What a Faltering CMBS Markets Means for Commercial Property

The market for commercial mortgage backed securities (CMBS) is faltering as investors are demanding more security and better terms for the riskier portions of the deals or avoiding such portions altogether. The weaker demand leads to more attractive structures being offered obtain investors.

This means higher rates for commercial RE borrowers as the more attractive structures translate into a more expensive loan. The lower interest rates can act as a counter balance, but it is too soon to see how it will play out.

Due diligence by the CMBS lenders in reviewing surveys and leases will be more intensive, looking for any problem that could impact their ability to market the securities.  Current owners of commercial property getting ready to sell or refinance the property should do a review of the leases and other diligence information to spot potential issues and try to resolve them while there is time to do so. Also, owners will need to be realistic in setting the asking price. The pricier the CMBS becomes to continue attracting investors, the less a buyer will be able to offer, suppressing the price of commercial properties.


Dallas Property Management said...

You have pointed out some great points. Glad you made this very relevant topic for those who are trying to find this out. Likewise thanks for sharing this. Keep it up!

Nikki said...

Very need information for me... I hope this is very helpful for who searching for this relevant topic... Thanks for sharing.

Commercial Contracts