As companies and investors enter the third quarter of the year, it’s time to take a look at the commercial mortgage-backed securities (CMBS) market.
NEW YORK, NEW YORK, USA, September 16, 2022 /EINPresswire.com/ — As companies and investors enter the third quarter of the year, it’s time to take a look at the commercial mortgage-backed securities (CMBS) market. Commercial mortgage-backed securities (CMBS) are fixed income investment products that are backed by mortgages on commercial properties rather than residential real estate. CMBS can provide liquidity to real estate investors and commercial lenders. Because there are no regulations to standardize CMBS structures, their valuations can be difficult. The underlying securities of CMBS may include a number of commercial mortgages of varying terms, values and property types, such as multi-family dwellings and commercial real estate. CMBS may offer less prepayment risk than residential mortgage-backed securities (RMBS) because the term of commercial mortgages is generally fixed.
Similar to debt-backed bonds (CDOs) and mortgage-backed bonds (CMOs), CMBS come in the form of bonds. Mortgages that form a single commercial mortgage-backed security act as collateral in the event of default, with principal and interest flowing through to investors. Loans are usually contained in a trust and they are very diverse in their terms, types of assets and amounts. The underlying loans that are securitized in CMBS include loans for properties such as apartment buildings and complexes, factories, hotels, office buildings, office parks and shopping malls, often within of the same trust.
A mortgage loan is generally considered non-recourse debt, which is any consumer or commercial debt that is secured only by collateral. In the event of default, the lender cannot seize any assets of the borrower beyond the collateral. Since CMBS are complex investment vehicles, they require a wide range of market participants including investors, lead manager, lead manager, special manager, manager certificate holder, trustees and rating agencies. Each of these actors plays a specific role in ensuring the proper functioning of the CMBS.
The CMBS market represents approximately 2% of the total US fixed income market. Joe Malvasio of Global Capital Partners Fund, LLC provides its view on the current state of the market and what we can expect in the coming months. The CMBS market had a strong first half, with issuances totaling $140 billion. This is up from $120 billion in the first half of 2020 and is the highest level of issuance since 2007. The increase in activity can be attributed to a number of factors including low interest rates, strong borrower demand and increased refinancing activity. .
Looking ahead, investors can expect commercial mortgage-backed securities issuance to remain strong in the third quarter as borrowers take advantage of low interest rates. There may also be changes in the makeup of shows, with more private label deals coming to market and fewer conduit deals. This is due to the continued strong demand for higher yielding products from investors. Overall, the CMBS market is doing well right now. Borrowers are taking advantage of favorable conditions to refinance or buy property, and investors are finding many attractive opportunities. Investors should see another strong quarter of issuance, followed by a fourth quarter that could be even stronger.
About Joseph Malvasio, President of Global Capital Partners Fund, LLC
Joseph Malvasio is the President of Global Capital Partners Fund, LLC. Over the past 40 years, Mr. Malvasio has become one of the most trusted private lenders in the United States. It has a stellar reputation for excellent customer service, fast loan closings, and a range of loan options. Global Capital Partners is a New York-based private global commercial lender, offering many financing options including: bridge financing, hard money loans, private loans, commercial real estate financing, joint venture structured financing, permanent financing, mezzanine financing, loans to construction and acquisition financing. It is recognized as one of the best mortgage lenders due to its easy loan applications and fast processing. It has been very successful and has helped many clients over the years. Global Capital Partners has funded over $2 billion in transactions. From mortgages to land, development and even equipment, his expertise in private loan financing allows him to quickly close loans ranging from $1 million to over $100 million.
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