Damage from Hurricane Irma could affect some $26.6 billion in commercial mortgage-backed securities, according to Morningstar Credit Ratings.

While the damages are still being assessed, there are 1,840 properties, which back 1,471 securitized loans in 16 different Florida counties, that the Federal Emergency Management Agency declared disaster areas eligible for individual assistance.

Most of the properties reside in Miami-Dade, Broward, Palm Beach, Hillsborough and Duval counties, and have a combined balance of $21.1 billion.

Waves of loan defaults are not expected to result from this storm, as business-interruption insurance should ideally cover the gap in service for most properties, according to Morningstar projections.

However, flood damage could still put the payoff of about $1.89 billion in securitized loans that mature within a year from now at risk, as damage may prevent refinancing of the existing loan. But if a property is operating and meeting its debt obligations and no lasting hurricane-related fallout is present, financing should continue and the loan should pay off.

A projected 25% of homes were destroyed in the Florida Keys, where Irma made its first U.S. landfall, and an estimated 65% suffered damages.

In the Keys, there is about $291 million in CMBS exposure, with Cheeca Lodge & Spa and the Ocean Key Resort & Spa securing the largest in CMBS; both have a combined balance of $156 million and currently remain closed.

Undamaged multifamily properties and hotels are expected to see demand growth, as families will be forced into temporary housing. Florida has generally seen consistent job growth, which also bodes well for commercial real estate.

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