{"id":1004105673,"date":"2014-10-15T11:13:41","date_gmt":"2014-10-15T19:13:41","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004105673"},"modified":"2022-12-07T01:56:51","modified_gmt":"2022-12-07T09:56:51","slug":"fitch-sees-room-for-improvement-in-u-s-cmbs-market","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/fitch-sees-room-for-improvement-in-u-s-cmbs-market\/","title":{"rendered":"Fitch Sees Room for Improvement in U.S. CMBS Market"},"content":{"rendered":"
\"Huxley<\/a>

Huxley Somerville<\/p><\/div>\n

While there are many favorable aspects to the general health of the U.S. CMBS sector, some areas could bear improvement, according to Fitch Ratings.<\/p>\n

\u201cEveryone wants to avoid the mistakes in CMBS 1.0 and what happened there. There has been as a whole improvement across the board, but there are still a couple of areas that are hangovers from 1.0 that don\u2019t seem to have been resolved,\u201d Fitch Ratings managing director Huxley Somerville told Commercial Property Executive<\/i>. \u201cThey aren\u2019t necessarily easy fixes, and CMBS 2.0 is better, but there are places that could be (even) better.\u201d<\/p>\n

Among them, Somerville said, is that as new originators enter the market, there is a need to stretch to get the loans originated. \u201cThey are all competing for very much a similar product, and the underwriting gets pushed in the wrong direction, and there\u2019s not a lot you can do about it,\u201d he said. \u201cYou want competition and you can\u2019t inhibit the market, but unfortunately, a side effect is that underlying standards decline, and they will decline until there is some sort of correction.\u201d<\/p>\n

According to Somerville, a great deal has been made of the underwriting declines in recent years, but in fact CMBS originators are generally exercising prudence and using more sensible assumptions when underwriting a property\u2019s cash flow\u2014a positive development compared to the 2006 to 2008 period.<\/p>\n

Fitch\u2019s recent report analyzing the market also identified other areas with room for improvement, particularly around potential conflicts of interest among special servicers and the excessive amount of debt evident in some large-loan deals.<\/p>\n

\u201cIncreased transparency is still needed on the motivations of some CMBS special servicers in relation to the actions that they take on a loan in need of a workout,\u201d Somerville said. \u201cAs for large loans, some of them are just too highly leveraged and may have considerable refinance risk, particularly if interest rates are significantly higher at maturity.\u201d<\/p>\n

Of the favorable signs, Somerville feels credit enhancement will increase, something that didn\u2019t occur in the last cycle.<\/p>\n

This U.S. CMBS progress report is the first in a series Fitch plans to publish globally that discusses significant changes various sectors have undergone since the financial crisis.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Keith Loria, Contributing Editor: While there are many favorable aspects to the general health of the U.S. CMBS sector, some areas could bear improvement, according to Fitch Ratings.<\/p>\n","protected":false},"author":1139,"featured_media":1004105674,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21825,37753],"tags":[],"class_list":["post-1004105673","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-research-center-finance"],"acf":[],"yoast_head":"\nFitch Sees Room for Improvement in U.S. CMBS Market - 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\/fitch-sees-room-for-improvement-in-u-s-cmbs-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fitch Sees Room for Improvement in U.S. CMBS Market\" \/>\n<meta property=\"og:description\" content=\"By Keith Loria, Contributing Editor: While there are many favorable aspects to the general health of the U.S. CMBS sector, some areas could bear improvement, according to Fitch Ratings.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/fitch-sees-room-for-improvement-in-u-s-cmbs-market\/\" \/>\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=\"2014-10-15T19:13:41+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-07T09:56:51+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/10\/Somerville.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"300\" \/>\n\t<meta property=\"og:image:height\" content=\"319\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Keith Loria\" \/>\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\/fitch-sees-room-for-improvement-in-u-s-cmbs-market\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/fitch-sees-room-for-improvement-in-u-s-cmbs-market\/\",\"name\":\"Fitch Sees Room for Improvement in U.S. CMBS Market - 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