CMBS Rates and Market Commentary From Liberty SBF For Jan. 30, 2014

January 30, 2014

A flight to quality by investors who see emerging markets (especially Turkey as that country goes through turmoil) as risky and the continued and expected move by the Federal Reserve to taper its bond-buying program led to a two month low for 10-year benchmark treasuries. The New York Times reported on Wednesday that the central bank cut another $10 billion from the program in “its final major decision under the leadership of Ben S. Bernanke.” It cited “growing underlying strength in the broader economy.”

The 10-year yield on Thursday morning was at 2.68% according to Bloomberg’s website.

“Additional tapering of QE was questioned by the market in light of recent troubles in emerging markets,” said Alex Cohen, CEO of Liberty SBF. “After yesterday’s move we should see the Fed continue at this pace as policy makers unite behind a strategy of gradual withdrawal. The flight to quality by investors from emerging markets has supported bonds and the 10-year treasury yield has fallen from its high at the end of last year. As long as we continue to see progress in inflation and continued job gains we believe the Fed is committed.”

Recently, investors said that the CMBS securities market would see a dramatic increase this year. Some of the reasons are refinance opportunities, increase in transactions as buyers and sellers find each other, and a possible pullback by Fannie and Freddie from the mortgage market.

As demand surges and competition between lenders heats up, there is worry that underwriting standards of CMBS is slipping, according to a recent article in Bloomberg. Data compelled by the news agency predicted that “sales of bonds tied to commercial-property loans doubled to $80 billion last year, and are poised to reach $100 billion this year.”

Commercial Mortgage-Backed Security Loans (CMBS)

Rate Sheet 1/30/2014
Non-Recourse loans for Limited Service Hotels, Office, Industrial, Retail, Multifamily. (As low as $3 Million)

Current Rates
3.69% I 5 YEAR FIXED
5.33% I 10 YEAR FIXED

Term
5-10 year term
25-30 year amortization

Loan Parameters
• Up to 65% LTV on hospitality transactions.
• Up to 70% LTV on conventional commercial real estate acquisitions and refinances.
• DSCR > 1.45x