KBRA Releases Research – Coronavirus (COVID-19): Multifamily Update: Bracing for Forbearance
NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases a report on the effects of the coronavirus (COVID-19) pandemic on the multifamily sector. The report focuses on recently instituted protections for tenants of rental properties and Freddie Mac’s multifamily forbearance program that went into effect in late March, as well as implications related to the agency’s K-deal securitizations, private label CMBS, and CRE CLOs.
The impacts of COVID-19 on commercial real estate (CRE) are intensifying. Multifamily properties will begin to see issues as tenants’ April rent is now due, and many could be unable to make rent payments due to pandemic-related loss of income. In response, many states and jurisdictions have put a temporary moratorium on evictions, and the federal government has passed legislation that should provide additional financial support to Americans affected by the virus.
As far as the owners of multifamily properties go, Freddie Mac has announced a 90-day forbearance program for its borrowers. To qualify, they must be able to show hardship due to COVID-19 and gain lender approval. In return, owners may not evict any tenants due to missed rental payments related to the pandemic during the forbearance period. The agency expects this program will provide relief for up to 4.2 million renters across the U.S. Unfortunately, there are no other broader programs for other multifamily borrowers, which could have implications on private label CMBS and CRE CLOs.
As events surrounding the crisis unfold, our thoughts are with the individuals and families who have been affected by the virus.
Click here to view the report.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe Limited is located at 6-8 College Green, Dublin 2, Ireland.
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