7.10.14: CMBS Conduit Loan Originations Explode on Lower Rates

“Commercial Mortgage Alert” recently reported that CMBS issuance dropped 8% in the first half of 2014 versus a year ago. The decline was blamed on competition from the community banking system, which is now hungry for commercial real estate loans after cleaning up its balance sheets after the 2008-2009 financial crisis.

The report does not reflect the decline that occurred during June and July in both the Swap rate, the financial index that is used to set interest rates on CMBS conduit loans, and CMBS spreads, which is the second component that impacts the all-in interest rate determination for borrowers. The 10-year Swap rate, used to price CMBS conduit loans with a 10-year term, is hovering around 2.60%-2.65%, while CMBS spreads for commercial property loans $5 million and up has fallen from over 200 basis points (bp) to around 175 bp, resulting in a borrower rate in the 4.50% area; the rate is even lower for loans over $10 million.

“Our CMBS conduit loan pipeline is exploding,” commented Michael D. Sneden, Executive Vice President of ValueXpress. “We signed up a few large loans (more than $20 million) and have over a dozen recently signed mid-sized loans, all scheduled to close in the third quarter. In total, we are looking at over $100 million for the quarter, which is a pretty good clip and puts us well ahead of last year’s pace.”

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This entry was posted in CMBS, CMBS Conduit Loans, Commercial Real Estate Loans, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , , , , , . Bookmark the permalink.

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