- Lockdowns and social distancing have impacted many tenant businesses, resulting in an unprecedented number of requests for rental relief, stressing real estate rental-income streams.
- For equity investors, income returns have weakened, despite softening asset values. Recent income returns may understate the full potential impact as accrual of deferred rents may mask further shortfalls.
- Lower rental incomes may also stress debt covenants and increase servicing pressures on some loans. In loans that default and are foreclosed upon, falling asset values may also increase potential loss severity.
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