The CMBS market has deflated from a $280B biz in 2007 to $100B in 2013, Cassidy Turley partner Kurt Scheidt tells us. Here's why: Buyers typically don't like to borrow from a CMBS lender because there's often a lot of structure involved, he says. Yet while the CMBS pie has shrunk, the number of participants has increased almost twofold (27 in 2007 to 45 in 2013). There's no doubt it's still a really frothy market, he says, with CMBS guys doing everything they can to get money out the door. (They treat cash like they treat in-laws.)
Buyers tend to prefer a life company loan if they're going long, fixed, and non-recourse. But some deals have CMBS written all over them. CMBS loans chase atypical real estate in secondary markets, like a shopping center in Stockton, Calif. Or a recent refinance in Portland, Ore., for a shopping center (above) occupied by LA Fitness, Century Theater, and Ross. Life companies avoided that deal because it's not the right tenant mix (they prefer a grocery, not health club, anchor), says Kurt, who repped the owner and got a whopping 10 CMBS bids that met proceeds, structure, and pricing. How do you pick if all quotes look alike? Kurt goes with people he's closed biz with before and trusts.
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