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Bond traders who bet on hotels or shopping centers now have Big Data on hand

But the bond traders in famous suit The $ 600 billion mortgage-backed commercial stock market (CMBS), now has more ways than ever to mine Big Data when betting on a recovery – or decline – of specific hotel properties or a mall cluster.

Like so many recent things, the pandemic is a catalyst.

A year ago, Empirasign Strategies, a New York City-based platform that tracks transaction data in more confusing areas of the debt market, joined in with Advan geolocation analysis firm to start mapping traffic data to commercial property-specific bond transactions.

Adam Murphy, the founder of Empirasign. “They just announced that The Javits Center will be established as a field hospital. “

That’s when Murphy started negotiations with Advan about the traffic data licensing, which was used by hedge funds, private equity, and the real estate industry to overlay bond transaction data of Empirasign.

“Everyone thinks: Will New York come back?” Mr. Murphy said he was still entering the office several times a week during a pandemic. “I could see the walking traffic with my own eyes, but I could only see it with my own eyes, and only for a few blocks.”

Now then about 40% of the US population Having received at least one COVID-19 vaccine, many hotels, retail stores and office buildings across the country have reopened.

Empirasign’s platform has also grown, linking around 65% of all commercial mortgage bond transactions with data showing how fast or slow traffic has returned to specific assets, with the goal of reached 95% by May 1.

“The primary reason so many investors have been patient over the past year is that they believe the workers will return to the offices and the tourists will return to the hotels,” Murphy told MarketWatch. “Here’s how you can actively monitor the validity of that argument.”

Related: Office asset value could drop by 54% if the work from home takes long: Fitch

Hotel, commercial center

Let’s see the hotel sector hit hard, where the number of bookings last spring fell sharply overnight, causing real estate bond prices fell and borrowers owe billions of dollars to line up to negotiate with lenders about the possibility of bailout.

In the months since then, foreclosure proceedings have begun at some of the damaged properties, even as the number of passersby has risen again. This Empirasign chart compared guest traffic at six hotels where loan payments were past due for more than two months.

The pedestrian traffic in the hotels was difficult.


The blue line represents traffic at JPMCC 2018-PHH, the name of a $ 328.9 million commercial mortgage bond contract that three years ago helped fund history. Palmer House Hilton in ChicagoThe city’s second-largest hotel is currently in foreclosure, according to Trepp LLC.

Empirasign bond tracking data recently pegged small slices of hotel liabilities fetched in the dollar, signaling a low expected recovery value.

Ed Reardon, an analyst at Deutsche Bank, said a number of green shoots have emerged, including hotel occupancy rates that have recently hit pandemic highs of 60%, in a weekly note. On the other hand, hotel loans still have the highest overdue rates, with 19% overdue 60 days as of April 21, compared with 7% for retail and 6% for all categories of property. movables.

Away from hotels, pedestrian numbers have also increased from lows in some of the nation’s major shopping malls, including at the Mall of America in Minnesota. The Wall Street Journal Recently detailed the struggles of the owners to keep the mall’s indoor roller coaster open during a pandemic, as well as maintain the $ 1.4 billion borrowed on the bond market.

Walking traffic Mall of America.


“There is a huge amount of data that people have been using for a long time,” said Steve L’Heureux, portfolio manager at Loomis, Sayles & Company.

and global commercial real estate and CMBS strategist. “Some of them are far more complex than the typical industry participants might think.”

But L’Heureux also warns that the traffic is not necessarily shifting to sales and that commercial real estate still depends on the finances of the real estate, the rate of borrowing.

cash flow and a mix of legal contracts between landlords and tenants, which are often renegotiated during stressful times, as well as between borrowers and lenders.

“That kind of information is harder to get,” he said. “I think new things are very interesting. And it’s a hot topic. “

Also read: This may be the most closely watched indicator of the post-pandemic economy



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