How CMBS Has Changed in the Era of COVID-19

When the government started implementing the mass shut-downs in March 2020, owners of commercial real estate quickly reached out to their lenders to attempt to obtain relief from the upcoming April 2020 payments.  Immediately, there were stark contrasts in reception from the various lenders.  Banks for the most part, told borrowers verbally that they would be willing to defer or forbear three monthly payments. CMBS master servicers, the borrower’s daily view of the lender on a CMBS loan, however, are not allowed to grant any relief on a CMBS loan. The master servicer’s job is that of a rule enforcer for the CMBS pool. 

For the most part, for many CMBS borrowers, there was never a need to know anything about the inner workings of the CMBS debt structure and who all the various parties in the CMBS pool are, as their loan was performing, payments had been paid religiously in the past and they never had to really ask for anything out of the ordinary.  COVID changed all that. CMBS borrowers were forced into a situation they had never been in before and found themselves at the mercy of the special servicer, whom they had never dealt with before.