Commercial Mortgage Alert surveyed 14 market pros, and those pros projected that CMBS issuance in the United States would soar 32% to $124 billion in 2015. That lofty goal may not be within reach based on results through the third quarter of 2015.
Some $23.1 billion of U.S. transactions priced from July through September, down from an average of $27.2 billion for the first two quarters this year and from $28.1 billion in the year-earlier period. Volume was unexpectedly low in September, when only $7.1 billion of transactions priced. Through September, U.S. CMBS issuance was $77.6 billion, up from $68.9 billion a year earlier. If that 13% growth rate continues, volume for the full year will be $106 billion, well below the $124-billion average prediction by the panel of CMBS specialists at the beginning of the year.
Dealers said issuance in August and September was negatively impacted by volatility and a general widening of spreads. As bond values gyrated, lenders re-priced loans that hadn’t been rate locked. Extended negotiations with borrowers caused loans to either close more slowly than expected or fall by the wayside, reducing projected pool sizes. Loans that did not close may resurface as closed loans in the fourth quarter, boosting results, but not likely enough to approach the levels predicted by industry pros at the beginning of the year.
“The choppier the market gets, the more deal sizes come down, because loans aren’t closing,” said one CMBS veteran.