With attendance at the recent Commercial Mortgage Securities Association European conference held in Brussels earlier this month exceeding expectations, the hot topic this year was the educational seminar on the new investor reporting package for U.K. CMBS transactions - called CMSA E-IRP.
The E-IRP provides relevant data that investors can use to compare bonds across multiple transactions. The E-IRP concept is based on its U.S. counterpart, which the CMSA IRP introduced in 1997. However, it is structured to account for the differences between markets. A 30-day comment period, held in January, allowed input from market participants to improve the accuracy and efficiency of capturing U.K. CMBS market data. The organization received numerous suggestions during that period, many of which were incorporated, said Wilkie.
"The initial feedback we got at the conference was that participants liked the idea of having a standard format but then most of the major players in attendance had a hand in creating the final product," said JPMorgan Securities Vice President Clive Bull, who also serves as Chair of CMSA's European Board of Governors.
"These standard reporting formats are essential to supporting the continued growth and liquidity of the commercial mortgage real estate debt securities market in the U.K.," said Bull. According to figures reported by CMSA-Europe the U.K. CMBS market has taken off, as new issuance for the first three quarters of 2005 totals $24 billion, making up the bulk of total European issuance for the same period of almost $39 billion. This compares to $8 billion in U.K. CMBS issuance during the same period last year. New issuance in Europe this year has already surpassed last year's total and is set to reach 50 billion ($60.6 billion) by the end of the year.
Bull said that while adapting the standard format was not mandatory, he expected most industry players would comply with the IRP and said that at the moment the CMSA-Europe was considering ways of implementing the format to broader European deals. "What we have put together is almost generic in terms and could easily be adapted to other markets," said Bull. "But the aim is to go through it again and understand how the database would work best if we were looking at it from say a German CMBS point of view. On the deal mechanics side it would only take re-labeling some of the fields but the harder aspect to handle is the legal intensive differences that might be more specific to German deals."
The CMSA-Europe is also considering implementing reports such as those included in the U.S. CMSA-IRP. Bull said that, at the moment, the task was to go through these reports on watchlist and specially serviced loans and see if they might be appropriate for the U.K. and its IRP.
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