Kroll Bond Rating Agency reports rapidly rising losses on loans secured by commercial properties in Texas and in Houston, driven locally by high vacancy in the office market.
The agency reviewed the impact of a persistent oil slump on energy-related "commercial-mortgage-backed securities," bundles of mortgage loans made on commercial properties, finding a 120 percent increase over 15 months in the number of loans in default or facing risk of default.
"In many cases, property cash flows have been unable to support required debt-service payments and collateral values have fallen below origination proceeds — which prompted a number of loans to become delinquent. Most of these loans are secured by assets in oil-dependent regions —particularly in the multifamily, lodging, and office sectors," the report said.
Over the same 15-month period, losses on energy-related commercial-backed securities in Texas increased sixfold, to 14.9 percent of principle balance, up from 2.6 percent.
The report said Houston had a growing number of concerning loans because of high vacancy in the office market, which results from a large supply pipeline from the years of the shale boom coupled with many energy companies' downsizing during the slump.
