Sector developments and company hires

Skilled nursing CMBS eyed
DBRS Morningstar is reviewing its ratings on the CSMC 2019-SKLZ, Greystone CRE 2018-HC1 and CHC 2019-CHC CMBS, which are secured primarily by skilled nursing facilities. The agency warns that in the coming months, nursing homes and their parent companies may face significant legal liability as a result of the high death toll at nursing homes during the Covid-19 pandemic.

As of this month, 20 US states have provided nursing homes and other long-term care facilities with some form of liability protection in connection with the pandemic. However, while DBRS Morningstar is unaware of lawsuits targeting specific facilities backing CMBS loans or their operators, wrongful death lawsuits have been filed against other properties where coronavirus deaths have occurred and more lawsuits may be forthcoming as the coronavirus fallout grows.

Further, should homes be found to have violated mandated standards of care, the agency is concerned that federal and state regulators may seek to withhold payments to skilled nursing facilities or suspend licenses.

In addition to the potential effect on near-term cashflow, valuations of these assets may be depressed until the outcome of cases is settled, according to DBRS Morningstar. This may affect the ability of borrowers to refinance their loans. As a result of these concerns, the agency has a negative outlook on the sector.

A fourth transaction with exposure to skilled nursing facilities - MSCCG 2016-SNR, which matures in November 2021 - has been paid down significantly and is less of a concern in the future, it says.

In other news…

EMEA
Helena Nathanson has joined Greenberg Traurig as its joint head of banking and finance in London. She continues to advise on the full range of corporate trust work and has expertise in structured finance transactions. Previously, Nathanson was a partner at Bryan Cave Leighton Paisner and has also worked at Reed Smith, Berwin Leighton Paisner and Cadwalader.

IHS Markit has elected Gay Huey Evans as an independent director to its board. She will also join the company’s audit committee. Huey Evans is chair of the London Metal Exchange and a member of Her Majesty’s Treasury Board in the UK. She is also a non-executive director of Standard Chartered and ConocoPhillips. Previously, Huey Evans worked at Bankers Trust, Barclays, Citi and the UK FSA.

Serious delinquencies soar
The volume of US homeowners that are 90 days or more behind in their mortgage payments has increased by more than 20% since June and now stands at its highest level since early 2010, according to Black Knight data. In total, 376,000 mortgage-holders are now “seriously delinquent” and the overall total is 1.8m higher than it was before Covid-19 struck. Early stage delinquencies have continued to decline, however, and the overall number is now at pre-pandemic norms. There were 340,000, or 9%, fewer mortgages in delinquency last month compared to June.