Happy Labor day everyone! Today, we will be discussing the unfortunate aftermath of Hurricane Harvey.
Assets Backing CMBS At High Risk
Recently, Morningstar Credit Ratings published a report concerning CMBS loans. Because of the catastrophic Hurricane Harvey in Houston, there is a concern for assets backing CMBS loans. Morningstar Credit Ratings expressed concern that due to the flood, 1,529 properties could be at high risk.
The assets’ total balance comes to $19.4 billion. The damage that the hurricane has caused could potentially affect the payoff of a large combination of loans worth $1.13 billion.
The flooding affects properties in 18 Texas counties. The hurricane destroyed several properties in these counties, which are considered major disaster areas.
Many of the properties at high risk are in Harris County. This county suffered the most damage with a balance of $16.24 billion. Following Harris county is Fort Bend County, with a balance of $1.43 billion. Major exposure areas amount to nearly 99% of CMBS exposure to the flood zones.
Although not all properties involved suffered extreme damage, they are still vulnerable to mold and other types of damage. Unfortunately, not all of the properties located in flood zones have flood insurance. Obviously, flood damage is a huge concern, but there is also an extreme concern for mold. That might be even more problematic.
The other high exposure areas include Galveston County, Brazoria County, and Nueces County.