Research - SEPTEMBER 8, 2014

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CMBS fundamentals continue downward trend in Q3

by Reg Clodfelter

CMBS fundamentals continue to decline from the conservative standards seen in the wake of the global financial crisis, with the percentage of interest-only loans in CMBS conduit deals continuing to increase quarter-over-quarter thus far in third quarter, and riskier underwriting standards continuing to rear their head, according to the latest report from Standard & Poor’s Rating Services.

The percentage of interest-only loans in CMBS conduit deals climbed to 62 percent in the third quarter through Aug. 31 — 19 percent full interest-only and 62 percent at least partial interest-only — up from 60 percent in second quarter, 55 percent in first quarter and 50 percent in 2013. Though these numbers are still significantly lower than the metrics seen in the 2007 vintages, they have inched up to the level seen in the 2005 vintages, according t

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