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

Tuesday, 15 January 2019

The Next Crisis May Be Different for Banks and CMBS

Banks are likely to feel the pinch of rising interest rates sooner than CMBS, which may not see any impact for at least another four years.

By Manus Clancy, Trepp LLC

There are many things to worry about in commercial real estate. But when it comes to rising interest rates, not all risks are created equal.

In 2008, overstated property valuations, loose lending and heavy leverage on loans issued in 2006 and 2007 helped sink lenders of all stripes - from banks to CMBS conduits.

No two crises are the same - and we're not necessarily saying that rising interest rates will trigger a crisis - but rising rates might take a much different bite out of banks than they would CMBS.

Banks are much more likely to write loans with floating rates and terms of five years or less. Libor - the benchmark against which most short-term, floating-rate loans are pegged - has increased disproportionately to the long end of the yield curve.

So, banks will have to contend with borrowers having to refinance their...





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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

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • 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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    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
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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