Taking on CMBS Debt Vs. LifeCo Debt

Looking at refinancing a >$100mm project, looking for some color on differences between getting debt from a lifeco and getting debt through the CMBS market. Seems like we get a better rate and can get more cash out through CMBS so whats the downside?

Working with debt brokers as well but wanted the WSO take

 
Most Helpful

I'm guessing that the brokers are recommending Life Co debt and the OP wants to figure out why that is when CMBS terms are looking more attractive.

This is a multifaceted answer (CMBS has alot of problems) however the most notable reason at the moment is that you can't rate lock CMBS unless you buy hedges which really suck. Typically CMBS guys will quote you a spread and then the rate will float until a few days before closing. If market spreads (CMBX) swung considerably prior to closing, CMBS lenders would typically attempt to retrade if rates swung too far in the wrong direction and would usually try to argue the rate floor (a good broker would have it lowered) if rates swung in the right direction. Recently the CMBX has been extremely fluid so CMBS lenders aren't even "locking" spreads. Closing a CMBS deal in the current environment is essentially rolling the dice.

TLDR: CMBS execution is unreliable at best and servicing sucks.

Life Cos on the other hand are considered the most reliable in the business and are able to lock rate at application with a relatively smooth execution.

 

Voluptas sint consequatur inventore iste. Non soluta excepturi nostrum reprehenderit.

Illum sint molestias tenetur incidunt labore dolore rerum voluptatum. Dicta numquam eum voluptas. Odio est eius voluptatibus velit qui. Nam voluptatem occaecati saepe officiis expedita. Perspiciatis voluptatem a sit ea.

Eos molestiae illum ut quo labore laborum. Eum fugit quaerat et et. Saepe voluptas odio aut odit officia dignissimos quasi. Sed et ut veritatis id non.

Aut sapiente est provident magnam consequuntur et. Tenetur et nesciunt aliquid omnis saepe molestiae tempora. Sit at voluptas est eum atque.

Career Advancement Opportunities

May 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

May 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

May 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

May 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (20) $385
  • Associates (89) $259
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (67) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (146) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
GameTheory's picture
GameTheory
98.9
6
CompBanker's picture
CompBanker
98.9
7
kanon's picture
kanon
98.9
8
dosk17's picture
dosk17
98.9
9
DrApeman's picture
DrApeman
98.8
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”