“CMBS is back” — virtually unheard in 2009, mostly a whispered hope in 2010 and a cautious claim in 2011 — is a growing chorus in 2012 and it rang in ears at The Mayor's Development Roundtable.
CMBS, commercial mortgage-backed securities, made the commercial real estate world go 'round until the credit crash and the Great Recession in 2008. Their near absence in 2009 — and, for the most part, until last year — hit Wall Street and Main Streets nationwide, when so-called conduit lending and private commercial development stopped cold.
This year will see nowhere near the $300 billion per year at the peak. Projections range from $25 billion to $45 billion in 2012. Nonetheless, development capital proceeding from such bond sales picked up last year and took off in the first quarter.
In other words, big lenders are making loans for commercial real estate projects again, bundling notes together and selling the aggregate income from them to investors — then taking the proceeds and making more loans.
“CMBS — we love it,” developer Richard Tanenbaum said at the round-table event Wednesday at Cox Convention Center.
Without it, he said, developers draw on local or regional bank lines of credit as much as their credit standing could stand, then “we were stuck.” Developers find rare equity partners, or try to sell sound income-producing property to get capital to leverage into new development projects.
With Wall Street backing in the form of renewed securitized capital and non-recourse loans — meaning the income-
For their part, off-Wall Street lenders continue to sing the cautious song. Panel moderator Judy Hatfield, owner-principal of Norman-based Equity Commercial Realty — and a housing developer in downtown Oklahoma City — asked the lone banker on the panel to explain how increased federal regulation of lenders was crimping local commercial lending.