With two hurricanes following in the footsteps of last month's Charley, the uptick of CMBS delinquencies due to the first storm are expected to take longer to cure than previously anticipated, said Fitch Ratings. Florida currently has the fourth highest percentage of CMBS collateral in the country.
Fitch added that commercial property borrowers are typically required to carry insurance for wind damage (which usually has a 5% loss deductible) and property interruption. Analysts said that these deductibles are usually applied to each occurrence. This is why if a property has been affected by more than one storm, borrowers could face more burdens as a result. Additionally, many policies have reinstatement premiums in cases where limits on insurance are already paid out fully. This factor results in additional expenses for the property owner.