Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Monday, 05 March 2018

CMBS Market Share Down, But Not Out

CMBS loans comprise 13.9 percent of the $3.1 trillion commercial mortgage universe. That's down sharply from the 22 percent share of the universe before the Great Financial Crisis. No one expects CMBS to go away, but it's unlikely to recover to its levels before the recession.

Commercial Real Estate Direct Staff Report

CMBS loans comprise 13.9 percent of the $3.1 trillion commercial mortgage universe. That's down sharply from the 22 percent share of the universe before the Great Financial Crisis.

While its market share has shrunk appreciably, no one expects CMBS to go away. After all, it's an efficient way of funding mortgages against income-producing properties.

Securitized lenders have picked up speed in recent years - last year, they issued $86.4 billion of CMBS, for instance, up sharply from the $68.3 billion in 2016 - but CMBS is unlikely to ever hit the issuance numbers reached before the recession.

A few key things drove the sector's dominance before the recession. Investor demand for CMBS was keen, which pushed bond spreads to super-low levels. That allowed securitized lenders to write generous mortgages with low coupons. Much of the demand was driven by structured investment vehicles, which issued short-term commercial paper and used proceeds to leverage investments in longer-term assets, including CMBS, and investment banks' proprietary trading desks. But the two housing-finance agencies, Freddie Mac and Fannie Mae, were perhaps the largest investors in the asset class.

It was common before 2008 for CMBS deals' AAA-rated bonds to be oversubscribed by three times. That hefty demand resulted in extremely tight...





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“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

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  • Industry moves and changes in “The Insider“

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

 

 

 

REITCafe

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shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
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