Value of U.S. commercial property slashed by 27%, Financial Times reports
By David Randall
NEW YORK (Reuters) – The economic effects of the coronavirus are battering the U.S. commercial-backed securities market, raising the question of the value of hotels, malls, and other buildings that act as collateral for mortgages, according to a report in the Financial Times on Sunday.
Wells Fargo estimates that U.S. properties that have gotten into trouble are being written down by 27% on average, according to the report. (https://on.ft.com/36cE4eE)
Declining appraisal values could hammer portfolio managers that have moved into the commercial mortgage-backed securities market in search for yield at a time when the Federal Reserve has indicated that it will keep benchmark yields near zero until 2023 at the earliest.
(Reporting by David Randall; Editing by Lisa Shumaker)