CMBS loans on other types of assets, like the ground under an office building and a corporate rental apartment building, have also run into hard times.

The next most impacted market is the Chicago metro area, with $2.2 billion in delinquent loans. While that’s less than half of New York’s total balance, the delinquency rate in Chicago is twice as high, with nearly 14 percent of the area’s total CMBS debt currently delinquent.

Minnesota’s Twin Cities area comes in at number three with $1.8 billion in delinquent CMBS debt, the bulk of which comes from just one loan: the $1.4 billion loan on Triple Five Group’s Mall of America, which is more than 60 days delinquent and has been transferred to special servicing.

Among top markets, Houston’s hotel sector — facing the double whammy of coronavirus and falling oil prices — has been among the hardest hit, with more than 60 percent of its hotel CMBS debt now delinquent, compared to about 40 percent in New York and less than 24 percent in Los Angeles. The city’s office sector is also struggling, with almost 14 percent of office CMBS debt in delinquency, far more than any other metropolitan area.