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Thursday, 02 January 2020

Domestic CMBS Issuance in 2019 Hits $96.7Bln; Most Since Recession

Domestic, private-label CMBS issuance totaled $96.7 billion last year, topping 2018's volume by 27.1 percent and marking the heaviest year of issuance since the Great Financial Crisis. Citigroup took top honors among bookrunners of CMBS as well as loan contributors. It handled the books of 12.9 percent of the year's issuance and contributed 12 percent of all loans that were securitized.

Commercial Real Estate Direct Staff Report

Domestic, private-label CMBS issuance totaled $96.7 billion last year, topping 2018's volume by 27.1 percent and marking the heaviest year of issuance since the Great Financial Crisis.

Last year's fourth quarter saw a staggering $38.5 billion of issuance, or 40 percent of the year's total. A big chunk of that took place in November, when $14.6 billion of deals priced. Last month, meanwhile, saw $11.5 billion of issuance.

Single-borrower deals played a big role in issuance during the latest quarter, as 28 such deals totaling $21.4 billion priced. That amounted to 46 percent of the year's total single-borrower issuance, which was skewed by a $5.6 billion deal that priced in early December that provided some of the funding for Blackstone Group's $18.7 billion purchase of 179 million square feet of industrial space from Global Logistic Properties.

Domestic, Private-Label CMBS Issuance

 

2019

2018

 

Deal Type

#Deals

Vol $mln

Mkt Shr%

#Deals

Vol $mln

Mkt Shr%

YoY Change%

Conduit

52

49,153.96

50.81

44

40,151.02

52.75

22.42

Single-borrower

84

46,355.04

47.92

75

35,662.57

46.86

29.98

Other

4

1,231.50

1.27

2

297.26

0.39

314.28

Total

140

96,740.50

 

121

76,110.85

   

Conduit issuance totaled $49.2 billion last year, topping 2018's issuance by a whopping 22.4 percent. Separately, 29 collateralized loan obligations totaling $19.2 billion priced during the year. That was up 33 percent from 2018's $14.2 billion of issuance.

CMBSIssuance2019

CMBS issuance this year was driven by continued low interest rates. The 10-year Treasury, against which most 10-year loans are benchmarked, was priced to yield 2.66 percent at the start of the year. After a brief and slight increase, it consistently declined, hitting a low of 1.47 percent in August, and ended the year at 1.83 percent. At the same time, loan spreads, or the risk premiums lenders use to price their loans, had declined as bond market conditions remained stable and securitizing loans stayed profitable. So, the weighted average coupon of conduit deals, which started the year near 5 percent, ended 2019 at less than 4 percent, with some deals having a WAC of as low as 3.5 percent.

The practice of securitizing loans, meanwhile, has remained quite profitable, with margins regularly topping 2 percent and often exceeding 5 percent.

Citigroup was the most active CMBS bookrunner, receiving credit for 15 deals totaling $12.5 billion, or 12.9 percent of the year's total issuance. It had participated in a total of 37 transactions, or just more than a quarter of all deals issued. Its bookrunner chops were due largely to its heavy loan contributor activity. The banking giant contributed 244.8 loans with a balance of $11.4 billion to securitizations. That's equal to 12 percent of all loan volume securitized during the year.

Top CMBS Bookrunners

Domestic, Private-Label Issuance

 

2019

2018

Investment Bank

Credit

Bal $mln

#Deals

MktShr%

Credit#

Bal $mln

MktShr%

Citigroup

15.05

12,628.80

37

13.05

9.48

8,120.96

10.67

Morgan Stanley

15.79

11,464.69

30

11.85

10.79

7,538.21

9.90

JPMorgan Securities

18.70

11,388.65

37

11.77

17.68

10,608.13

13.94

Goldman Sachs

15.99

10,827.30

29

11.19

15.48

8,476.68

11.14

Wells Fargo Securities

13.77

10,589.96

29

10.96

12.17

7,567.17

9.94

Bank of America Securities

12.04

9,760.01

27

10.11

7.10

5,509.86

7.24

Deutsche Bank

11.53

9,347.13

37

9.66

13.70

9,930.02

13.05

Barclays Capital

7.64

5,392.82

21

5.58

6.77

4,357.03

5.72

Credit Suisse

7.08

5,132.28

10

5.31

5.99

3,522.61

4.63

Cantor Fitzgerald

5.03

2,731.77

12

2.83

2.51

1,391.07

1.83

UBS Securities

3.08

2,279.81

11

2.36

6.37

4,475.55

5.88

Societe Generale

4.90

1,960.79

12

2.03

2.01

1,535.91

2.02

Natixis

6.19

1,806.70

9

1.87

9.97

2,945.34

3.87

KeyBank

2.02

1,230.25

8

1.27

0.00

0.00

0.00

Performance Trust Capital

1.00

156.70

1

0.16

1.00

132.30

0.17

BMO

0.20

42.84

1

0.04

0.00

0.00

0.00

Total

140

96,740.49

 

 

121.00

76,110.85

 

Behind Citigroup, in a tight pack, in the bookrunner ranking were Morgan Stanley, which received credit for $11.5 billion of deals; JPMorgan Securities, with $11.4 billion of deals; and Goldman Sachs, with $10.8 billion of deals.

