CMBS shockwaves

A look at the abrupt summer stall in the commercial mortgage market that could hinder New York City’s commercial real estate recovery

TRD New York /
Sep.September 14, 2011 02:49 PM

Illustration by David ColeJuly 27 was a dark day for commercial mortgage-backed securities, or CMBS.

On that day, Goldman Sachs and Citigroup were set to begin selling a $1.5 billion batch of CMBS, secured in part by some New York City properties.

But at the last minute, Standard & Poor’s essentially put the kibosh on the deal. The rating agency said it had discovered a “glitch” in its methodology and would need more time to vouch for the worth of the mortgages at the heart of the bonds.

Without the blessing of S & P, the deal died. And with that, the CMBS market — in which pools of real estate loans are bundled together and sold to investors — hit a major snag few had anticipated when the year began.

S & P’s move — along with wild stock market fluctuations, concerns about the debt crisis in Europe and the renewed round of economic problems — helped knock the wind out of the sails of the CMBS market and confirmed the industry’s worst fears of a slowdown. Many expected the CMBS market to quadruple in value from $13 billion in 2010 to $50 billion by the end of 2011, as investors started to regain faith in the strength of the commercial real estate market. Instead, they now expect CMBS issuances to be just $30 billion this year, which calls into question reports of the market’s recovery. [more]

Related Article


Embattled Prodigy Network CEO Rodrigo Niño to step down

The Watchtower building at 25 Columbia Heights, CIM Group’s Shaul Kuba (right) and LIVWRK’s Asher Abehsera (Credit: Wikipedia, CIM Group, and LinkedIn)

JPMorgan leads $335M refi for CIM and LIVWRK’s Watchtower renovation

247 Metropolitan Avenue in Williamsburg (Credit: The Pod Hotel)

Goldman Sachs provides $90M loan to refinance hotel in Williamsburg

Anna Castelini and 601 Lexington Avenue (Credit: LinkedIn and Andrew Moore via Flickr)

DeKalb Market Hall creator bringing new food hall to Midtown

Multifamily market still reigns in Queens, Blackstone balks after rent reforms and more of the biggest CRE trends right now

Real estate titans … and their toys

Developer seeks $40M for Opportunity Zone site in downtown Newark

This East End icon might finally be closing in on a sale