JPMorgan Chase and Ladder Capital Finance are prepping a CMBS worth $800 million in June, according to published reports.
The reports said that the planned conduit CMBS transaction is backed by new office and retail loans originated by both firms, including $650 million made by Chase.
This report of another CMBS transaction comes after Royal Bank of Scotland's (RBS) Commercial Funding CMBS, which was earlier reported by StructuredFinanceNews.com.
The over $300 million RBS deal was the first CMBS conduit transaction in a couple of years, thus serving as a benchmark for future transactions.
The securitization was backed by 81 commercial real estate properties in Texas, New York, Missouri, Wisconsin and New Jersey and is primarily composed of retail and office properties, which is like the JPMorgan Chase/ Ladder Capital potential offering.
RBS and Natixis served as underwriters on the RBS transaction.
Reports of the new deal have bouyed up the CMBS market. "Reports last week that JPM will be coming out with a $840 million new-issue CMBS deal with multiple borrowers and dramatic tightening in CMBS spreads in last two months have generated a lot of optimism in the CMBS market," says Malay Bansal, head of portfolio management and advisory for commercial real estate and CMBS at NewOak Capital.
Bansal said that an example of spread tightening is that GG10 super-senior bonds have tightened by 90 basis points over the last month, and 165 basis points in the last two months.
"Increasing optimism is encouraging others to consider restarting origination too, which is good for the market," he said. "However, with the fundamental problems that the CRE market still faces, it will not be prudent to originate loans for securitization with the assumption that spreads will keep tightening."
According to Bansal, any negative surprises could actually hurt sentiment as well as discourage origination efforts. "The prudent thing for the CMBS market participants to do is to work on a mechanism to hedge loans while they are being aggregated for securitization," he said.