Sales of commercial mortgage-backed securities are surpassing analysts' expectations for 2013. In January, Barclays forecast $60 billion in sales this year, but issuance is expected to exceed $80 billion, analysts said.
The Commercial Real Estate Financial Council Europe finalised general standards for best practices in commercial mortgage-backed securities, dubbed CMBS 2.0. The council intends for CMBS 2.0 to be adopted industrywide. "It will ultimately be a matter for market participants to decide whether or not to endorse them by applying them to transactions," according to the guidelines' preamble.
When financial markets stalled years ago, commercial mortgage-backed securities started to come with an "operating adviser," a sort of watchdog to look out for investors. Now, those advisers have lost their authority. They used to be able to get rid of a servicer based on their own judgment, whereas now they need investor approval. Operating advisers also no longer have access to all kinds of information.
Deutsche Bank and UBS reduced a planned $2.2 billion commercial mortgage-backed securities deal to $1.4 billion, sources said, as an onslaught of offerings hits the market. The banks struggled to close loans included in the deal after debt yields increased.
Westpac Institutional Bank is focusing on the retail bid to revive the commercial mortgage-backed securities market in Australia. "The retail bid has immense potential ... because investors are trying to beat the rate on bank deposits which has more than halved over the past year," said Nicholas Chaplin, an executive at Westpac Institutional.