Shopping the B-piece is an integral part of structuring a CMBS transaction. However, with more than a few of the more traditional B-piece investors exiting the market in the last down cycle, B-piece buying became more opportunistic. As CMBS market fundamentals improve, the sector is bound to see the return of the more traditional mezzanine investors, sources said.
Traditional B-piece buyers underwrite lower tranches in CMBS transactions. They are capable of working out loans that go into special servicing for the best recovery value. "As a controlling class, they have the right and skills to work out the loans for the best outcome," said Ron D'Vari, co-founder and CEO at New Oak Capital.