In total, 27 lenders contributed to CMBS deals, which was unchanged form 2018. But three lenders that participated then - Blackstone Mortgage Trust, Basis Real Estate and Bank of China - were absent from 2019's list of contributors. They were replaced by 3650 REIT, which contributed 36 loans totaling $729.23 million; MUFG Principal Commercial, which contributed $250.7 million of loans, but since has quit the business; and BMO Financial Group, which participated in one loan that was securitized.

Top Loan Contributors

Domestic, Private-Label Issuance

 

2019

2018

Lender

#Loans

Bal $mln

Avg bal $mln

Mkt Shr %

#Loans

Bal $mln

Mkt Shr %

Citibank

244.76

11,394.00

46.55

11.97

218.07

7,314.00

9.61

Goldman Sachs

155.22

10,112.57

65.15

10.63

106.83

8,665.70

11.39

Morgan Stanley

234.12

9,713.67

41.49

10.21

159.47

5,838.67

7.67

JPMorgan Chase Bank

184.86

9,275.87

50.18

9.75

139.87

9,442.39

12.41

Deutsche Bank

149.94

9,095.42

60.66

9.56

197.62

9,010.55

11.84

Bank of America

130.54

8,672.29

66.43

9.11

105.75

4,843.48

6.36

Wells Fargo Bank

243.22

7,573.01

31.14

7.96

190.77

5,468.74

7.19

Barclays Bank

88.25

4,742.08

53.73

4.98

94.65

3,916.22

5.15

Credit Suisse

39.20

3,712.98

94.72

3.90

23.03

2,914.68

3.83

Societe Generale

74.50

2,118.78

28.44

2.23

58.73

1,576.91

2.07

Rialto Mortgage Finance

173.00

2,072.11

11.98

2.18

100.00

1,272.67

1.67

Natixis

25.00

1,964.97

78.60

2.07

73.88

3,206.98

4.21

UBS Real Estate Securities

131.20

1,964.55

14.97

2.06

141.00

2,444.22

3.21

Cantor Commercial Real Estate

85.85

1,842.24

21.46

1.94

67.75

1,563.96

2.05

Argentic Real Estate Finance

97.00

1,780.18

18.35

1.87

105.50

1,565.64

2.06

Starwood Mortgage Finance

136.40

1,759.35

12.90

1.85

109.00

1,717.95

2.26

LoanCore Capital

70.00

1,572.78

22.47

1.65

25.00

643.72

0.85

KeyBank

93.75

1,451.57

15.48

1.53

75.50

1,105.23

1.45

Ladder Capital Finance

85.00

969.53

11.41

1.02

103.00

1,304.25

1.71

Ready Capital

184.00

829.90

4.51

0.87

50.00

164.95

0.22

3650 REIT

36.00

729.23

20.26

0.77

0.00

0.00

0.00

National Cooperative Bank

127.00

493.94

3.89

0.52

100.00

400.05

0.53

Benefit Street Partners

30.00

462.54

15.42

0.49

34.00

446.63

0.59

CIBC World Markets

38.00

345.36

9.09

0.36

40.00

359.26

0.47

MUFG Principal Commercial Capital

11.00

250.70

22.79

0.26

0.00

0.00

0.00

C-III Commercial Mortgage

41.00

207.00

5.05

0.22

57.00

253.13

0.33

BMO

0.20

42.84

214.20

0.05

0.00

0.00

0.00

Blackstone Mortgage Trust

0.00

0.00

0.00

0.00

0.50

517.50

0.68

Basis Real Estate

0.00

0.00

0.00

0.00

7.00

109.60

0.14

Bank of China

0.00

0.00

0.00

0.00

0.07

43.80

0.06

 

The CMBS business was developed primarily to provide long-term financing for middle-market properties. The data show that most lenders that participate in the sector do just that in that the average securitized loan last year had a balance of $32.7 million. But some contributors' numbers are skewed by their activity in the large-loan business.

The average loan that Credit Suisse contributed to CMBS had a balance of $94.7 million. While it contributed 35 loans with a balance of $952 million, for an average loan size of $27.2 million, to four conduit deals under the CSAIL Commercial Mortgage Trust shelf, it contributed 4.2 large loans, with a balance of $2.8 billion, to six single-borrower transactions. Those included its share of a $1.4 billion loan, securitized through Credit Suisse Mortgage Securities Corp., 2019-ICE4, against a portfolio of 64 cold-storage facilities owned by Lineage Logistics.

The most-active lenders with the smallest average loan size include Ladder Capital Finance, with an $11.4 million average; Rialto Mortgage Finance, with a $12 million average; and Starwood Mortgage Finance, with a $12.9 million average.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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