Several industry trade groups last week sent a letter to Senate Banking Committee leaders calling for changes to the Main Street Lending Program (MSLP) to provide relief for commercial real estate. These changes included calls to extend the program, expand eligibility, modify the asset-backed underwriting methodology, and address additional debt issues, including affiliation rules and statutory distributions.
The letter was supported by the American Hotel and Lodging Association (AHLA), Asian American Hotel Owners Association (AAHOA), Commercial Real Estate Finance Council, International Council of Shopping Centers, Latino Hotel Association, Mortgage Bankers Association, NAIOP, the Commercial Real Estate Development Association, National Association of Black Hotel Owners, Operators & Developers, and The Real Estate Roundtable.
The letter comes as delinquency rates in the commercial mortgage-back securities (CMBS) market spike. According to a JLL study, May marked the largest monthly increase on record with an increase of 20.4 PP in the lodging sector. JLL’s forecast of CMBS delinquency rates shows continued risks for retail and lodging sectors, with delinquency rates peaking in 2021 and not expected to recover until 2023. Cumulative CMBS loans in default are expected to increase to 60 percent in lodging and 45 percent in retail by Q2 of 2021. The top five markets by portion of total CMBS loan balance in special servicing include New York, Miami, Chicago, Los Angeles, and Hawaii.
Read the full text of the letter here.