The Off Market Association: Will Continued Low Interest Rates Attract CMBS Investors in 2013?

San Francisco, CA (PRWEB) December 13, 2012

Over the course of 2012, investors have been increasingly pouring money into Commercial Mortgage Backed Securities (CMBS) and related funds, as investors see a recovery in the commercial real estate market and chase the attractive CMBS yields.

Yields on senior bonds tied to the commercial real estate sector have been narrowing and now stand at just 145 basis points more than benchmark swap rates, the tightest level since the middle of 2008. In comparison, the spread on debt issued by financial companies now stands at 143 basis points over benchmark swap rates.

What about 2013 and beyond? The CMBS market is clearly benefiting from interest rate forecasts, which project the Federal Funds rate will remain near zero through the middle of 2015. This low rate has been prompting investors to consider riskier assets in an effort to boost yields. This in turn has helped property owners who had feared they might be unable to refinance loans coming due in the 2012-2014 timeframe. Unlike other types of lending, CMBS originations are accelerating in an effort to meet CMBS demand. 2012 will see some $ 46 billion in new CMBS issues, which is a 50 percent increase over last years issues, and the possibility for over $ 60 billion in 2013.

Improving financing conditions are a clear positive for the legacy CMBS market, said the JPMorgan analysts led by Ed Reardon in New York, referring to commercial-mortgage backed securities sold during the peak of the property bubble before credit markets froze after the September 2008 collapse of Lehman Brothers Holdings Inc.

However, Fitch Ratings cautions on the legacy CMBS loans in special servicing, which dropped by almost $ 6 billion by the end of the third quarter. Fitch analysts say, “the trend toward a smaller specially serviced loan pool may be difficult to maintain over the longer run [with conflicts of interest]. The large volume of maturities that will begin in 2015 and run through late 2017 are difficult to predict amid uncertain interest rate trends and the current delicate recovery in the business cycle.”

About The Off Market Association

The world is changing and has changed. Old ways of doing business dont always apply. The Off Market Association (OMA) brings a new, exciting and visionary way to do business to all our members.

OMA uses a cutting edge technology and platforms, a deal desk, and extensive contacts across the US for commercial real estate transactions, bank note sales, small business advising and SBA loan services. The OMA is affiliated with Sunovis Financial and Genesis Capital to provide investors with access to capital and quick financing.

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Report Points to Increased Appetite for Distressed Commercial Real Estate Supported by Low Borrowing Costs in 2012 and 2013; CMBS Delinquency Rate Falls Below 10%

San Francisco, CA (PRWEB) October 23, 2012

There is a change in the U.S. commercial mortgage-backed securities (CMBS) industry. The U.S. CMBS Delinquency Report, released by the New York-based research and consulting firm Trepp, indicates that the distressed commercial real estate industry is in somewhat better health.”The CMBS market is on its firmest footing in four years,” said Manus Clancy, senior managing director of Trepp. In fact, the delinquency rate for CMBS loans fell 14 basis points to 9.99% in September. This brings the rate below 10% for the first time since April.

The Trepp report says that CMBS issuance levels rose, and delinquency levels have contracted. Trepp, LLC, is a leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets,

However, bad debt and matured loans still linger, and need to be cleared out of the system or be reworked. Trepp reports that there were around $ 3.3 billion of newly delinquent loans in September. The addition of these loans to the delinquent loan category provided upward pressure on the rate. With the same amount of newly delinquent loans in August, the effect on the rate was similar.

Trepp reports that the appetite for distressed real estate remains high among investors, while borrowing costs remain extremely low. This should allow special servicers to operate at a high speed for the foreseeable future. The CMBS new issuance market has also seen a resurgence over the last three months, leading the market to raise its expectations for securitization volume over the next six months. As new deals tend to perform extremely well, they should help to dilute the bad legacy loans that still exist.

Clearly, the chance to buy distressed commercial real estate at low prices is here, and the moment for entry into the market is now, as competition for available assets will only become steeper in the near future. To get the best of the distressed commercial market, however, analysts say that buyers need to reach out directly to sellers and to negotiate person-to-person, or use a specialist like Genesis Capital. Even at this point in the cycle, owners are finding it hard to accept the lower valuations that the post-crisis period has brought in. Experienced negotiators can get past this psychological obstacle.

About Genesis Capital

Genesis Capital provides a unique forum for distressed and off market assets. Genesis sources off market assets from private clients and from banks for opportunity buyers. Assets may or may not be distressed, but they are always off market. Genesis works principal to principal only (no brokers) and keeps fees low.

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