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1 1 (June 19, 2020)

handle is hein.crs/govdiyz0001 and id is 1 raw text is: Researh Setwkc COVID-19 Impact on Commercial Real Estate and Commercial Mortgage-Backed Securities June 19, 2020 The economic turmoil resulting from Coronavirus Disease 2019 (COVID-19)-particularly business interruptions and the decline in consumer activity-has negatively affected commercial real estate in numerous ways, leading to a sharp increase in delinquencies among commercial mortgage-backed securities (CMBS) borrowers in the past month. This Insight provides a brief overview of the commercial real estate (CRE) market, as well as some policy issues that may be of interest to Congress. Overview of Commercial Real Estate Financing The CRE market is large and complex. Because private companies own or lease most of the properties, valuing the market is difficult-but industry analysis suggests that outstanding CRE debt is around $3 trillion. As seen in Figure 1, banks are the largest lenders of CRE mortgages, but nonbank financial institutions, such as life insurance companies and CMBS lenders, also play a significant role. The general distinction between CRE mortgages and residential mortgages is the commercial use of CRE properties, meaning that they will be used for generating income rather than being used as a residence. Borrowers can be individuals or corporations looking to buy space to rent out to retailers or use for their own small businesses; corporations that want office space for their employees or factories for production; or investors buying multifamily apartment complexes with the hope of generating rent from the buildings' residents. CRE comprises many subsectors, including office and industrial space, retail storefronts, apartments, hotels, health care facilities, and other specialty properties (e.g., sports venues, storage units, and data centers). Congressional Re search Service https://crsreports.congress.gov IN11427 CRS MNS GHT Prempa red o rC --embersand C oo m n.. t eei o ften g o [ C o-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------...........