Commercial Real Estate Finance

Posts Tagged ‘underwriting standards’

CMBS stands for commercial mortgage backed securities.  Of course, if you asked borrowers about 18 months ago (and many even today), you might have thought it stood for Commercial Mortgage Bull $hit.  When CMBS financing was introduced to the commercial real estate industry earlier in the decade, it was viewed as a Godsend.  This was because rates and terms were better than those being put out on term sheets from conventional banks.  The reason for this, of course was that the loan originators (often large banks) would not keep these loans on their balance sheets, but instead sell them off in tranches, with the help of investment banks, to individual investors who had a wider appetite for risk.  Rather than putting all of their eggs in one basket with one property, they technically owned pieces of multiple properties that were all pooled together.  On the surface this seemed like a great idea and a win-win for all involved.  Obviously, the lax underwriting standards for these loans did not (and maybe could not) have taken into account the tumultuous events of the credit crisis. Read the rest of this entry »

News broke late last week regarding Royal Bank of Scotland’s $500M issuance of CMBS bonds.  This would mark the first such sizable CMBS issuance in 2010. I know what you must be thinking.  CMBS?  Isn’t that what helped steer us into this mess to begin with? In a word, yes.  However when you take note that approximately one third of the loans originated between 2005-2007 were sold into, and therefore facilitated by, the secondary CMBS market, this can only be a good thing for real estate.  As other banks begin to follow RBS’ lead (and there have been signs that just that is happening)

Despite what you might be thinking, investors are not necessarily in need of a lobotomy.  They remember the pain.  They remember the collapse of the marketplace.  But now, they see value. Read the rest of this entry »

As if landlords didn’t already have enough to worry about, dealing with delinquent rent payments, having to offer concessions left and right to increase occupancy, and wondering what they will do when their current loan balloons, they now may have to increase their capital expenditure budgets and rework their ARGUS models too. Why you ask?  Well if new legislation in Philadelphia gets passed this fall, and then catches on in other major cities with older infrastructure, landlords may have to pay for exterior building maintenance. Read the rest of this entry »