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CMBS Lenders Concerned About Risk Retention Regulations


New financial oversight regulations are set to take effect this year requiring CMBS loans to retain a 5% chunk of each CMBS deal for five years.

The rules—which take effect Dec. 24—have caused some concerns for CMBS lenders already reeling from a year-to-date 50% decline in overall insurance last year, CoStar reports.

At present, CMBS loans account for 7% of all commercial real estate lending, down from 17% in 2015. That’s quite a shift from the 2006 market, when CMBS loans accounted for roughly 50%.

“There are fewer loans being originated as CMBS lenders are becoming more selective and conservative,” says Richard Hill, head of US REIT Equity and CRE Debt Research at Morgan Stanley. [CoStar]