CMBS have dropped sharply since the start of the year, with Triple-B bonds tumbling 18%—a development that could signal a broader downturn in the commercial real estate market.
The high prices CMBS investors are demanding to take on risk means property owners and developers will face higher rates on loans. The change happens as the market braces for the CMBS maturity wall, in which nearly $200B in CMBS loans will need refinancing, the Wall Street Journal reports.
“It’s not a good dynamic,” said Lea Overby, head of CMBS research at Nomura Securities. “The cost of financing will increase for borrowers with loans coming due.”
And for the cherry on top, the CMBS dive comes as both regulators and investment giants say lending practices are starting to look as bad as they did leading up to the 2008 crash. [WSJ]
