Risk Retention Clarity is Key to CMBS Future
July 12, 2016 — The volume of commercial mortgage-backed securities (CMBS) issuance this year is running at about half of 2015’s level, for reasons that go beyond the disruption in global capital markets. CMBS sponsors are struggling to contend with new risk retention rules that go into effect in December. But as of now, it’s still not clear exactly how lenders can comply with the new rules. That lack of clarity is doing more to slow CMBS volume than the rule itself.
Under Regulatory Scrutiny, Banks Rein in Risk
June 2, 2016 — When the Dodd-Frank financial reforms were announced several years ago, some people said they went too far in restraining banks’ activities, while others believed they didn’t go far enough. Now that the legislation has gone into effect, however, it seems to be doing its job: motivating banks to make prudent loans and conduct proper due diligence, without causing a credit crunch. While it’s impossible to know what the future holds, there are signs that the limits placed on real estate lending will help smooth out the boom-bust cycle we’ve seen for decades.
Real Estate Industry Seeks Softening of CMBS Risk Retention Rules
June 2, 2016 — The CMBS market was supposed to be white-hot this year, and instead it has been ice cold for much of the year to date. Some of the main reasons involve volatility in global capital markets and the ripple effect of low oil prices, but another significant factor is CMBS investors’ concerns about loosening underwriting standards. And investors aren’t alone in worrying about risk: The federal government has weighed in, with a warning to lenders by several agencies and new risk retention rules imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
What Comes After the Fall of the CMBS Wall? Structured Finance
April 12, 2016 — CMBS issuance totaling nearly $100 billion in 2015 fell short of analyst predictions at the start of the year, but covered the $80 billion of conduit loans in need of refinancing—the leading edge of the so-called wall of maturities. Analysts have predicted an even bigger year for CMBS issuance in 2016 as the pace of maturities increases and real estate NOI continues to improve.
Tapping the Brakes: A Slowdown Beats a Crash
March 17, 2016 — As an avid cyclist, I’ve learned to appreciate and adapt to the changing seasons, especially in New England. If only real estate investment cycles were as predictable as the seasons.