Is CMBS Seeing The Light?
Thanks to three CMBS conduit deals totaling $2.3B, May has seen one of the most active CMBS issuance weeks in months, possibly signaling a reprieve from CMBS’s slow Q1.
CMBS issuances hit $19.1B during Q1, down 30% from the $27B in Q1 ‘15. 2015 saw $101B of CMBS issuances, the first time CMBS broke $100B since 2007—but concerns in the CMBS industry, like greater risk-retention laws, are putting the brakes on hopes of hitting the same number in 2016.
The Preserving Access to CRE Capital Act, which still has to get through the Senate, will do a lot to mitigate the new regulations, and “would also provide more flexibility in how CMBS transactions are structured, in order to better accommodate how investors raise capital and divide risk in the capital stack, reducing the rule’s unintended negative impact on CRE liquidity,” Real Estate Roundtable CEO Jeff DeBoer tells GlobeSt.
The new CMBS regulations are set to come into effect right in the middle of the looming CMBS maturity wall—the massive amount of CMBS loans coming due during 2016-17. That, combined with recent economic turmoil, is a lot of pressure for CMBS to bear. [GS]