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In parallel with reported coronavirus cases surging past 3 million in the United States, commercial mortgage-backed securities (CMBS) debt has also been drastically increasing since May. This is due in large part because numerous hotel and retail chains have either declared bankruptcy, filed for bankruptcy protection, or renegotiated their lease and stopped paying rent when their brick-and-mortar stores were still closed. These decisions greatly diminish and delay the payment of rent, which lead to the selling of properties and prolong the temporary closing of these hotels and stores within malls that have already reopened.


In June, CMBS delinquency rates of hotels and other lodging properties spiked to around 11.5%, a major jump from 2% in May because of the great decline in travel nationwide. For regional retail stores and malls, delinquency rates rose to 10.31% in June from 4.46% in May due to 24 newly delinquent mall loans just last month. Of all of the 30-day delinquencies, hotel and retail make up a significant amount––49% and 34% respectively. If more businesses in the lodging sector are defaulting on loans and facing liquidation, not only will that result in losses for CMBS investors, but it will also decrease property valuation. These 30-day delinquencies may end up becoming 90-day delinquencies, which may lead to foreclosures as more Americans become unemployed due to the resurgence.


Due to the current situation, many businesses are seeking special servicing such as forbearance agreements or repayment plans from lenders. This negotiation process allows the borrower and lender to acknowledge and address specific terms in order to ultimately reach a consensus about curing the default on a certain date. Just from March through May of this year, the amount of CMBS loans that went into special servicing already surpassed half the amount for all of 2019. While these agreements seem promising enough to allow some businesses to recover, other businesses are already in too deep.















“Coronavirus Sparks Largest-Ever Rate Jump in U.S. CMBS Delinquencies.” Fitch Ratings: Credit Ratings & Analysis For Financial Markets, 6 July 2020,

Howley, Kathleen. “Foreclosure Threat Grows as COVID-19 Surges, Fed Says.” HousingWire, 6 July 2020,

Olick, Diana. “Commercial Mortgage Delinquencies Surged at Record Monthly Rate in June.” CNBC, CNBC, 6 July 2020,

Rennison, Joe. “Delinquency Rate Triples in US Commercial Mortgage Market.” Financial Times, Financial Times, 1 June 2020,

Richter, Wolf. “Mall and Hotel Loans Are Blowing up Commercial Mortgage-Backed Securities.” Wolf Street, 5 July 2020,




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