In 2016, CMBS 2.0+ loans have comprised nearly 40% of all defeasance activity. The defeasance of these newer vintage CMBS loans highlights hidden Borrower risk, in the area of defeasance portfolio structuring and pricing. Borrower exposure to securities portfolio markup grows exponentially with 2.0 loans due to a combination of longer maturities and alternative collateral options. Sloppy structuring and poor pricing equate to higher Borrower costs.
U.S. defeasance activity reached a post-crash high of $22.4 billion last year, but the rate of growth slowed sharply. The volume of commercial MBS loans defeased in 2015 was up by $1.5 billion, or 7%, from $20.9 billion the previous year, according to a draﬅ of an annual Moody’s report to be released today. That was a modest increase compared to jumps of $7.7 billion (58%) in 2014 and $7.3 billion (124%) in 2013.
Commercial Defeasance and QuietStream Financial mourn the loss of board member Joe Trustey. He was a valued advisor and good friend. Our hearts are breaking for his wife and colleagues, and our thoughts and prayers are with them.
Here’s the question we really want answered: Will two rate hikes happen before Christmas?
Historically, multiple successive rate hikes have followed a period of prolonged low interest rates. This was the case at the conclusion of the low-rate periods of the early 1990s and mid 2000’s. Read more
It’s no secret CRE professionals have been lukewarm to new technologies. Meanwhile, the rest of the world is accelerating adoption quickly, which is why CRE is now playing catch-up. Read more
Why? Defeasance economics are turning in their favor. Let me explain. Read more
Due to sustained low rates and continued strength in the sector, owners of multi-family properties are moving at a quickening pace to defease loans against their properties. The intent is to maximize proceeds from disposition or refinance loan proceeds as the Wall of Maturities inches closer. Read more
Last week, we looked at some numbers showing the difficult prospects in front of office properties approaching the Wall of Maturities.
Enough gloom and doom. There are plenty of reasons to look at the office sector with optimism. While some assets will surely reach maturity in need of additional capital, the majority find themselves in improving conditions. Read more
A Fairview Real Estate Solutions analysis of all 10-year commercial mortgage backed securities maturing from 2015 to 2017 shows less than 60 percent of all office CMBS is expected to payoff at par value. The remaining loans involve office properties that could be worth less than the original loan value and require additional capital. Others are expected to be in worse condition, having already been classified severely delinquent or in default. Read more
It’s easy to write-off the future of retail properties based on a few headlines spelling out the demise of some major U.S. retailers. The closing of big-box stores such as Sears or the bankruptcies of major brands such as Radio Shack get plenty of attention.
The truth, however, shows bricks-and-mortar retail shopping centers, mixed-use developments and stand-alone out parcels in many cases to be in fine condition. Lenders and investors are eager to finance and own these properties as consumers return to shopping, fueled by job and wage growth. Read more