CMBS

The repricing in global financial markets since Russia’s invasion of Ukraine in February has put upward pressure on financing costs in Europe’s real estate sector.

The CMBS market saw record issuance in the first two months of the year.

Market participants say the volatility seen in financial markets is only dealing glancing blows to the US CMBS market.

Conduit deals accounted for just 19% of private label issuance in 2021, down from 45% in 2020 and 81% a decade ago.

The US-based firm sees significant mispricings that present opportunities to take short positions.

Panellists at CREFC Europe’s Autumn Conference also discussed the rising CMBS market and the increasing importance of ESG in lending strategies.

The covid crisis has tempered issuance this year. But lenders are hopeful the market will revive as the US emerges from social restrictions imposed due to the pandemic.

With recovery underway in the US hotel sector, securitisation activity is gradually picking up in select sub-sectors – albeit with more conservative underwriting.

Commercial mortgage-backed securities issuance in Europe is gaining traction, with six deals launched so far this year.

Rating agency Moody’s predicts next year’s European CMBS issuance will have greater exposure to assets including multifamily residential and specialised properties.