COMMERCIAL MORTGAGE BACKED SECURITY FINANCING (CMBS)

 

Are you looking for the best commercial mortgage backed security financing? The CMBS, commercial mortgage-backed security, is a type of bond that is backed by mortgages on commercial real estate rather than residential real estate. These bonds are usually placed as multiple trances, similar to collateralized mortgage obligation rather than a typical residential “passthrough”.

The American commercial mortgage-backed security possesses less prepayment risks than other types of mortgage-backed securities. Most commercial mortgages have lockout provisions that can be subject to pre-payment penalties, yield maintenance, and defeasance to protect the bondholder(s). On the other hand, European commercial mortgage-backed securitiy financing tend to contain less prepayment protection because the interest on these bonds is floating. This means that the interest is based on a benchmark plus a spread. An easier way to look at this is that commercial real estate first mortgage debt is normally split into two basic categories: loans to be securitized, also known as commercial mortgage-backed security loans, and portfolio loans. Loans that are originated by a lender and held on it balance sheet through maturity are termed portfolio loans.

Commercial mortgage-backed security transactions are structured and priced-based on the supposition that it will not be subject to tax. Becase these loans are not standardized, when compard to residential mortgage-backed security, there is a lesser degree of prepayment risk because rates on commercial mortgages are usually on a fixed term. These type of bonds have become an attractive capital source for commercial mortgage lending because these bonds are supported by a pool of loans that are normally valued at more than the total of the value of the entire loans.

Since 1977, Ocean Pacific Capital has helped hundreds of real estate developers and investors acquire the best commercial mortgage backed security financing. Let our experience and knowledge help you acquire the financing you need. Email or call us to see what we can do for you.