I had an acquaintance ask me for some feedback on a few potential opportunities. Anyone care to share their .02- CMBS servicing role on performing loans vs an IS analyst / Debt analyst opp at a JLL/CW/HFF/CBRE brokerage? I have no CMBS experience so I don't want to open my mouth and give him crappy feedback. Thank you in advance for taking a minute to share.
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Placing capital/IS at a brokerage sounds like a way better gig than any loan servicing role
Going to have to agree with this. Currently in loan servicing and I do come across CMBS servicing which can be a pain in the ass because of major legal concerns related to securitization. Servicing is pretty cut and dry and just a back office role. IS/Debt brokerage offers more skills especially if its with one of those reputable firms. It's front office and you'll learn a lot more there because you'll look at it from an investment perspective.
Second the point above. Not even close. If it's CMBS lending then it's a more debatable point.
If its actually CMBS lending vs brokerage could you touch upon the pros/cons? Thank you!
You can read jpmorgan’s 2019 cmbs outlook, it’s not good
Next year forecast is only 90B for conduit cmbs but 150B for agency cmbs. It’s getting more difficult for conduit cmbs to source any multifamily collateral and liquidity will become an issue when the conduit cmbs market further shrinks
Yeah it looks like our shop has come to terms with the fact that with multi's we will just lose out tom agencies. But what about office/retail/industrial? In my opinion, CMBS's biggest selling point is that we can lend in secondary and even in tertiary markets when appropriate. So, isnt there a lot of non multi real estate in secondary or tertiary markets where the loan amount is too little for most life co's or you could have local balance sheet lenders that are hesitant to offer 10 year fixed money in those markets. Doesn't cmbs offer a additional competitive financing option there?
I disagree with that selling point completely. In our experience small balance focused Life Cos (Life Cos who focus on $500k-$20MM loans) are more willing to go to tertiary markets than CMBS lenders. Additionally, given the legal and associated costs of CMBS, the loans have to be above a certain size for CMBS to become an option. I know that Wells has a small balance CMBS program which manages the costs pretty well but my impression is that they do not go to tertiary markets.
I work at a CMBS shop, we compete with small life co's and small regional banks when it comes to secondary and tertiary markets. We are very willing to lend in secondary markets and even in tertiary markets but we will be a little more selective when it comes to tertiary markets. Our most recent deals were in South Lake , TX and Travellers Rest, SC. The population in both these markets are less than 30K. We realize that for the bigger deals in primary markets, our non cmbs competition (especially larger life cos) is increasingly willing to offer longer term fixed rate non recourse money. They can also stretch the leverage when they really like a deal. This could just be the cycle we are in, but our main competitive advantage gets neutralized. So, for our shop, smaller deals in secondary and tertiary markets has been working well. Even though smaller life co's can also be competitive here, most of our business comes through brokers and they dont shop the deal with life co's every time. And on loan amounts, of course bigger is better given the costs and fees, but we can do loans as little at 2MM as again we find our competition not focussing on these small loan amounts. PLus it also helps that our counsel gives us a break on fees due to our volume.
link for this?
Do you have the pdf for JP Morgan's outlook? Not able to find it. Thank you!
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