The Return of CMBS – A CRE Bond Market Revival
Wednesday, February 09, 2011
Source: Bloomberg
Bloomberg reports: Banks and other firms that bundle mortgages into bonds are lending more money as demand for securitized debt increases from investors seeking higher yields. That’s making refinancing easier for commercial property owners that have been passed over by institutions that usually hold real estate debt on their books, aiding a recovery in commercial property values.
This rebound in CMBS is benefiting borrowers with smaller properties and in tertiary markets. CMBS issuers fare better in these markets outside the biggest cities because they can get the higher rates they need to cover the costs of packaging and selling loans. Institutions that keep mortgages on their balance sheets, like non-US banks and insurance companies, focus on top-tier buildings in large metropolitan areas.
“Loans from CMBS lenders are more often on smaller assets or Class B office properties,” said Ben Thypin, Director of Market Analysis at global commercial property research firm Real Capital Analytics. “They haven’t been able to compete that well with insurance companies and international lenders in the office market on the highest-quality buildings.”
According to Real Capital Analytics, about 71% of commercial-property lending by insurance companies was done in primary markets in 2010, compared with 67% for foreign banks and 47% for CMBS lenders. Their investment data shows that about one-third of loans from CMBS firms were in tertiary markets, compared with 6.6 percent for insurance companies and 12 percent for non-U.S. banks.
View the full article on Bloomberg: The Return of CMBS – A CRE Bond Market Revival
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Posted by: Matthew Stone