Banking

Real Estate Industry Alert Tracking – Issue 1 March 2021 | Kelley Drye & Warren LLP

CMBS failure rate continues to decline

Trepp’s February delinquency report found that the Trepp CMBS delinquency rate fell 78 basis points in February to 6.8%, the largest drop in the past eight months. Overall, over 93% of loans are listed as current. The percentage of loans past due between 30 and 60 days fell 16 basis points from January to 0.58%. The percentage of loans during or beyond the grace period also fell to 2.3%, down 77 basis points from January. Overall, the percentage of loans in special service continued to decline, from 9.72% to 9.60%. The most affected sectors, accommodation and commerce, show a slight improvement in terms of credits in special services.

A copy of the report can be found here.

Texas federal judge overturns CDC deportation moratorium

In a 21-page ruling, U.S. District Court Judge Barker ruled in favor of a group of property owners and managers who alleged that the Center for Disease Control (CDC) overstepped the authority of the federal government by decreeing and then by extending the federal moratorium on evictions. . Justice Barker found that the federal government did not have the power under the U.S. Constitution to order landowners not to evict specific tenants or to grant such power to the CDC. While the ruling does not affect moratoriums on evictions issued by individual states, Judge Barker noted that such warrants could also infringe on owners’ rights under state law. An appeal to the United States Court of Appeals for the 5e Circuit is planned.

Additional information can be found here.

Growth in commercial real estate prices in January

A new report from Real Capital Analytics found that commercial real estate prices continued to accelerate in January 2021, while transaction volume declined from December 2020 highs. The US National Index of All properties increased 1.2% from December 2020 and 6.9% from last year. Office prices, driven by suburban offices, rose 3.3% year over year in January. Price increases for multi-family housing were nearly 7%, but prices were still lower than posted prices in 2018. Transaction volume declined significantly in January, down 58% from year-on-year transaction volume after record activity in December, where volume increased 8% year-on-year. during the year.

Additional information can be found here and here.

U.S. shopping mall values ​​plunge during pandemic

Data compiled by Bloomberg revealed that U.S. shopping center values ​​plunged an average of 60% based on revaluations triggered by defaults, defaults or foreclosures, with a loss of $ 4 billion on 118 properties. anchored in commerce with CMBS loans. While the selling prices of the few malls sold last year fell only 1.8% from January 2020, according to data from Real Capital Analytics Inc., the modest drop is attributable to the fact that the Most of the properties sold were high quality projects. .

Additional information can be found here.

HSBC plans to reduce office space after pandemic

HSBC has announced plans to reduce its physical office space (not including its branch network) worldwide by 40% in the future. HSBC chief executive Noel Quinn acknowledged that in the aftermath of the pandemic the bank would move to a more hybrid model that would create a “more agile way of working.” Its chief financial officer, Ewan Stevenson, said the cost savings resulting from the reduction in office space would be substantial and that the bank hopes to cut costs by $ 4.5 billion by 2022.

Additional information can be found here.

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