Signs of Hopes for CMBS in Some Quarters; In Others, It's Mixed

Signs of hope for new commercial mortgage-backed securities issuance are emerging in some quarters but in others opinions about the market's prospects are somewhat mixed. Broker Summit Capital said Thursday that it "will begin analyzing the feasibility of financing transactions in order to place an approximate $380 million pool of non-recourse capital." President John Stueber said, "We believe this is the first capital of its kind to come out" and the move "signals the new beginning of CMBS in regards to the hotel real estate sector." Mr. Stueber said, "There's approximately $380 million available for hotel and commercial real estate assets. There's room for roughly 17 or 18 deals and that's it. Once that capital is used, the entity will securitize this capital pool and make a decision on whether this was a successful run or not. If it is, I expect that they will inject more capital into this type of financing again." A day earlier, Malay Bansal, head of portfolio management for commercial real estate and CMBS at NewOak Capital, summed up the outlook for the CMBS market as follows: "With Legacy TALF coming to an end after March, DDR dropping its planned CMBS deal, and few new deals on the horizon, the CMBS market may be headed for slower days. DDR was the first to do a new issue CMBS deal last year using TALF. The planned second $300 million deal was cancelled after it was able to raise $300 million by selling equity. Yet the fact that DDR preferred to raise funds elsewhere, instead of a CMBS deal, does not mean that CMBS [are] not needed or that others will not want to take CMBS loans. If DDR had not been able to refinance maturing loans by doing its first CMBS deal in November, it would not have found the equity markets that hospitable."