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Value of U.S. commercial property slashed by 27%, Financial Times reports

FILE PHOTO: The Empire State Building and Manhattan skyline are seen in New York City, New York, U.S., September 9, 2020./File Photo

NEW YORK (Reuters) - The economic effects of the coronavirus are battering the U.S. commercial-backed securities market, raising the question of the value of hotels, malls, and other buildings that act as collateral for mortgages, according to a report in the Financial Times on Sunday.

Wells Fargo estimates that U.S. properties that have gotten into trouble are being written down by 27% on average, according to the report. (on.ft.com/36cE4eE)

Declining appraisal values could hammer portfolio managers that have moved into the commercial mortgage-backed securities market in search for yield at a time when the Federal Reserve has indicated that it will keep benchmark yields near zero until 2023 at the earliest.

Reporting by David Randall; Editing by Lisa Shumaker

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