Lending that occurred with the aid of commercial mortgage-backed securities has helped fuel the growth in the real estate market, Crain’s reported.
Some $19 billion worth of CMBS were issued in the first two months of 2013, roughly four times the volume that was issued in the first quarter of 2012, in an encouraging sign for a market that saw record delinquency rates in 2012. “It’s a key driver of sales, especially in New York, where we have these larger trophy-asset deals,” Douglas Mazer, the co-head of Wells Fargo’s CMBS lending group in Manhattan, told Crain’s. “”Borrowers and sellers on both sides will have the confidence to enter into these larger acquisitions knowing the CMBS financing will be there.”
Supply of CMBS continues to rise, with big lenders such as JPMorgan Chase revising its CMBS forecast from $45 billion to $70 billion. While pre-crisis figures touched $230 billion, experts said that 2013’s estimates indicate that investors are looking for alternatives to Treasury bonds and other financial instruments.
In New York, major players such as Vornado Realty Trust and SL Green are taking advantage of the growing CMBS trend. Vornado is arranging a $707 million CMBS loan to refinance the retail section of 666 Fifth Avenue, sources told Crain’s, and SL Green recently refinanced 1515 Broadway with a $900 million CMBS loan. Tishman Speyer is also looking to arrange CMBS financing for its 32-story tower at 11 West 42nd Street, sources told Crain’s.
The Dodd-Frank Act — the federal statute drafted in the wake of the financial crisis to increase regulations over financial institutions – has placed additional constraints on CMBS, as The Real Deal previously reported. [Crain’s] —Hiten Samtani