Trepp: CMBS loan exposure to Harvey near $30B

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Commercial mortgage securitizations have approximately $30 billion in exposure to Houston-area and Gulf Coast Texas properties hit by Hurricane Harvey, Trepp reported Tuesday.

Any signs of moving bond spreads or forced sell-offs from existing deals have yet to emerge, but the commercial mortgage research firm said “that could be coming down the road once everyone has a better idea of exactly what areas were hit the hardest.”

Trepp analyzed 54 disaster-area counties released by the Texas governor’s office, coming up with a list of 2,200 loans with a balance of $29.6 billion. Trepp did not include loans that were backed by more than 10 properties, plus if the exposure to the Harvey disaster area was less than 10% of the loan balance, according to the commentary.

“In the past, hurricanes have not been a terribly disruptive problem for CMBS. Since properties have been sufficiently insured, the commercial loan toll has been very limited compared to the devastating human toll,” the commentary read. “However, Houston could be somewhat of a different story.”

Trepp singled out the extent of forthcoming major lease expirations for large area office buildings loans — such as the $91 million Two Westlake Park loan and an $80 million Three WestLake Park note — for which the hurricane damage could extend the “inability to show, renovate, or release those offices” for an extended period of time.

Trepp noted that many exposures to Houston buildings were already under duress due to fallen energy prices that have weighed on area oil and gas E&P firms.

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