small balance conduit CMBS
Question for anyone in the CMBS space. Are you seeing loans under $5 million get done? If so, would you care to share what that looks like?
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Based on the most helpful WSO content, CMBS loans are typically more common for "medium-sized" deals, but it's not unheard of for smaller loans, including those under $5 million, to get done. However, these smaller loans might face challenges due to the complexity and costs associated with securitization.
For smaller balance conduit CMBS loans, the following factors are often considered:
Property Type: CMBS loans can cover various property types, but stable, "core" properties are more likely to qualify. Multifamily and industrial properties are often in the "strike zone" for lenders.
Loan Terms: CMBS loans are generally non-recourse, which can be attractive to sponsors. However, they may come with stricter underwriting standards, especially in uncertain lending environments.
Market Conditions: The current lending environment is challenging, with banks on the defensive and focusing on relationship lending. Rates for CMBS loans have been higher compared to agency loans, often in the mid-3% range or higher, depending on the market and property specifics.
Challenges for Smaller Loans: Smaller loans might not be as attractive for securitization due to the fixed costs involved in structuring and issuing CMBS. However, they can still be done if the property and borrower meet the necessary criteria.
If you're exploring this space, it might be worth reaching out to lenders or brokers specializing in CMBS to understand the specific requirements and feasibility for loans under $5 million.
Sources: So you want to work in CRE Debt? Here are the options..., Math Checks Out | The Daily Peel | 3/24/23, https://www.wallstreetoasis.com/forum/real-estate/state-of-the-cre-debt-markets?customgpt=1, https://www.wallstreetoasis.com/forum/investment-banking/how-to-position-for-a-recession?customgpt=1
To give you an answer cause I don’t think anyone else did.
CMBS loans under $5mm do get done. Shops like Starwood will do it, and pricing is going to be ass. Likely like 300 over. Probably not worth it unless you have no other option, and you also have closing costs including lender legal.
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THANK YOU
Not OP but I am also interested in shops who provide small balance CMBS loans
They get done all the time it’s just that a lot of originators don’t love to spend time on the sub 10 million dollar stuff since there’s not as much profit and you need to jack up the spread a ton to make anything. Also smaller lenders can offer better spread and structure than us at the size.
What’s your exact question?
I am curious why are you asking about CMBS small balance specifically? As opposed to other sbl programs like agency or private perm.
to answer the last two posters, have a financing need and wanted to see if it has become a price competitive alternative to banks and life cos (talking non-multi perm debt here, so ignoring agency) since I was last in a real capital markets role over a decade ago
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