Big news in the real estate market! CMBS, or commercial mortgage-backed securities, are starting to make a comeback according to an article recently published by Bloomberg (See “Rally in CMBS Buoyed as Angelo Gordon Leads Investors: Mortgages”).
The article states that demand for bonds linked to offices, skyscrapers and shopping malls is the highest in four years as commercial properties across the country show signs of improvement. Another encouraging factor is that late payments on mortgages bundled into securities fell last month for the first time this year and property value has climbed as much as 41 percent from their January 2010 low.
Katheryne Zelenock, a Member in Dickinson Wright’s Troy office, has seen the changes in the industry from when it was at its peak in 2007, with CMBS making up 65% of commercial mortgages, to the changes in non-recourse guarantee provisions.
“Yes, there is a resurgence in CMBS but it is still not remotely what it was,” said Kathy. “There is a lot of debate in the industry right now on whether this is CMBS 2.0 or CMBS 2.5.”
CMBS is often referred to as a Wall-Street type of lending because CMBS are commercial loans that are pooled together and sold as a bond. Firms in New York, San Francisco, Chicago and Dallas are usually more involved in these types of transactions. Dickinson Wright, however, is carving out a niche for itself as one of the few law firms in Southeast Michigan that assists clients in this area of real estate.
To learn more, check out our Real Estate Finance Practice.
