The FT with a sobering report on commercial real estate amid Covid. From the article: “Commercial properties hit by the economic effects of coronavirus could have lost as much as 1/4 of their value or more, laying bare the scale of the damage being wrought across American malls, hotels & other commercial buildings. Evidence emerging in the commercial mortgage-backed securities (CMBS) market from recent appraisals also raises questions over the value of the collateral backing commercial mortgages throughout the financial system. Properties that have gotten into trouble are being written down by 27% on average, data from Wells Fargo shows. New appraisals are triggered when a commercial property owner starts to have trouble paying the mortgage, and the loan is handed to a “special servicer” that could eventually seize the property on behalf of CMBS holders. “It’s a big number,” said Lea Overby, an analyst at Wells Fargo. “This is material.””

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