CMBS Trouble in Small Markets
Commentary:
"Investors should be careful when acquiring a single tenant NNN property in a secondary or tertiary market. The re-leasing exposure is higher when compared to a major MSA market and therefore the risk should be priced appropriately."
Buildings in Strong Property Markets Can Shrug Off a Tenant Default
Lease-payment defaults by the largest tenants in a property were the most common factor driving U.S. commercial real estate loans into special servicing last year, says Moody's Investors Service in a new report.
Moody's report examines a number of 2006 commercial real estate loans in special servicing -- distressed or defaulted loans that servicers are attempting to make whole -- and that are securitized in Moody's-rated conduit, fusion, and CTL commercial mortgage-backed securities (CMBS).
The report finds that, of the loans in special servicing at the time of Moody's 2006 review, 37% were the result of corporate tenants' defaults, excluding assets such as multifamily apartments and manufactured home communities that rarely have corporate tenants.
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