- June 2010: Vol. 22 No. 6

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We Need CMBS: Why Securitization Is Essential for Recovery in the U.S. Commercial Real Estate Market

by Margie Custis and Marc Peterson

The securitization market for U.S. commercial real estate loans all but collapsed in the wake of the financial crisis that rocked the global economy in 2008 and early 2009. Property values dropped dramatically as virtually all forms of financing dried up. Most property types have experienced more than 30 percent value declines as of year-end 2009 (according to The Moody’s/REAL All Property Type Aggregate Index and the NCREIF Property Index) with an overall peak-to-trough decline of 35 percent to 40 percent predicted.

These declines are not as bad as the draconian levels predicted a year ago because new life is emerging in the commercial real estate market as legacy collateral is being traded more actively and investor capital is finally beginning to flow. Property sales are beginning to occur beyond distressed selling, and nominal cap rates are anticipated to trend lower. Financing

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