CMBS

Long Term None-Recourse Permanent Financing

A CMBS (Commercial Mortgage Backed Securities) Loan is a secured loan offered on commercial property. CMBS Loans can provide liquidity to real estate investors and to commercial lenders. A CMBS loan is primarily reserved for real estate that has been stabilized in price over a period of several years. Once the lender determines that the real estate is a stabilized value, a loan can be made. Due to recent rises in real estate pricing, CMBS Loan requests have been on a steady increase.

Rates and Determination

Thanks to the structure of commercial mortgages, a CMBS Loan will carry a lower prepayment risk. The price based assumption of a CMBS Loan is often structured in compliance with REMIC (Real Estate Mortgage Investment Conduit) regulations. This enables the tax law applicable to become a pass-through entity, meaning the entity will not be subject to tax at trust levels.

A CMBS Loan is an attractive capital source due to the bonds being secured by a group of loans. These loans are generally worth more than the sum of value for the CMBS Loan. This will allow for the loan to be aggressively priced to benefits it’s borrow.

The LTV for a CMBS Loan is typically based within the range of 60%-70% for 10-20 years on non-recourse loans. The rates can be fixed or tied into an index to float accordingly.