CMBS Financing Blog
Learn everything you need to know about CMBS loans, including terms, property types, prepayment penalties, lenders, and more.
When it comes to getting a CMBS loan for a commercial property, there’s a lot that potential borrowers need to know. In this quick, comprehensive primer, we’ll explain all the basics to help borrowers determine whether getting a CMBS loan is right for them.
When CMBS loans are pooled together and securitized into commercial mortgage-backed securities, they are split into multiple tranches based on risk and return. CMBS tranches can generally be split into two major categories, investment-grade CMBS and sub-investment-grade CMBS.
The CMBS B-piece refers to the tranches of commercial mortgage-backed securities rated BB+/Ba1 through B-/B3, providing the highest risks and the highest returns for CMBS investors. If the underlying loans that back a CMBS go into default, the B-piece investors are the last to be paid back, if they get paid back at all.
CMBS loans are generally fully assumable with servicer approval and a small fee. Fees vary but are typically around 1% of the remaining balance of the loan. CMBS loan assumption can be of significant benefit to both the seller of a property and a new borrower, but it isn’t a good idea in all situations.
CMBS loans are mortgage-backed securities (MBS) collateralized by loans on commercial properties, while residential mortgage-backed securities (RMBS) are mortgage-backed securities collateralized by loans on residential properties between 1-4 units.
If you’re looking for a CMBS loan for a multifamily or commercial property, leave it to our team of experienced capital markets advisory partners. Fill out a form today to get a free quote from an experienced commercial mortgage banker today!
