August 11, 2017
CMBS issuance soared in the second quarter of 2017, with more than $21.2 billion in CMBS loans closing in Q2, according to the latest Trepp report. That more than doubled activity recorded between January and March 2017 ($10.5 billion) and brings the H1 2017 total to roughly $31.7 billion.
That burst of activity countered the affects of loan inventory clear-outs in preparation of risk retention regulations that slowed down activity earlier in 2017. The CMBS space is adapting to retention requirements, gaining a stronger handle on the process, and new benchmark pricing levels for these deal types are slowly stabilizing.
The share of retail loans in total issuance fell to 13.56% in the second quarter, down from 15.19% in Q1. Retail historically backed about one-fourth of newly securitized mortgage totals. The main drivers of year-to-date CMBS issuance has been hotels and trophy office towers in CBDs.
Category breakdowns for 30 CMBS closings between April and June 2017:
- Vertical risk retention: 12 deals, less than 40% of the issuance balance
- Horizontal structure: 12 deals totaling $7.41 billion (35.01%)
- Hybrid or “L-shape” strategy: six securitizations totaling $5.32 billion (25.16%)
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