Following a summertime lull, CMBS issuance has picked up with strong representation from the hotel sector.
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The banks have extended a couple of trillion dollars in credit and the CMBS that are coming due.
The CMBS market is watched closely in the commercial real-estate industry because the securities are an important source of finance.
In fact, the pain could have been a lot worse for the largest originator of commercial mortgages for CMBS since 2005.
When the downturn hit in 2008, new CMBS issues practically vanished, contributing to the credit crisis in the industry and enormous headaches for landlords.
In 2010, 56% of newly issued securitized mortgages were on retail properties, according to Darrell Wheeler, head of CMBS strategy at Amherst Securities Group.
Both were slightly higher than expected as CMBS prices have softened in recent weeks and investors demanded more compensation for the longer-than-usual maturity on the issue.
Edward Shugrue, chief executive of CMBS investor and servicer Talmage, said Bank of China is one of the large sovereign entities looking for significant U.S. real-estate holdings.
Commercial mortgage backed securities (CMBS) have also been infected, although there is no obvious connection between overstretched residential borrowers and the markets for office and retail space.
This month, some investors have been hit with losses as their commercial-mortgage securities, or CMBS, that had been steadily rising in value for months went into reverse.
The interest rates of top U.S. government bonds have fallen below 2%, and investors have been willing to pay high prices for precrisis CMBS that carry rates of 5% or 6%.
The first is that in many cases they were taken out by investors who need steady cash flows to repay debt, or were financed using instruments such as CMBS that also require steady income streams.
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What is happening is that landlords have been taking advantage of dropping rates and easing loan conditions to refinance and pay off a growing volume of the CMBS debt that they borrowed at higher rates earlier.
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