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In the wake of the ongoing COVID-19 pandemic, Congress has enacted various legislation in an effort to provide critical assistance to individuals and businesses. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)[1] is the largest economic stimulus package in United States to date. Additionally, the Federal Reserve has instituted a number of loan facilities to provide certain borrowers access to alternative sources of financing during the economic challenges of the COVID-19 pandemic.[2] However, until now, there was no proposed legislation to aid the approximately $16 trillion[3] commercial real estate (“CRE”)[4] debt market or the $550 billion[5] commercial mortgage-backed securities (“CMBS”) market. As a result of the COVID-19 pandemic, CRE transactions decreased 68% overall in the second quarter of 2020 as compared to the second quarter of 2019 and CRE transactions secured by hotel properties decreased by 91% during the same time period.[6] The CMBS delinquency rate climbed to 10.32% in June 2020, which was just a shade below the historical high of 10.34% from July 2012.[7] Although the delinquency rate fell moderately to 9.60% in July 2020, the decrease was largely the result of approximately $8 billion in loans that were cured in July 2020 by way of loan modifications, reserve releases and other remedial measures.[8]

Continue Reading Proposed “HOPE” Act to Provide Financial Assistance to CMBS Borrowers Through Preferred Equity Lending Facility