Although my target audience is real estate, banking, and development professionals, I don't want to lose those who are not quite up with all the jargon or technical details. So, occasionally i give intros to a topic, as i did with this topic in the first of 3 posts. I also will sometimes give more basic explanations, as i'm about to do here.
Who's affected by deteriorating CMBS's? Since they are securities, basically whoever has invested in (is holding) the bonds that were issued. These bonds are backed by the pool of mortgage loans. They could be held by just about any investor and often includes insurance companies, hedge funds, banks, etc.
Deteriorating CMBS will hit the balance sheets of these bondholders.
The special servicers may also be impacted.
BUT the Deutsche Bank report points out an interesting twist. During the peak of the CMBS boom, conventional Real estate bank financing could not compete. The report notes that as a result, smaller banks in particular went heavily into construction loans, especially for condos and office buildings. Construction loans, nationally, are expected to be a major problem going forward.
Who's affected by deteriorating CMBS's? Since they are securities, basically whoever has invested in (is holding) the bonds that were issued. These bonds are backed by the pool of mortgage loans. They could be held by just about any investor and often includes insurance companies, hedge funds, banks, etc.
Deteriorating CMBS will hit the balance sheets of these bondholders.
The special servicers may also be impacted.
BUT the Deutsche Bank report points out an interesting twist. During the peak of the CMBS boom, conventional Real estate bank financing could not compete. The report notes that as a result, smaller banks in particular went heavily into construction loans, especially for condos and office buildings. Construction loans, nationally, are expected to be a major problem going forward.
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