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Wednesday, 03 October 2018

Tepid CMBS Issuance in 3Q Leads to 4 Percent Drop in Volume for Year

Domestic, private-label CMBS issuance totaled $17.6 billion during the third quarter, bringing issuance for the year to just more than $58 billion. That's nearly 4 percent shy of the $60.4 billion that had been issued to this point last year. Last year benefited from a robust $26.3 billion of issuance. JPMorgan Securities remains comfortably atop a ranking of CMBS bookrunners, with a 16.8 percent share of the market.

Commercial Real Estate Direct Staff Report

Domestic, private-label CMBS issuance totaled $17.6 billion during the third quarter, bringing issuance for the year to just more than $58 billion.

That's nearly 4 percent shy of the $60.4 billion that had been issued to this point last year, which benefited from a robust $26.3 billion of issuance during the third quarter - a third again as much as this year's third quarter. Total issuance for all of last year was $86.4 billion - a level unlikely to be reached this year. Quarterly issuance this year has averaged only $19.3 billion, down from last year's $21.6 billion. If volumes don't change appreciably, the year could see roughly $77 billion to $80 billion of issuance.

That volume doesn't include collateralized loan obligations. A total of 20 such deals totaling $10.1 billion have priced so far this year.

The buzz is that perhaps a dozen more single-borrower transactions will be brought to market, along with perhaps six or so conduit transactions before the year is up.

Domestic, Private-Label CMBS Issuance

3Q2018

3Q2017

Deal Type

#Deals

Bal $mln

#Deals

Bal $mln

Conduit

10

8,922.52

13

12,333.88

Single-borrower

22

8,562.14

22

13,212.30

Other

1

132.30

2

716.56

TOTAL

33

17,616.96

37

26,262.74

 

 

 

 

 

 

 

 

During the third quarter and so far this year, the dollar volume of conduits and single-borrower transactions has been almost evenly mixed. But so far this year, more than twice as many single-borrower deals have priced than have conduits.

Meanwhile, conduit issuance is down 13 percent from last year's levels.

The average size of the 64 single-borrower deals that have priced so far this year has been $454.64 million. That compares with last year's $562.93 million average. Conduit transactions also have shrunk in average size, to $923.1 million from $952.74 million.

Domestic, Private-Label CMBS Issuance

9Mos2018

9Mos2017

Deal Type

#Deals

Bal $mln

#Deals

Bal $mln

Conduit

31

28,615.75

35

32,995.94

Single-borrower

64

29,097.05

45

25,331.65

Other

2

297.26

5

2,026.20

TOTAL

97

58,010.06

85

60,353.79

 

 

 

 

 

 

 

 

The conduit business, meanwhile, just isn't as profitable as it was last year. The weighted average profit margin for conduit deals that priced this year and had either a horizontal or vertical risk-retention structure was 1.2 percent. The comparable margin for deals that priced last year through September was 3.82 percent.

At the same time, credit underwriting remains relatively conservative, with the average loan-to-value ratio at 59.9 percent, according to Wells Fargo Securities. That's up only slightly from last year's 59.9 percent and compares with a post-crisis high of 65.8 percent for conduits issued in 2014. Debt-service coverage, meanwhile, averaged 1.98x this year, compared with 2.05x last year. But the percentage of loans, by balance, that don't amortize during their lives, has increased to 51.7 percent from last year's 46.6 percent, Wells Fargo found.

Top Bookrunners
Domestic, Private-Label CMBS

9Mos2018

9MosQ2017

Investment Bank

#Deals

Bal $mln

Mkt Shr%

#Deals

$mln

MktShr%

JPMorgan Securities

16.05

9,725.13

16.76

11.70

8,474.19

14.04

Deutsche Bank

11.35

7,938.73

13.69

9.18

7,436.67

12.32

Goldman Sachs

11.88

6,517.39

11.23

12.05

8,066.71

13.37

Wells Fargo Securities

10.30

5,850.83

10.09

9.27

7,201.19

11.93

Morgan Stanley

8.16

5,466.19

9.42

8.22

6,314.01

10.46

Citigroup

6.89

5,114.51

8.82

9.47

7,567.42

12.54

UBS Securities

5.09

3,647.86

6.29

3.19

2,430.95

4.03

BofA Merrill Lynch

4.38

3,137.32

5.41

4.96

3,405.22

5.64

Barclays Capital

4.49

2,954.67

5.09

4.52

3,593.41

5.95

Natixis

10.11

2,872.57

4.95

2.82

1,388.09

2.30

Credit Suisse

3.71

2,423.20

4.18

5.77

2,416.95

4.00

Societe Generale

1.62

1,286.44

2.22

1.47

1,023.07

1.70

Cantor Fitzgerald

1.97

942.73

1.63

0.85

549.25

0.91

Performance Trust

1

132.30

0.23

-

-

-

TOTAL

97

58,010.06

 

84

60,353.79

 

JPMorgan Securities remains the most-active CMBS bookrunner. It received credit for just more than 16 deals totaling $9.7 billion, for a 16.8 percent share of the overall market. Its market share was down slightly from the 17.2 percent share it held at the half. Well behind it is Deutsche Bank, with credit for 11.4 deals totaling $7.9 billion and a 13.7 percent market share, and Goldman Sachs, with 11.9 deals totaling $6.5 billion for an 11.2 percent share of the market.

Commercial Real Estate Direct divvies up bookrunner credit proportionally among all of a deal's bookrunners, based on what's stipulated in offering materials.

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

 





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Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

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

 

cppichart FP

 

 

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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