Here is a portion of an article from National Real Estate Investor Magazine discussing the role of CMBS or “Conduit” loan in the Apartment lending space. We are seeing more and more transactions where the buyer of larger apartment complexes consider the advantages of CMBS financing over traditional financing thru banks and Fannie and Freddie. CMBS is getting a little more aggressive but still underwriting is sound. They are not allowing projected rents to be used to size the loan like they did prior to the market crash in 2008.
From NREI Magazine:
Filling a niche
CMBS lenders continue to offer financing to properties and buyers who may not find financing from other sources. Interest rates for CMBS loans continue to be roughly 15 basis points higher than the leading competition for comparable properties—usually provided by Fannie Mae or Freddie Mac lenders, experts say. As a result, most CMBS loans are being made in secondary or tertiary markets to Class-B or lower multifamily properties.
These properties are also showing more strength as the economic recovery is finally spreading towards the relatively low-income renter who rent these apartments, allowing rents to rise. “We have seen a lot of rent growth,” says JLL’s Board.
CMBS loans will be especially important as the commercial real estate market overall handles an estimated $1.5 billion in loans maturities over the next three years. “CMBS is going to help refinance our market,” says Mike.
If you or any clients have questions regarding CMBS financing or in general. Also the advantages and disadvantages of CMBS over Banks, Fannie and Freddie and Life Companies, Please give me a call (949) 236-5879.
Walker & Dunlop