Last week's reopening of the private label CMBS market may not last, say investors, amid the continuation of high interest rates.
On Friday, HIG Capital and Bank of Montreal both priced CMBS deals. The $531m HIG 2023-FL1, which was backed by a pool of mostly multifamily properties, landed tighter than guidance across the capital stack. On the same day BMO priced the $702m BMO 2023-5C2, backed entirely by shorter-duration loans of five-year terms.
This was the second conduit deal last week, following Thursday's $620m BBCMS 2023-C22.
However, the pick-up in activities in both SASB and conduits last week might be temporary and is a result of the slight rate dip over the summer, said a CMBS investor based in Miami.
“Investors have been waiting for more supply, but the interest rates are higher for longer, and it’s a problem across the board,” said the investor.
Another recent CMBS deal, backed by industrial property loans, has been waiting for execution for two months but has not gone through because the bank on the deal has “raised the cost six times”, said the investor.
“There’s a lot of price discovery before the market can fully open up, so the market will remain slow at least for the coming months,” he said.