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Commercial Property News
Why the self -cert commercial mortgage has vanished
If you are wondering what happened to self-certified commercial mortgage lenders Commercial First, 5D Finance, Interbay, and Base Commercial Mortgages, who 12 months ago were touting for commercial mortgage business, look no further than the figures released by Moody's today, which show the volume of Commercial Mortgage Backed Securities (CMBS) issued in Europe, the Middle East and Africa (EMEA) sharply down H1 2008, recording volumes of €3.0 billion - a 91% decline from the record-breaking €35 billion posted for the same period last year. This decline also reflected the dwindling of the number of transactions 5 in H1 2008 from 38 in the same period last year.
CMBS were the means by which these lenders sold their mortgage book to investors and replenished their lending funds. That well has run dry. Over the past couple of months, several of the market participants that have been active as originators and/or arrangers of EMEA CMBS have re-assessed their business model for commercial mortgage loans and using CMBS as an exit strategy. This re-assessment has resulted in very low volumes of loan origination for securitisation purposes, and this is likely to continue.
In Moody's view,the less favourable outlook for the EMEA property markets might hinder a substantial increase in investor demand over the short term. Moody's expects a slow market recovery over the course of 2009. A rejuvenation of the market will depend on future investor sentiment towards structured finance investments in general and EMEA commercial mortgage loans specifically.
The number of loans experiencing adverse issues is growing although the overall number of these loans is still low compared with the total number of loans monitored by Moody's.The Outlook for UK CMBS remains Negative. If the quality of UK CMBS proves good enough to withstand the stress test that these present market conditions are imposing, then investor appetite should return and with it the specialist lenders.
CMBS were the means by which these lenders sold their mortgage book to investors and replenished their lending funds. That well has run dry. Over the past couple of months, several of the market participants that have been active as originators and/or arrangers of EMEA CMBS have re-assessed their business model for commercial mortgage loans and using CMBS as an exit strategy. This re-assessment has resulted in very low volumes of loan origination for securitisation purposes, and this is likely to continue.
In Moody's view,the less favourable outlook for the EMEA property markets might hinder a substantial increase in investor demand over the short term. Moody's expects a slow market recovery over the course of 2009. A rejuvenation of the market will depend on future investor sentiment towards structured finance investments in general and EMEA commercial mortgage loans specifically.
The number of loans experiencing adverse issues is growing although the overall number of these loans is still low compared with the total number of loans monitored by Moody's.The Outlook for UK CMBS remains Negative. If the quality of UK CMBS proves good enough to withstand the stress test that these present market conditions are imposing, then investor appetite should return and with it the specialist lenders.
Thu, 4th Sep 2008