Latest news
Latest news
Inflation caused by war threatens budding recovery in commercial real estate
The rise of the European master trust and the CLO market nears shut down
The trade is EdgeConneX’s euro debut, the first Dutch data centre ABS, the first data centre CMBS structure and the first master trust structure
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The senior loans backing German Residential Funding 2013-1 have been repaid, in a move that will hand back nearly €2bn to CMBS investors who bought the deal, with no replacement deal likely. -
Wells Fargo issued the US CMBS market’s first ever risk retention compliant deal last month, retaining a 5% vertical interest which sources this week say will be treated like a loan participation rather than a securitization exposure for the purposes of calculating risk based capital charges.
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Wells Fargo on Thursday launched the first ever risk retention compliant CMBS, bringing the benchmark triple-A class at 94bp over swaps, the tightest level of 2016 and 14bp tighter than the the most recent offering, demonstrating willingness on the part of investors to pay up for deal in which issuers have skin in the game.
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A seller was out on Tuesday afternoon with a $711m list of legacy CMBS senior bonds, pushing volumes in the US secondary market past $1bn for the day.
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The expectation of light deal flow through the summer and into the fourth quarter is pushing spreads on conduit CMBS to the tightest levels of the year, with an issuer this week pricing the latest offering at 108bp over swaps for the benchmark triple-A class.
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US CMBS issuers have cranked out over $3bn in conduit and single borrower offerings in the past week, as spreads in the sector tighten in on the back of low supply and a muted reaction to the Brexit event last month.
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Nobody likes it when markets seize up, but the post-Brexit plight of the UK commercial property funds shows markets working well, not badly. It also demonstrates why markets, not banks, are the best providers of financing.
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The news that seven open ended commercial real estate funds froze redemptions this week should come as no surprise. Funding highly illiquid, chunky investments with cash that investors can pull at short notice is a flawed strategy.
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Fitch Ratings has downgraded a Morgan Stanley UK CMBS deal, Ulysses (European Loan Conduit No. 27) as the British referendum result shakes confidence in UK commercial real estate.
