CMBS Analyst

CRE, CMBS Disaster Imminent? Not So Fast

As far as CMBS spreads improving, that is like watching the DOW go up and saying the economy is getting stronger. Apples to oranges. The REIT industry is dwindling. Loan extensions will help for the CMBS industry, but no more than 40% of the maturing loans coming due this year will be extended due to the requirements of most servicers and their best judgement for the investor. In addition, negotiating new loan terms requires a special servicer, in which those costs get passed on directly to the investor. Plus, servicers don't have the capacity to restructure a large amount of loans, they're already swamped and expensive. Retail, office, warehouse, hotel, self storage, and industrial properties will surely suffer due to the slowing economy. No doubt about it. There will be a total collapse, it will just happen slower and with less impact than the residential market, as has always happened in the the past.