Read time: 3 minutes 50 seconds
Fourteen years ago this September, I distinctly recall attending a conference hosted by the European CMSA that was focussed on the advent of CRE CDO’s. At the time, the emergence of these structures was seen as an extremely exciting development as it marked a natural progression for the maturing
Whether you are a supporter of using CMBS to finance commercial real estate or not, the simple fact is that it provides an efficient mechanism to transfer commercial real estate loan risk away from the banking sector, whilst at the same time providing much needed transparency to the commercial real estate lending market. In light
Read time: 2 minutes 20 seconds
The economic fallout of COVID-19 will be hugely significant for the European CMBS market, as a perfect testing environment has been created to truly examine the resilience and robustness of CMBS 2.0. Indeed, the impact of COVID-19 will be a true litmus test as to whether those structural reforms
Read time: 8 minutes
At a glance
A large number of legacy non-performing loan exposures (NPLs) continue to subsist on the balance sheets of banks. Portfolios of NPLs tie up huge amounts of regulatory capital which, in turn, limits the amount of capital that banks have available to lend to the real economy. The economic
Read time: 2 minutes 20 seconds
Those readers that have followed the meteoric rise of the European non-performing loan (NPL) market from the ashes of the global financial crisis (GFC) will be very aware of the profound impact that COVID-19 has had. In the space of a few weeks a large, burgeoning market that exhibited
Read time: 3 minutes 30 seconds
When it comes to the nuts and bolts of commercial mortgage-backed securities (CMBS), one of the key features that will be at the very forefront of any Arranger’s mind will be the mechanism by which ‘excess spread’ (i.e., the positive difference between amounts received on the underlying loans and the liabilities of the issuer – or, in other words, profits) is not only extracted from structures in an efficient manner, but also in such a way as to maximise returns. Although this is a standard feature for CMBS, a review of recent transactions reveals a high degree of variance in extraction structures across deals.
Continue Reading CMBS 2.0 – Class X – variety is not always the spice of life
As was the case prior to the global financial crisis, the current driver for all new European CMBS deals stems from the adoption by investment banks of the originate-to-distribute business model for financing commercial real estate assets. This trend is showing no sign of abating in the CMBS 2.0 era. Although this is a proven and effective mechanism for producing much needed CMBS product, it is important for market participants to be aware that these conduit deals are not the only CMBS structures in the market and that agency deals could potentially be an invaluable tool for any sophisticated borrower that is looking to directly tap the capital markets to raise cheaper finance.
Continue Reading Agency CMBS – is now the time for borrowers to capitalise?
Read time: 2 minutes
The recent news that the Greek parliament has approved the Greek government guarantee programme Hercules marks an important milestone in the evolution of the European non-performing loan (NPL) securitisation market. If Hercules enjoys the same level of success that we have witnessed the Italian GACS deliver, then this will have widespread, positive ramifications for not only yield-hungry investors but also the handful of systematic Greek banks that have balance sheets saddled with large volumes of NPLs.
Continue Reading Hercules – an astronomical boost for NPL securitisation
Read time: 2 minutes 29 seconds
As industry participants head off on their festive breaks, there will be a level of euphoria that despite unfavourable regulation, political uncertainty as well as a very cautious macro-economic outlook, the European CMBS industry has successfully not only avoided succumbing to many potential market pitfalls but when you take into account the volume of issuance as well as the heterogeneity of the deals that have graced the market, then 2019 can be said to be a positively booming year for the product.
Continue Reading BOOM, BOOM, BOOM – CMBS IS SHAKING THE ROOM
Read time: 2 minutes 45 seconds
Thus far CMBS has had a storming year and all current indicators point towards 2018 being a bumper year for the product. After two years of relative malaise on the primary issuance front, the first half of 2018 has proven to be anything but sluggish. Notable transactions that have so far taken place include Citibank and Morgan Stanley closing an extremely well priced transaction secured by Finnish assets (a CMBS 2.0 first), Bank of America Merrill Lynch achieving some hugely impressive pricing on an Italian CMBS and most recently the spotlight has turned to Goldman Sachs who have recently obtained excellent pricing on a £427m CMBS secured by a portfolio of UK hotels. The market though has not simply been confined to conduit deals as demonstrated by the fact that Blackstone successfully closed CMBS Pietra Nera Uno (which is apparently the first of a swathe of Agency CMBS deals that Blackstone are expected to bring to the market) and the recent market rumours that Natwest are currently in the midst of structuring a synthetic CMBS. Taken together all these transactions provide the firmest indicator yet that that the beleaguered CMBS product is firmly back in vogue.
Continue Reading The European CMBS market is positively booming!