CMBS is Back via Commercial Property Executive

At its 2007 peak, the CMBS market reached $230 billion in sales. While we are a long way from that crest, the CMBS market has fought its way back: Wall Street banks report selling $1.25 billion during the week of Sept. 10 alone, and we are poised for $7 billion in new bonds in October. Issuance could hit $45 billion this year, partly because many loans written in 2007 are rolling over and are refinancing with new conduits. That total could rise to $58 billion in 2013 and $75 billion in 2014. Part of the issue is that there is a shortage of bonds in the market, since so much of the 2007 stock matured this year.

All of this is good news for the industry, because the simple truth is that we can’t function without CMBS. The bond market remains the principal way that developers and owners convert temporary financing (often three-year construction loans) into permanent financing. Typically, this is accomplished with conduit loans, which are converted into securities and sold to investors.

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