As rating agencies tighten up ratings for commercial mortgage-backed securitizations, some deals relying on such funding may not be closed.Risk associated with real estate investment is being underpriced, according to John Kriz, managing director with a Moody's Investors Service group that rates unsecured REIT debt. Speaking at the National Association of Real Estate Investment Trusts' annual convention in New York, he noted, "The glass is less than half empty and draining," adding that it is "worrisome" to see prices in "secondary and tertiary markets being bid up." Mr. Kriz expects some CMBS deals to be repriced and some deals to be scuttled, as part of the signals of caution. There has been a historic move in spreads in the CMBX market, according to Jay Sugarman, chairman & CEO, iStar. He has heard anecdotally about some high profile transactions being impacted. On some transitional multifamily properties proceeds are down 20% as rational underwriters are saying no more, Mr. Sugarman noted.

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