Congressmen Al Lawson and Van Taylor (Lawson from Bill Clark / CQ-Roll Call, Inc. via Getty Images; Taylor from Thomas McKinless / CQ Roll Call)
A bipartisan law that was presented in Congress on Wednesday is intended as a lifeline for CMBS borrowers in hotels and shopping centers.
The move would provide preferential equity to borrowers affected by the coronavirus pandemic, out of a pool of $ 454 billion earmarked for weak companies under the previous stimulus package, the Wall Street Journal reported.
According to Trepp, around 10 percent of CMBS loans were in default within 30 days or more in June.
"The numbers are getting worse and the projections are getting stricter," said Republican Congressman Van Taylor from Texas, who sponsors the bill with Florida Democratic Congressman Al Lawson.
The Real Deal first reported news of Van Taylor's proposal earlier this month.
The funds would be available to help borrowers who had a good reputation before the pandemic with mortgage payments. Many CMBS borrowers indicated that they are having trouble negotiating relief with special service providers.
Loan documents often prohibit them from taking on additional debt. For this reason, Van Taylor structured the financing as preferred equity. However, some have pointed out that the government that fits into the capital stack is a risky position.
The borrower would have to repay the debt before taking money out of the business.
Some industry players have argued that efforts to help the CMBS market primarily benefit large property owners rather than small businesses. But Van Taylor said the legislation was aimed at saving jobs.
"It started with employees in my district calling and saying," I lost my job, "he said. (WSJ) – Rich Bockmann
Contact Rich Bockmann at (Email protected) or 908-415-5229.