Commercial Mortgage Backed Securities Update 2011
We have seen a strong reemergence of the CMBS (Commercial Mortgage Backed Security) markets in lending during 2011. Well, almost.
Although the predications for CMBS origination range from $40BB to $90BB in 2011 (and that predication is strengthened by recent media of securitizations), it seems as though life companies and banks will once again rule the market.There are approximately 16 CMBS lenders (that we know of) and liquidity has no doubt increased in 2011, and CMBS therefore will increase, but the market we all witnessed come apart in 2007 will not be the same one we see in future years.
Heavy tenant improvement, leasing commission, and capital expenditure holdbacks continue to reign. For loans in the $5mm - $10mm initial good faith deposits far outweigh those of regional banks. Furthermore, deals with a story are looked over. Investors of CMBS are focused on loan level information such as cash flow. We have seen some CMBS lending moving toward more prominent properties, but for the most part you will not get around the requirements that make CMBS transactions fit in a box.
The CMBS market also has shown signs of holding out for larger transactions. The only transactions drawing attention under $10mm are Class (A - B) properties in primary markets. After speaking with one CMBS lender, their is high demand for higher end real estate. "An (A+) asset in the $25MM+ range is exactly what we are looking for. We are less interested in spread on riskier assets and more focused on loans that make sense."
For strong cash flowing properties in primary markets, 10 year fixed pricing in the sub 6% (as of 1st quarter 2011) is readily achievable. A For properties with high vacancy or other issues please email us at btwente@csfinancial.com.
Typical CMBS Execution:
- 10 Year Fixed / 10 Year Term / 30 Year Amortization
- Very competitive fixed pricing (as of 1st Quarter 2011 sub 6%)
- Typically High Leverage (up to 80% on Class A assets)
- Non-Recourse (Bad Boy Carve-Outs are required)
- Defeasance or Yield Maintenance Prepayment
- Reserves required for Tenant Improvements, Leasing Commissions, and Capital Expenditures
Our next article with outline the resurgence of Bridge and Mezzanine Debt in the CMBS marketplace. While there are players in the space, the additional leverage comes at a heavy cost to borrowers looking to leverage non-stabilized properties.
For more rate and terms on CMBS loans, please visit http://csfinancial-commercial.com.
Although the predications for CMBS origination range from $40BB to $90BB in 2011 (and that predication is strengthened by recent media of securitizations), it seems as though life companies and banks will once again rule the market.There are approximately 16 CMBS lenders (that we know of) and liquidity has no doubt increased in 2011, and CMBS therefore will increase, but the market we all witnessed come apart in 2007 will not be the same one we see in future years.
Heavy tenant improvement, leasing commission, and capital expenditure holdbacks continue to reign. For loans in the $5mm - $10mm initial good faith deposits far outweigh those of regional banks. Furthermore, deals with a story are looked over. Investors of CMBS are focused on loan level information such as cash flow. We have seen some CMBS lending moving toward more prominent properties, but for the most part you will not get around the requirements that make CMBS transactions fit in a box.
The CMBS market also has shown signs of holding out for larger transactions. The only transactions drawing attention under $10mm are Class (A - B) properties in primary markets. After speaking with one CMBS lender, their is high demand for higher end real estate. "An (A+) asset in the $25MM+ range is exactly what we are looking for. We are less interested in spread on riskier assets and more focused on loans that make sense."
For strong cash flowing properties in primary markets, 10 year fixed pricing in the sub 6% (as of 1st quarter 2011) is readily achievable. A For properties with high vacancy or other issues please email us at btwente@csfinancial.com.
Typical CMBS Execution:
- 10 Year Fixed / 10 Year Term / 30 Year Amortization
- Very competitive fixed pricing (as of 1st Quarter 2011 sub 6%)
- Typically High Leverage (up to 80% on Class A assets)
- Non-Recourse (Bad Boy Carve-Outs are required)
- Defeasance or Yield Maintenance Prepayment
- Reserves required for Tenant Improvements, Leasing Commissions, and Capital Expenditures
Our next article with outline the resurgence of Bridge and Mezzanine Debt in the CMBS marketplace. While there are players in the space, the additional leverage comes at a heavy cost to borrowers looking to leverage non-stabilized properties.
For more rate and terms on CMBS loans, please visit http://csfinancial-commercial.com.
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