CMBS could make a comeback, experts say

Miami /
Mar.March 18, 2016 05:15 PM

From the New York websiteAs banks retreat from funding certain projects, commercial mortgage-backed securities may return with renewed vigor over the next few months.

“You’re seeing the market solidify itself,” said Qahir Madhany, a principal of the Blackstone Group, at a panel on Wednesday. “We do think there should be a rally of CMBS over the next couple of months.”

Madhany, speaking at New York Law School’s “The Keys to the Future of NYC Real Estate” panel, noted that the strength of these securities has recently coincided with the health of equities and oil — two sectors that suffered in mid-February. He said the sectors have recovered quickly, and he expects CMBS to follow suit.

Lenders have increasingly backed off CMBS issuances since mid-2015, largely due to the volatility of global markets and pending federal rules — dubbed the “risky-retention” policy — that will require lenders to keep a portion of the loans on their balance sheets, increasing their cost of capital, The Real Deal reported in February. Jennifer McCool, chief legal officer at Related Companies, said that as long as other funding sources, such as balanced-sheet lenders, remain strong, the market in Manhattan shouldn’t be dramatically impacted.

“Over the past two years, CMBS debt markets have really fueled the recovery, in particular Manhattan,” she said at the panel. “Now, in looking at debt opportunities, the CMBS space has really dropped off, and folks who are still in that game, the pricing is not nearly as competitive.”

Ron Lo Russo, tri-state president at Cushman and Wakefield, said that the residential market in general is seeing a softening, with the exception of multifamily properties, which remain especially attractive to foreign investors.

“When you have the thread of negative interest rates in a lot of countries, New York is a great place to park money in large buckets,” he said.

He noted that the city’s aging infrastructure may imperil its longevity as the go-to city for millennials to — as various marketing campaigns hammer home — live, work and play. Jessica Lappin, president of the Downtown Alliance, cited the new Fulton Street Station and the $4 billion World Trade Center Transportation Hub — which opened earlier this month and has long been criticized for its massive cost overruns — as crucial examples of steps that have been taken to revitalize the city.

“We do, on a big scale, trail other cities,” she said. “But here, in Lower Manhattan, we really made that investment.”


Related Articles

arrow_forward_ios
Blackstone’s Stephen Schwarzman and the Hampton Inn hotel at 5701 Madison Avenue (Google Maps, Getty)
Blackstone sells Tamarac Hampton Inn for $18M
Blackstone sells Tamarac Hampton Inn for $18M
G6 Hospitality CEO Rob Palleschi and the Motel 6 at 825 East Dania Beach Boulevard (LinkedIn, Google Maps)
Blackstone sells five South Florida budget hotels for $61M
Blackstone sells five South Florida budget hotels for $61M
Link Logistics' Luke Petherbridge with 115.7-acre site at 21001 Northwest 27th Avenue (LinkedIn, Google Maps)
Blackstone’s Link Logistics pays $291M for Calder’s horse racing track
Blackstone’s Link Logistics pays $291M for Calder’s horse racing track
Link Logistics' Luke Petherbridge (Link Logistics, Calder Casino, iStock)
Take two: Blackstone affiliate proposes industrial complex with movie studio at Calder’s horse racing track
Take two: Blackstone affiliate proposes industrial complex with movie studio at Calder’s horse racing track
 Rendering of Nema Miami with Russell Galbut and Bruce Menin (Crescent Heights)
Russell Galbut’s Crescent Heights scores $224M loan for Whole Foods-anchored Edgewater project
Russell Galbut’s Crescent Heights scores $224M loan for Whole Foods-anchored Edgewater project
The Mangrove Bay assisted living facility at 110 Mangrove Bay Way in Jupiter (Senior Lifestyle, iStock)
Blackstone sells waterfront assisted living facility in Jupiter at a loss for $41M
Blackstone sells waterfront assisted living facility in Jupiter at a loss for $41M
Laguna Pointe Apartments are at 903 Southwest 15th Street in Pompano Beach, 25370 Southwest 137th Avenue in Homestead and Sanctuary Cove Apartments at 5301 West McNab Road in North Lauderdale (Redfin, Apartments.com, Google Maps)
Blackstone goes all-in on South Florida affordable housing with over $300M portfolio deal
Blackstone goes all-in on South Florida affordable housing with over $300M portfolio deal
Blackstone CEO Stephen Schwarzman and the Crosskeys Apartments complex at 1850-2100 SW 81 Avenue in North Lauderdale (Getty, Apartments)
Blackstone picks up North Lauderdale apartment complex for $14M
Blackstone picks up North Lauderdale apartment complex for $14M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...