US CMBS issuance ended 2015 just over $101 billion, a post-recession first, according to data from research firm Trepp.
That may provide some solace after 2014 failed to hit the triple digits as many had hoped, but the final tally is also significantly lower than many early predictions for 2015.
“Plenty of people expected as much as $120 billion, but the market’s momentum slowed in the second half of the year,” noted Trepp research associate Sean Barrie.
After a $93.1 billion year in 2014, January’s CRE Finance Council 2015 Market Outlook Survey found that 70 percent of respondents expected issuance in 2015 to fall between $100-125 billion, and 18 percent believed there would be more than $125 billion.
Morgan Stanley in December of 2014 had predicted 2015 issuance of $125 billion, stating that it could reach as much as $140 billion in a “bull case scenario.”
But three of the year’s top five deals were issued during Q1, including the $1.8 billion GAHR Commercial Mortgage Trust, 2015-NRK (Northstar skilled nursing) and the Motel 6 Trust, 2015-MTL6.
Additional market volatility, widening spreads and the increased volume from agency lenders was also thought to have curbed the number of deals in the second half of the year.
“The appetite for larger deals fell as the market got choppier and, as a result, deal size has shrunk,” said Mike Schulte, head of pricing and distribution at Silverpeak Real Estate Finance, as the year came to a close in November. “Deals smaller than $1 billion are just easier for people in the market to digest.”
Issuance of CMBS peaked in 2007, when there was about $230bn of volume, but that ground to a standstill during the recession.