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CMBS Sales Seen Little Changed in 2012 as Lenders Cut Back

Nov 9, 2011 - Hui-yong Yu and Sarah Mulholland

Nov. 9 (Bloomberg) -- Sales of commercial mortgage-backed securities aren't likely to increase much next year as borrowing costs remain high and lenders back off making new loans, according to CMBS executives.

"The Street's not really taking risk, they're very concerned," Steven Schwartz, managing director of loan acquisitions for Torchlight Investors, said at the Bloomberg Commercial Real Estate Summit in New York. "The first quarter's going to be grim."

Europe's fiscal crisis has roiled credit markets since July, causing gyrations in the value of securities tied to shopping malls, skyscrapers and hotels and leading to a pullback in loan originations. CMBS issuance in the U.S. has totaled about $26 billion this year. While that's up from $11.5 billion in 2010, it's a fraction of the record of more than $200 billion in 2007 when commercial real estate peaked, according to data compiled by Bloomberg.

"Thirty billion was a number that sounded about right, maybe $35 billion" for CMBS sales in 2012, said Harris Trifon, global head of commercial real estate debt research at Deutsche Bank Securities Inc., echoing a forecast by Schwartz.

Anthony Orso, chief executive officer of Cantor Commercial Real Estate, was more bullish than the other panelists, estimating that CMBS sales could reach $60 billion to $70 billion next year.

"We're closing loans," said Orso. "We hope we can do 10 percent of the marketplace."

Cantor Commercial Real Estate, an affiliate of New York- based Cantor Fitzgerald LP, originates and securitizes mortgages and mezzanine loans. Cantor Fitzgerald created Cantor Commercial Real Estate in August 2010 in partnership with Los Angeles-based CIM Group LLC. In May, Cantor Fitzgerald sold $634.5 million in commercial mortgage pass-through securities, backed by loans originated by Cantor Commercial Real Estate.

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