Ballooning Supply Looms Over $3.68 Billion in CMBS Backed by Manhattan Hotels
June 02, 2016
Morningstar Credit Ratings, LLC is concerned that the burgeoning hotel-room supply could increase risk for the $3.68 billion of fixed-rate loans backed by Manhattan hotels and packaged in commercial mortgage-backed securities that we monitor. Although Manhattan is one of the strongest markets in the U.S. for hospitality properties, we believe that demand growth could miss most industry experts’ projections. While delinquent and specially serviced loans account for just 2.8% of these loans, Morningstar identified another 14 loans, with a combined balance of $730.9 million, with debt service coverage ratios, or DSCRs, below 1.2x, elevating default risk.
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