Real estate survey 2010: Awaiting resurrection – CMBS
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Surveys

Real estate survey 2010: Awaiting resurrection – CMBS

The breakdown of the global securitization market has pared down most US and European banks’ ability to recycle their balance sheets in the search for new lending business. From a peak of $324 billion-equivalent of issuance in 2007, global CMBS issuance totalled $8 billion in the first half of 2010, according to data collected by US-based data provider Commercial Mortgage Alert. Meanwhile, with more than $250 billion of US CMBS maturing before 2014, including bonds referencing $90 billion of delinquent and distressed underlying loans, the restructuring crisis is even more perilous for securitized loans. With potentially hundreds of investors in each transaction representing often competing interests, the process of restructuring or unwinding a CMBS structure is particularly complicated. In Europe, the CMBS market is less troubled by delinquent loans and more afflicted by negative equity. Andrew Currie, head of EMEA structured finance surveillance at Fitch Ratings, says that in euro CMBS deals that have matured recently, only one-third of the debt has been repaid and the remaining two-thirds is in varying states of workout or restructuring.

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