FROM THE FIELD:
LEVERAGING A NEW
L ANDSCAPE
Investors Have More Financing Options as Lenders Compete for Business
By Michael Snodgrass and Jan Sparks
Managing Directors
Structured Finance
The capital markets have finally returned to pre-crash levels, prompting a
flurry of activity that will make 2013 look a lot like 2007. Borrowers have
more financing alternatives than they’ve had in the last five years, and they
are taking advantage of the opportunities. Less equity is required for deals
because loan-to-value percentages have increased, therefore the cost of
capital has decreased. And investors are enjoying higher yields than
they’ve seen in recent times.
Commercial mortgage-backed securities lenders have made a strong
revival. The CMBS volume in first-quarter 2013 was estimated at $22.9
billion, as opposed to $6 billion for first-quarter 2012 — a dramatic 281
percent increase. The first-quarter volume was nearly half of last year’s
total, when the CMBS volume reached approximately $48 billion. It had
gotten to where, for a time, it was not profitable to securitize debt. The
securitizations are becoming more profitable, so there’s more demand for
loans originated by CMBS lenders. CMBS is also becoming more
competitive on multifamily lending, an area previously controlled by Fannie
Mae and Freddie Mac.
