The Real Deal New York

CMBS market rebounds as lending standards loosen

Issuance of property-backed securities heating up in the second half of 2014

December 19, 2014 04:09PM

Following a slow first half of the year, the commercial mortgage-backed securities market is seeing a flurry of activity as lending standards continue to ease up.

Since July 1, Wall Street firms have sold about $45.4 billion of securities backed by loans on properties ranging from shopping malls to apartment complexes. That’s compared to $37.4 billion in the first half of the year, Bloomberg reported. The bump up in CMBS issuance has coincided with insurance companies and commercial banks lowering lending standards as enthusiasm to finance U.S. real estate grows.

CMBS lenders that were squeezed out by the competition in early 2014 lowered rates and loosened guidelines, Jefferies Group analyst Lisa Pendergast told Bloomberg. “It was famine and then feast” in the CMBS market, she said.

The U.S. Office of the Comptroller of the Currency said in a report this week that the largest banks cited commercial real estate as a particular area of concern in an annual survey of lending standards.

Credit Suisse AG Group forecasts a rush of deals next year — up to $140 billion in 2015. Investor demand for riskier assets after six years of near-zero interest rates is helping revive the market, according to the website.[Bloomberg via Crain’s] Tess Hofmann

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