{"id":1004032829,"date":"2011-10-05T10:21:08","date_gmt":"2011-10-05T18:21:08","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004032829"},"modified":"2022-12-08T01:20:31","modified_gmt":"2022-12-08T09:20:31","slug":"keeping-the-faith-on-cmbs-amid-market-forces","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/keeping-the-faith-on-cmbs-amid-market-forces\/","title":{"rendered":"Keeping the Faith on CMBS Amid Market Forces"},"content":{"rendered":"

By Nicholas Ziegler<\/strong>
\nNews Editor, Commercial Property Executive<\/em><\/p>\n

In real estate, everything is connected. The health of the economy in general, as always, affects the rest of the market, sometimes in unexpected ways. In recent months, amid a European debt crisis, deepening concerns over employment numbers and on-the-sidelines speculation, there is growing concern over the CMBS market. As recently as this summer, analysts were calling for an increase in CMBS issuances<\/a> \u2013 but a series of factors has seemed to derail the recovery, of both the economy in general and the CMBS market specifically.<\/p>\n

In a report released yesterday by law firm DLA Piper \u2013 its fifth \u201cState of the Market Survey\u201d \u2013 an overwhelming majority of respondents predicted a cooling of the CMBS market. While 46 percent of the responding CRE executives and senior managers expected transaction volume to hit the $30 billion to $40 billion range, 48 percent predicted that CMBS would only reach the $25 billion to $30 billion range for 2011. And despite potentially more attractive loan terms available from CMBS, 55 percent favor financing from conventional lenders. As one respondent wrote, \u201cTurmoil in the CMBS market has made debt unattractive and thus the pace of acquisitions and refinancings must slow as a result, which should cause cap rates to rise.\u201d<\/p>\n

Trepp was even more clear in its early-October report: \u201cThere is no denying the CBMS market has been acutely negative in the past three months,\u201d the research firm said. With a huge drop in delinquencies in August, it looked as if things might be turning around. But there have been a lot of changes in the last three months: Spreads have risen sharply, lenders are no longer offering new loans, the economy in general has weakened and some in commercial real estate have speculated that trophy-property pricing has risen too quickly.<\/p>\n

But it\u2019s not cause for panic.<\/p>\n

According to a report by Cushman & Wakefield, CRE delinquency rates continue to slowly improve, with CMBS delinquency rates 100 to 200 basis points worse than bank delinquencies — which are at roughly 7.0 percent. Fitch Ratings has taken proactive steps to raise enhancement levels for new CMBS to ensure \u201cample credit risk protection\u201d and has pledged to continue raising those levels \u201cif standards continue to decline further.\u201d And as Commercial Property Executive<\/em> reported in its September issue, banks such as KeyBank are actively searching out new loans under their CMBS arms<\/a>.<\/p>\n

It appears to be a question of discipline, then, on the part of the lenders. \u201cIn football, the old saying goes that you are never as bad as you look when you’re losing, nor are you ever as good as you look when you’re winning,\u201d Trepp wrote in its report.\u00a0\u201cSo was the case with CMBS in September.\u00a0 While many of the headlines were sharply pessimistic in tone, not all of the data was negative.\u201d Huxley Somerville, group managing director of CMBS for Fitch, stressed the need to keep that winning mentality.<\/p>\n

\u201cFitch agrees that underwriting standards have declined in the last 12 months,\u201d he said. \u201cHowever, it should be noted that deterioration thus far has been off of very high standards. In other words it was only a matter of time before underwriting standards began to decline from such an unusually high level.\u201d<\/p>\n

As Somerville said at the close of his report, \u201cIt behooves all in the industry to ensure that discipline and memories are maintained so that the industry, too, is maintained.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

While it’s been a negative few months for the CMBS market, from delinquencies to the removal of lender options, there are still reasons to keep the faith. <\/p>\n","protected":false},"author":1201,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1004032829","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\nKeeping the Faith on CMBS Amid Market Forces - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/keeping-the-faith-on-cmbs-amid-market-forces\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Keeping the Faith on CMBS Amid Market Forces\" \/>\n<meta property=\"og:description\" content=\"While it's been a negative few months for the CMBS market, from delinquencies to the removal of lender options, there are still reasons to keep the faith.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/keeping-the-faith-on-cmbs-amid-market-forces\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2011-10-05T18:21:08+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-08T09:20:31+00:00\" \/>\n<meta name=\"author\" content=\"Nicholas Ziegler\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/keeping-the-faith-on-cmbs-amid-market-forces\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/keeping-the-faith-on-cmbs-amid-market-forces\/\",\"name\":\"Keeping the Faith on CMBS Amid Market Forces - 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