CMBS B-Pieces and The Multifamily and Commercial Lending Market

CMBS B-Pieces and The Multifamily and Commercial Lending Market

CMBS loans are among the most popular types of financing for multifamily and commercial real estate, with approximately $77 billion in CMBS financing issued in 2018 alone. As many already know, CMBS loans are designed for securitization, meaning that one borrower’s loan will generally be grouped with many others to generate a commercial mortgage-backed security, which is then sold to investors on the secondary market.

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Master Servicers for CMBS Loans: What Borrowers Need to Know

Master Servicers for CMBS Loans: What Borrowers Need to Know

Unlike a traditional bank or credit union loan, a CMBS loan is not serviced by the lender that originated the loan. A third-party loan servicing firm, known as a master servicer, will typically take on this responsibility.

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Special Servicers for CMBS Loans

Special Servicers for CMBS Loans

One potential downside to CMBS is that these loans are not serviced by the lender that originated them, and are typically placed under the supervision of separate loan servicing company referred to as master servicer. But what if things go south and a borrower defaults on their loan? That’s when another company, called a special servicer, comes in.  

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The Pros and Cons of CMBS Loans: A Guide

The Pros and Cons of CMBS Loans: A Guide

While CMBS loans all but disappeared after the 2008 market crash, in the last 4-5 years, the CMBS market has been stronger than ever, with nearly $88 billion of loans issued in 2017, and October 2018 numbers showing a loan volume of nearly $65 billion from the beginning of that year. CMBS came roaring back for a variety of reasons, including the fact that they often provide the highest leverage loan a borrower can get for properties in secondary and tertiary markets. However, CMBS loans aren’t ideal for everyone— as they can provide a particularly poor loan servicing experience rife with significant prepayment penalties.

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CMBS Lenders vs. Life Companies: What You Need to Know

CMBS Lenders vs. Life Companies: What You Need to Know

CMBS lenders and life companies often compete in the same space for large real estate deals. Both have significant advantages and certain disadvantages. For instance, life company loans typically offer lower rates and significantly better loan servicing, while CMBS loans are much easier to get approved for and offer benefits including interest-only periods (and even full, interest-only loans).

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Single Asset Single Borrower (SASB) CMBS Loans: What You Need to Know

Single Asset Single Borrower (SASB) CMBS Loans: What You Need to Know

SASB CMBS transactions involve the securitization of a single loan, which is typically collateralized by one, very large property. Single Asset Single Borrower transactions are typically based on loans of at least $200 million, and often range up to $800 million to $1 billion+. While most are collateralized by one property, SASB loans can also be collateralized by a group of cross-collateralized/cross-defaulted properties all owned by the same borrower (much like a Fannie Mae Bulk Delivery Loan or Fannie Mae Credit Facility financing, though with much less flexibility).

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CMBS Spreads: What You Need to Know

CMBS Spreads: What You Need to Know

A CMBS spread, also referred to as a CMBS credit spread, is the difference between the interest rate of a CMBS loan and the underlying index on which the interest rate is based on. Since the vast majority of CMBS loans are based on the swap rate, spreads can usually be determined by taking the interest rate of a loan and subtracting the swap rate.

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What are the Interest Rates for CMBS Loans in 2019?

What are the Interest Rates for CMBS Loans in 2019?

Currently, most CMBS loans vary between 4.30- 5.00%, with exceptions for particularly desirable or particularly risky properties. CMBS loan rates are generally based on the U.S. Treasury Index, plus a margin, also known as a spread, which compensates a lender for their risk and provides for their profits

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