JPMorgan Deal One Sign of Hope for CMBS
JPMorgan Chase Commercial Mortgage Securities Corp has filed a registration document to come to market with a $1 billion CMBS offering, according to a Dow Jones report. The article added that the last time the company came to market was in December with a $500 million CMBS.
Dow Jones reported that 2009's JPMorgan deal was eligible for funding through the Term Asset-Backed Securities Loan Facility (TALF), adding that in this round of issuance, new CMBS are projected to sell at tighter pricing levels compared with the three other issues that were sold last year.
JPMorgan's deal is one of several factors that are giving hope for a CMBS' market revival. In a report from ASR sister publication National Mortgage News, signs of hope for new CMBS issuance are emerging in some quarters but in others opinions about the market's prospects are somewhat mixed.
Broker Summit Capital said Thursday that it "will begin analyzing the feasibility of financing transactions in order to place an approximate $380 million pool of non-recourse capital."
The company's President John Stueber said, "We believe this is the first capital of its kind to come out" and the move "signals the new beginning of CMBS in regards to the hotel real estate sector." Mr. Stueber said, "There's approximately $380 million available for hotel and commercial real estate assets. There's room for roughly 17 or 18 deals and that's it. Once that capital is used, the entity will securitize this capital pool and make a decision on whether this was a successful run or not. If it is, I expect that they will inject more capital into this type of financing again."
A day earlier, Malay Bansal, head of portfolio management for commercial real estate and CMBS at NewOak Capital, summarized the outlook for the CMBS market as follows: "With Legacy TALF coming to an end after March, DDR dropping its planned CMBS deal, and few new deals on the horizon, the CMBS market may be headed for slower days."
He added that, "DDR was the first to do a new issue CMBS deal last year using TALF." Bansal also that the planned second $300 million transaction was cancelled after it was able to raise $300 million through selling equity.
However, with DDR preferring to raise funds elsewhere, rather than via a CMBS deal, does not mean that CMBS deals are not needed or that others will not want to take CMBS loans. "
"If DDR had not been able to refinance maturing loans by doing its first CMBS deal in November, it would not have found the equity markets that hospitable," Bansal said.