HOUSTON —Some 4,353 CMBS loans originated for Texas properties that carry an outstanding balance of $33.8 billion have been exposed due to the effects of Hurricane Harvey, according to the latest update from New York-based Trepp LLC. Of that total, nearly 1,100 loans come from government agency deals that have a combined outstanding balance of $12.9 billion. For loans where the property subtype is available, the majority of those government agency loans originated are for low-rise garden apartments, which would make them more likely to incur flood damage than high-rise properties, says Trepp.
Among non-agency CMBS loans, retail properties account for the biggest exposure with an outstanding balance of just under $5 billion, or 32.9 percent of the non-agency total. That is followed by multifamily (25.6 percent) and office properties (20.6 percent). Of those retail loans, there are 48 notes with a combined balance of $210 million for which the largest tenant makes up more than 25 percent of the collateral space and has a lease that ends within the next 24 months. A tenant with a lease expiring in the near-term may not find it worthwhile to stick it out for a property that has suffered severe damage, according to Trepp.
In the office sector of the non-agency CMBS data set, there are 33 loans with a balance of about $700 million for which the largest tenant makes up more than 25 percent of the space and has a lease that ends within the next 24 months. These loans were a concern before Hurricane Harvey hit and will come under more scrutiny now, Trepp believes. The large offices that are leased to energy firms looking to downsize, or that have already downsized, pose the biggest questions, says the data analytics firm.