CMBS Loans - Commercial Mortgage Backed Security
Another major source of mortgage capital for apartment building loans is the commercial mortgage-backed securities market through Wall Street investment banks. CMBS lenders make individual loans to borrowers which are then packaged and sold to investors as securities. These loans provide interest rate yield to their investors while contributing liquidity to the capital markets. This liquidity in the markets means lower commercial mortgage rates to borrowers. Borrowers are well served when there are multiple sources of capital in the market.
CMBS Loan Outlook 2022
As interest rates have continued to soar throughout 2022, CMBS activity has significantly decreased- bringing the CMBS market back down from a tremendous year of origination volume in 2021. Across the country, lenders originated $20.6 billion in CMBS loans in the second quarter of 2022. That’s a decrease of a whopping 29% from Q1 2022. Even though interest rates have gone up, sellers have yet to change their expectations on sales prices. This has led to a market in which most properties simply don’t cash flow at max leverage. Many buyers have temporarily left the market, waiting for sellers to adjust their price expectations, as they want to maximize leverage on purchases.
The delinquency rate on CMBS loans slightly increased by 7 bps to 3.2% in June 2022. This was only the second time in the last two years where the market has seen monthly increase in CMBS delinquencies. The last time was an increase of 16 bps in December 2021. It’s certainly too early to predict a delinquency trend, but many analysts to expect to see further delinquency rate increases in the CMBS loan market over the next few months.
$2 million to $10 million+
Primary, Secondary, and Select Tertiary Markets
Multifamily, Manufactured Housing, Office, Retail, Industrial and Self-Storage
First Lien Mortgage
25 – 30 years
MAXIMUM LOAN TO VALUE
Fixed rate based on spread premium over 10-year US swap rates
Non-Recourse, except for standard industry carve outs
Permitted after a typical lock out period, subject to defeasance
Permitted, subject to Lender’s Approval and 1% assumption fee
3rd party costs & legal are capped
Real Estate Taxes, Insurance, Replacement Reserves, TI/LC (if applicable), and others as reasonably determined by underwriting
Recent TRUSTPILOT Reviews
Select Commercial Funding Reviews from TRUSTPILOT
A three year journey
"Thanks Stephen for all of your hard work in getting our deal closed! I appreciate your professionalism and patience throughout a complicated process. You always were there for my partner and I whenever we had questions and needed answers quick. It was a pleasure to have worked with you and Select Commercial!"