CMBS Default Risk Connected to Poor Energy Efficiency
A report by UC Berkeley and Lawrence Berkeley National Lab found a tight correlation between energy efficiency for CRE buildings and the likelihood of defaults. As unorthodox as that may sound, it is supported with some rather convincing data.
Using commercial mortgage data trends from Trepp, LLC, and energy use statistics from benchmarking disclosures, researchers evaluated the impact of actual energy use and prices in six metros on default performance of CMBS loans between 2000 and 2012. What they found was poor building energy efficiency actually may be a significant predictor for commercial loan defaults.
The data collected is expected to help lenders collect “baseball-like statistics that evaluate and quantify the risk of mortgage default, based on a building’s energy metrics,” say the study’s authors, Dr. Paul Mathew of the Lawrence Berkeley National Laboratory and Dr. Nancy Wallace of UC Berkeley.
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Financing
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