In many cases, property portfolios are exposed to tenant concentration risk where a single tenant may be present in multiple assets. ProMS simulates and reports the effects of tenant concentration by applying the same defaulting scenarios to all the assets.
If a tenant defaults, it will default in all properties at the same time, increasing the volatility of returns at the portfolio level - i.e. reducing the effects of diversification. ProMS carefully models this effect, exposing the true risk of tenant concentration.
If a portfolio manager is concerned about a particular tenant, the risk of default can easily be set to 100%. By re-running the portfolio, risk managers can quickly calculate the precise effect of a particular tenant default on portfolio returns and cash flows.
ProMS allows users to set and modify measure of tenant credit quality from a wide range of external sources (Moodys, Experian, S&P etc.) or using internal estimates. Tenant grades are migrated with the economy in the scenarios such that rates of default increase in times of economic stress.