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Irma-related damage could affect $27B in securitized mortgages in Florida

Of the $26.6B more than $14B is in Miami-Dade, Broward and Palm Beach counties
By Amanda Rabines | September 14, 2017 01:30PM

Empty streets in downtown Miami. (Credit: Reuters)

Some $26.6 billion in securitized commercial mortgages is potentially at risk in Florida, thanks to major damage left behind by Hurricane Irma.

An analysis from Morningstar Credit Ratings looked into 16 Florida counties where it found about 1,840 properties backing 1,471 securitized loans. The counties were declared by the Federal Emergency Management Agency to be disaster areas eligible for individual assistance.

Of the $26.6 billion, more than $14 billion is in Miami-Dade, Broward and Palm Beach counties. About $6.41 billion is concentrated in Miami-Dade, $4.32 billion in Fort Lauderdale and $3.9 billion in West Palm Beach.

Three of the largest loans secured in the tri-county area is related to Aventura Mall, where about $1.2 billion of exposure is estimated; Boca Raton Resort, with about $430 million; and Pembroke Lakes Mall, with about $260 million.

In the Florida Keys, where FEMA assessed Hurricane Irma destroyed about 25 percent of homes, there is roughly $291.4 million in CMBS exposure. The two largest loans in the area arise from the Cheeca Lodge and Spa and the Ocean Key Resort and Spa. Combined, the balance amounts to about $156.2 million, according to the report.

In its analysis, Morningstar said it does not expect a wave of loan defaults, claiming business-interruption insurance could cover any gaps in service. But flood damage proves to be a challenge for loans set to mature over the next 12 months. The damage could jeopardize the payoff of roughly $1.89 billion, according to the report, as the damage may prevent refinancing the existing loan.