{"id":1004402822,"date":"2020-03-25T05:55:55","date_gmt":"2020-03-25T13:55:55","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004402822"},"modified":"2021-09-29T07:15:35","modified_gmt":"2021-09-29T15:15:35","slug":"another-9-11-for-lodging-cmbs","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/another-9-11-for-lodging-cmbs\/","title":{"rendered":"How Tough a Road for Lodging CMBS?"},"content":{"rendered":"
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Image via Needpix<\/em><\/p><\/div>\n

So far, the lodging industry has been the hardest hit by the Coronavirus outbreak and the subsequent social distancing mandates. It stands to reason, therefore, that analysts are concerned about CMBS 2.0 lodging exposure. Could this be another 9\/11 for the lodging industry? Could the impact of Coronavirus on underlying credit be worse?<\/p>\n

Guidance issued this week by Kroll Bond Ratings Agency compared recent events and their potential ramifications with the avalanche of negative consequences for the lodging industry that followed the devastating terror attacks of Sept. 11, 2001.<\/p>\n

Like 9\/11, the pain in the lodging industry is not economically driven, KBRA noted. But, unlike 9\/11, hotel companies today are also tending with government mandates for people not to travel domestically or internationally, the likely start of a recession and hundreds of thousands of new units coming online. There are 208,000 guestrooms under construction, which is close to the peak of 211,700 guestrooms in 2007. New construction is heavily weighted in New York City (10.3 percent of total inventory) and Las Vegas (5.5 percent of total inventory). These markets account for 13 percent of lodging CMBS 2.0 lodging exposure.<\/p>\n

KBRA found there is $90 billion of outstanding lodging principal balance distributed among conduits, single-borrower and large-loan transactions. They examined CMBS 2.0 lodging defaults and REVPar declines and the timing of recoveries in the aftermath of 9\/11 at both the national level and metropolitan statistical area for the 10 largest CMBS 2.0 exposures. Here are the highlights of their findings:<\/p>\n