After a rocky first half of the year, the CMBS sector is looking to rally on the back end.
National Real Estate Investor's Diana Bell examines the sector's challenges in the first half of 2016, as global economic volatility roiled the CMBS space, which had high hopes for the year.
The second quarter was particularly harsh, as lender spreads widened significantly, making CMBS pricing uncompetitive with offerings from banks, the government-sponsored enterprises, and life insurance companies. But industry watchers believe the fourth quarter will tell the tale:
The second half of the year, however, will likely be much more active than the first, market sources say. In July, U.S. CMBS issuance totaled $6.2 billion, signifying one of the more active months of the year, according to Commercial Mortgage Alert, an industry newsletter. In August, issuance came to $4.4 billion. These figures came in after a dismal June, when the market saw only $1.7 billion in CMBS issuance, the lowest level since at least 2014.
“Since the second quarter, spreads have bounced back, reaching their tightest levels of 2016. We anticipate the last three months of 2016 to be very busy,” according to [Manus] Clancy [senior managing director of applied data at research firm Trepp LLC].