CMBS & Conduit Loans
CMBS loans, sometimes known as conduit loans, have become a very popular source of capital for commercial real estate investors. CMBS stands for commercial mortgage backed security — a fitting name, as these loans are pooled with other loans and securitized so as to be sold off to investors for a return. In practice, hundreds of similar loans varying in size, rate, collateral (property type), etc. are bundled together. Once bundled, a blended rate of return is established, and investors may buy shares of that bundle of mortgages. CMBS investors may elect to invest in various CMBS bonds depending on property types, risk aversion, geographic location of the properties in the portfolio, the credit rating, and so-on.
Conduit financing is generally non-recourse, with fairly lenient credit requirements. Typical CMBS loans are structured with fixed-rate terms of 5, 7, or 10 years. Most CMBS loans come with prepayment penalties and provisions such as yield maintenance and defeasance to protect the guaranteed yield to the investors.
Click the following link to find more information on CMBS & Conduit loan terms.
To learn more about your multifamily loan options, fill out the form below and speak to a specialist.