Properties underlying Australian commercial mortgage-backed securities (CMBS) experienced minimal disruption as a result of the recent flooding and cyclone experienced in Queensland, Australia, according to Standard & Poor's Ratings Services. Therefore, we do not expect any impact from the recent events to the ratings on CMBS programs.
The disasters generally affected a limited number of commercial properties. The impacts were mainly inundation of carparks, which were resolved quickly and with no reported structural damage. Structural damage did occur for a limited number of properties, making them unable to be occupied. However, these properties are insured against flood damage and loss of rent. We expect that these properties will be repaired within a reasonably short period of time.
For CMBS portfolios, their overall exposure to affected properties is small. The most affected areas in Queensland tend to represent only a minimal proportion of properties in CMBS portfolios, and assets in Queensland have historically comprised between 10% and 30% of a total portfolio. In our opinion, factors such as CMBS programs' geographic diversity, insurance cover, and overcollateralization mitigate the impact of these types of events on the performance of the collateral portfolios.