CMBS

ABS overall should outperform, but risks remain in specific areas

Delay refinancing two loans prompts drop to below investment-grade for one class of CMBS

Top retail-mall owner Taubman has approached the market with a $1 billion CMBS deal to refinance the existing debt that is collateralized by one of the highest volume shopping centers in the U.S.

Affiliates of real estate company Tishman Speyer and investment firm Henry Crown & Co. are selling $3.4 billion of commercial mortgage-backed securities in a deal that's expected to price Thursday.

Investors began pulling funds rapidly after it disclosed last month the departure of Chief Investment Officer Ken Leech amid Justice Department and Securities and Exchange Commission probes into its trading practices.

The pool, collectively, has a cap rate of 8.57%, with an in-trust loan-to-value (LTV) at the cutoff date of 102.3%, and an appraisal LTV of 61.5%.

One of the transaction's many positive attributes is its low loan-to-value ratio, 71.5%, and with 4.7 million residents, the Riverside-San Bernardino-Ontario, Calif., metro area ranks as the 12th most populous metro area in the U.S.

The pool includes loans originated under section 504 of the Small Business Investment Act of 1958, which supported funding for loans made to small business concerns, predominantly with original 30-year terms.

As the inflation reduction campaign has miles to go, banks considering credit risk transfers referencing commercial real estate could find enthusiastic investors.