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Hurricane Florence: The 5 Largest Properties Backed By CMBS Loans In FEMA-Declared Risk Zones

Hurricane Florence, one of the most devastating storms to ever roll through the Carolinas, has racked up quite a bill in property damages and will go down in history as one of the 10 most costly hurricanes, according to Moody’s Analytics.

A satellite image of Hurricane Florence hitting North Carolina's coastline in the early morning of Sept. 14

In a report assessing the commercial properties with loans at risk due to the storm, Morningstar Credit Ratings found nearly $1.5B in securitized mortgages are at high risk of damage from the storm. 

Morningstar identified 189 assets backed by 187 loans in 16 FEMA-declared counties eligible for individual assistance in North Carolina. Of the loans identified, Freddie Mac issued a whopping 32.8%. 

The five FEMA-declared disaster zones/counties with the most securitized loans at risk are: 

  • Cumberland County — $584.3M
  • New Hanover County — $461.1M
  • Onslow County — $136.4M
  • Wayne County — $73.4M
  • Brunswick County — $61.4M

The five properties backed by the largest CMBS loans in FEMA-designated risk zones are: 

  • Cape Harbor Apartments, 7113 Cape Harbor Drive

          City/County: Wilmington; New Hanover

          Loan Balance: $33.7M

  • Aspire 349 Student Apartments, 349 Campus Cove

          City/County: Wilmington; New Hanover

          Loan Balance: $32.4M

  • Westlake at Morganton Apartments, 3311 Woodhill Lane

          City/County: Fayetteville; Cumberland

          Loan Balance: $32M

  • Mill Creek Apartments, 414 Mill Creek Court 

          City/County: Wilmington; New Hanover

          Loan Balance: $27.8M

  • Colonial Grand At Wilmington Apartments, 700 St. Andrews Drive

          City/County: Wilmington; New Hanover

          Loan Balance: $27.5M

Though Morningstar analysts do not expect exposed loans to suddenly default in the wake of the storm, borrowers could have a hard time refinancing existing loans as a result of it. 

“Morningstar does not expect waves of loan defaults resulting from this storm because business-interruption insurance should cover the gap in service, if necessary, for most properties,” the report reads. 

“Still, flood damage could prevent refinancing some existing loans and jeopardize the payoff of roughly $51.5M in securitized loans that mature over the next 12 months. Ultimately, if a property is operating, meeting its debt obligations and there’s no lasting hurricane-related fallout, financing should proceed, and the loan should pay off.”

Commercial real estate data giant CoStar reported last week that roughly $33.5B worth of commercial assets were at risk of damage from direct impact from Florence. The data provider based its figures off property valuations, and did not include costs of potentially lost business operations in its final figure.