Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/536709
17 July | August | 2015 CCIM.com the ability to turn down loans that are part of CMBS deals. Every CMBS deal needs an investor to buy the riskiest B-rated securi- ties, which get hit f rst by any losses to the loan pool. T at is why investors who buy the riskiest B-piece bonds earn the right to set underwriting standards for conduit loans. T is is good for CMBS investors, because it makes the loan seller's job more dif cult. Lenders need to make loans based on the right credit decisions. But with B piece buy- ers getting a lot tougher on credit, this could create a further squeeze in the already com- petitive CMBS lending market. Another development that will impact CMBS lending is the pull back of the gov- ernment-sponsored enterprises. Fannie Mae and Freddie Mac are getting close to hitting the caps set on the 2015 scorecard issued by their regulator, the Federal Housing Finance Authority. Consequently, the CMBS market is going to see many more multifamily loans than it would have previously. Market Forecast Taking all of these factors into account, the forecast is that the CMBS loan market will continue to be a critically important source of funds for commercial real estate investors. It certainly was before the crash, and as long as the U.S. economy continues to improve, there is every expectation that CMBS lending will stay healthy. No doubt, given the wave of maturities that is coming, there will be plenty of CMBS loans written over the next couple of years. T ere are a plethora of deals out there, and competition in CMBS lending won't be relenting any time soon. Who is going to do the best in this market? T at depends on how well banks — and shadow banks — are able to adapt to the changing credit landscape. On the most fundamental level, to be suc- cessful in the CMBS lending market, lenders have to see deals. T e more deals a lender sees, the more that lender will benef t from the market. It's when lenders are not seeing enough deals that they are more inclined to do loans they normally would not do. T e most successful CMBS lenders will be those who can tap into a nationwide infrastructure that enables them to see deals from coast to coast. Tim oltermann is senior vice president and group head of commercial real estate origi- nations and operations for Walker & Dunlop Commercial Mortgage Funding. Contact him at www.walkerdunlop.com. Invest in the future of your business. Post and view jobs at ccim.selectleaders.com. Enter code 50on5 to redeem your discount. Employers trust the CCIM Career Center to deliver quality, long-term hires. Now through Sept. 7, 2015, receive a 50% discount on up to five job postings using the CCIM Career Center powered by SelectLeaders. There is a downside to the heated competition in the CMBS loan market.