Tuesday, June 22, 2010

CMBS Market resurfacing?

If you are interested in the non-residential real estate development and construction sector of the economy, you should take at least some time, each month, to follow what’s going on in the industry that “finances” non-residential projects. You’ve heard the term “CMBS”, which stands for “commercial mortgage backed securities,” and that market, and that market went dead around September 2008 (if not somewhat before that.) CMBS industry players are represented by, why not, an industry association known as CREFC (the Commercial Real Estate Finance Council.)

The information I’m going to mention hereafter in this post comes from CREFC’s web-site, which can be found at http://www.crefc.org/

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First, I’d like to direct your attention to a “Compendium of Statistics”, last updated on June 4, 2010. You can find that report at this Internet address: (copy, cut and paste this into your browser window:)


You’ve “just gotta” look at this statistical report, especially the graph called Exhibit 3, CMBS Issuance, year-over-year. Get a real (glaringly clear) picture of how the CMBS (financing market) went dead.

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Secondly, here’s some of the news reported on the CREFC site:

…….News reported on Thursday, June 17, 2010

U.S. banks hiring as CMBS starts to revive (1:30pm ET Thursday –Reuters; Council President, Board Member quoted) 
Banks resume hiring CRE lenders; Wells Fargo building out with Wachovia employees; Just over $1 bln in CMBS loans completed so far this year. 
U.S. banks are accelerating their push back into packaging commercial real estate loans into bonds, two years after the financial crisis ground much of the business to a halt. Wells Fargo & Co is one such bank, and has begun expanding its commercial mortgage-backed securities business, or CMBS, by tapping former employees of Wachovia Corp -- one of the segment's most prolific lenders before the crisis. "I see lots of friends who used to be employed, and weren't for a while, and are now being rehired by institutions," said Jonathan Strain, head of debt capital markets for JPMorgan Chase & Co's CMBS division.

Bankers and advisers who specialize in commercial real estate-backed mortgage securities said the sector may never fully recover to the peak of $237 billion in originations in 2007. Slightly more than $1 billion in CMBS deals have been completed this year. One banker said the market may eke out $10 billion this year, and ultimately stabilize at roughly $100 billion in annual CMBS deals. This will ease but not solve the funding needs for maturing loans, which top $1 trillion over the next few years, analysts said. "Supply will be far less than what we were accustomed to," said Lisa Pendergast, Jefferies' managing director for CMBS strategy and risk. Pendergast also serves as president of the CRE Finance Council, the industry's main trade group. 

The ‘Council’ Holds Court This Week-More Optimistic Than In The Recent Past (IFR-ThomsonReuters) 
The semi-annual conference break arrived this week, courtesy of the gathering at the Waldorf Astoria hotel in New York City (June 14-16) via the CRE Finance Council, formerly the CMSA and now affectionately known simply as "the Council" (we like that one). The bringing together of interested Commercial Real Estate parties (dealers, servicers, investors, developers, ratings agencies, et. al) was more upbeat than in the preceding two years as things are said to be "slowly" turning the corner. A mild sense of humor - and not the gallows variety - was often times injected into the proceedings as movie clips (Wizard of Oz, Ferris Bueller's Day Off, Stand By Me, and the Color Of Money among them) were "sampled" to introduce panel discussions and General Sessions.

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