Housing Investors Can See Potential Bright Spots
SOURCE: The New York Times
Commercial-Mortgage-Backed-Securities (CMBS) had become the most popular form of debt in the U.S. as of late. Today, investor demand for these securities has become so low that there have been very few new issues this year. This is a dramatic change over previous years and a further drop expected this year.
With this tremendous drop in investors looking to buy CMBS and the securitization lenders slowing down their new loan originations, this has forced owners and buyers of commercial property to scramble to find other forms of financing. The reduction in sales activity can be attributed in a large part to the increasing cost and declining availability of all forms of debt.
"There is no question that the CMBS market is challenging," says Jeff Altabef, co-head of European CMBS at Credit Suisse. "The deal pipeline is low and banks are looking at alternative ways of syndicating existing positions based upon risk and return profiles, but there is low investor appetite at the moment." Unlike the subprime loans, though, the default rate on the commercial-real-estate mortgages underlying the issues has been low but they have been dragged down by the subprime mortgage crisis.
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Commercial-Mortgage-Backed-Securities (CMBS) had become the most popular form of debt in the U.S. as of late. Today, investor demand for these securities has become so low that there have been very few new issues this year. This is a dramatic change over previous years and a further drop expected this year.
With this tremendous drop in investors looking to buy CMBS and the securitization lenders slowing down their new loan originations, this has forced owners and buyers of commercial property to scramble to find other forms of financing. The reduction in sales activity can be attributed in a large part to the increasing cost and declining availability of all forms of debt.
"There is no question that the CMBS market is challenging," says Jeff Altabef, co-head of European CMBS at Credit Suisse. "The deal pipeline is low and banks are looking at alternative ways of syndicating existing positions based upon risk and return profiles, but there is low investor appetite at the moment." Unlike the subprime loans, though, the default rate on the commercial-real-estate mortgages underlying the issues has been low but they have been dragged down by the subprime mortgage crisis.
Read full report »
