Forever-Empty Offices and Malls May Mean Pain for CMBS Investors
- Property owners are seeking second round of forbearance
- CMBS losses could extend to AA securities, Morgan Stanley says
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The more-than-$550 billion market for bonds backed by U.S. commercial mortgages may face losses even after promising Covid-19 vaccines become widespread, as key parts of the real estate market may not return to full strength anytime soon.
That’s what some analysts and investors that look at the securities are cautioning as the pandemic potentially changes the way Americans work and shop for good. Demand for office space, hotels, and stores may drop permanently as people grow used to working from home, conducting meetings via Zoom, and buying more online.