CMBS Issuance Slows As Lenders Respond To New Risk Retention Rules

CMBS loan issuance was down 34% in the first quarter of the year as lenders scrambled to clear their loan history before the new risk retention rules set in.

The end of March marked the first full quarter under the new risk retention rules, which aim to tighten commercial lending standards by requiring issuers to keep 5% of the value of any loan on their balance sheets, rather than selling it entirely in the form of bonds.

The rules took effect in December, and in some cases, these rules have made CMBS loans less profitable to issue, requiring CRE sponsors to put up more capital to see a deal through.

The lack of loan issuance came as no surprise to the industry, according to Trepp’s Catherine Liu. Lenders did not issue any commercial loans in January, but from Feb. 1 to March 15 CMBS transactions amounting to $11.1B went through — down 34% compared to the previous 12 months, according to TreppTalk.

In addition to slow lending activity, billions in CMBS loans continue to approach their maturity debt as the year goes on. Of the $61.1B in CMBS debt maturing within the next six months, $6.7B is due in March. Most of these loans were issued in the late stages of the commercial real estate bubble, either in 2006 or 2007, and many of these properties may not meet today’s credit standards.

Despite talks of President Donald Trump’s push for financial deregulation, the industry does not foresee credit standards loosening any time soon. As a result, alternate lenders such as institutional investors and developers are increasingly tapping into the debt lending business to fill a void left by banks.

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's National Newsletters
Related Stories

Interest Rate Hike Douses Outlook For Atlanta Developers

The Bridge-To-Bridge Bet Is Holding Off CRE's 'Day Of Reckoning' — For Now

Augmentation, Not Replacement: How AI Platforms Are Streamlining Front Desk Teams

Lawmakers Punt On Stripping Approvals From 15 Projects In Data Center Alley

Success Of Top-Tier Malls Masks Enduring Distress In Sector's Underbelly

HUD Launches Investigation Into Wells Fargo's Efforts To Support Black Homeownership

Delaware Statutory Trust Fundraising Jumps 27% From 2025

Bank OZK Shares Drop After Citi Flags $915M Mortgage Concern

Activist Investor Buys Stake In Empire State Building Owner

Soaring Yields Strand REITs In M&A No-Man's-Land

How UK Investment Giant L&G Plans To Grow Its U.S. Multifamily Holdings

Properties Owned By REIT Accused Of Fraud To Be Auctioned Off