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CMBS Issuances Skyrocket From No Deals In January To 335 In August

The rebound of CMBS issuances in the second half of 2017 compared to the beginning of the year is dramatic.

Lenders went from issuing no loans in January, to issuing 335 loans in August alone totaling $10.65B, according to data gathered by Trepp.

330 Madison Ave. in Midtown Manhattan, owned by Vornado

The CMBS market began the year with trepidation, with lenders treading lightly due to uncertainties surrounding risk retention rules enacted in December that require lenders to keep 5% of each loan on the books. 

Lenders issued only 15 loans totaling $11.1B in Q1 — down 34% from the year prior. Lending climbed moderately in the second quarter, thanks in part to a large jump in commercial mortgaged-backed securities debt. By the end of June, CMBS issuance had skyrocketed — 451 CMBS loans worth $12.3B in debt closed that month. 

Capital markets remain favorable, pushing lending volume up across all major groups. CMBS issuance jumped in Q2 to $38.8B year-to-date, well above the $30.7B in CMBS debt issued at the same period last year. 

Major Deals Abound

There were several iconic deals funded through the CMBS market last month. Blackstone Group’s $8B acquisition of BioMed Realty, a life science real estate trust, is largely funded through CMBS notes. Though the deal closed last January, Blackstone tapped the CMBS market to secure the second part of its funding for the portfolio, which consists of 15 BioMed offices, CoStar reports. Blackstone secured $825M in lending led by Citigroup. Other lenders include Citi Real Estate Funding, Deutsche Bank and Barclays Bank

Vornado secured one of the largest loans last month to refinance its 330 Madison Ave. property in New York. The 840K SF office and retail building is anchored by Grand Central Terminal, and but a few steps away from the New York institution known as Bryant Park. The seven-year loan for $500M has a fixed rate of 3.475%, and was issued by several lenders, including German-based Landesbank Baden Wurttemberg. 

Other deals include the $712M loan Blackstone Group secured to refinance its iconic Hotel del Coronado in San Diego. The world’s largest asset management company was supposedly in talks to offload the 130-year-old hotel, but instead was able to secure enough to pay off the $703M it borrowed on the asset last year.