Nearly $ 16.6 billion in commercial mortgage-backed securities loans of some sort were made in July, with the lodging and retail sectors making up the bulk of the forbearance, according to a new staircase analysis of the referral comments.
The Review found around 400 loans have been given relief, although that number is likely to increase. Almost two-thirds of the deferrals granted so far were hotel loans and 25% private customer loans, according to Trepp. Outside of these industries, which were particularly hard hit by the COVID-19 outbreak, only a few industrial, multi-family or office loans were granted for deferral.
The majority of the forbearances – nearly 250 loans – had $ 250 million or less in outstanding debt. Only 26 had an outstanding balance of $ 100 million or more.
The largest loans granted included the HIT portfolio loan of $ 652 million in Chicago, the Grande Lakes Resort loan in Orlando, Florida, of $ 597 million, and the JQH hotel portfolio- Arkansas loan of $ 508 million.
For the HIT loan, according to Trepp, it is recommended that the loan be removed from a watchlist. The deferral agreement of June 10th was carried out and the loan was transferred back to Master Servicing two days later.
For the Grande Lakes Resort loan granted as relief due to COVID-19, the agreement includes a cover letter with Marriott to change the deposit and use of branded furniture, furnishings and equipment reserves, according to Trepp.
With the JQH loan, the change includes an agreement that enables the use of reserve funds for debt service payments from May 1st and waives payments into the reserve fund from April 1st, although both accommodations are allowed until July 1st, according to Trepp.
The borrower has already been granted one of two 30-day extensions as part of the modification. During this time, the borrower has access to reserve funds to pay off debts and cover operating costs.
Trepp’s survey notes that there are likely to be more loan modifications in the near future.
“There have been hundreds, if not thousands, of loans for which a ‘forbearance application’ is being examined,” said Trepp. “We forbearably ruled these loans out, which is evidence that the list of over 400 loans is likely to grow.”
Trepp also points out that other loans may not have been counted as comments are typically posted once a month, usually when a loan is paid out. Given the fluidity of the negotiations, this means that some leniency loans were not counted on Trepp’s balance sheet.
The study also did not include any additional loans. “[I]It is likely that these Companions also received relief, so the above amounts would be higher if they were taken into account, ”the study says.