1.2.18: CMBS Loan Volume in 2017 Exceeds Predictions

U.S. CMBS origination volume totaled $88 billion in 2017, up 17% from 2016’s $76 billion and far surpassing the average prediction of $75 billion by market professionals. Industry predictions for 2018 are for $75 billion of U.S. CMBS conduit originations.

The expected decline in 2018 is based partly on lower volume of 10-year loans maturing in 2018, which could reduce refinancing activity. The past two years, in contrast, saw a significant wave of 10-year CMBS loans mature from the boom years of 2006-2007, in which record amounts of 10-year CMBS conduit loans were closed. Many of these loans refinanced into new 10-year conduit loans.

Nevertheless, CMBS conduit loan originations will be bolstered from other sources. Interest rates for CMBS conduit loans are very attractive, in the 4.25%-4.50% area, and will attract borrowers with floating rate loans and bridge loans, in which the “value-add” strategy is complete and borrowers are finding rates trending upward with the upward movement of the federal funds rate. In addition, commercial banks are beginning to nudge their fixed-rate offerings higher in sympathy with rising short-term rates, making CMBS conduit loans even more competitive on rate.

 

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This entry was posted in CMBS, CMBS Conduit Loans, Commercial Lending, 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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