CMBS lenders now have their eye on a larger goal than just providing liquidity for the commercial real estate industry: creation of a global CMBS market, according to the report released at the Mortgage Bankers Association of America Commercial Real EstateFinance/Multifamily Housing convention in San Diego this week.
The $12 billion in mortgage-backed securities issued last year compares with $9.8 billion the prior year and just $600 million in 1998, according to numbers provided by Commercial Mortgage Alert. With US issuance apparently leveled off at a little less than $50 billion, E&Y's Commercial Mortgage Backed Securities Update 2000-2001 concludes that the global market seems to provide the clearest growth engine for CMBS in the years ahead.
Last year, major conduit operations were formed in Canada and the United Kingdom. CMBS-funded loans were used to finance an Australian property portfolio; and, in Italy and Japan securities were used to sell non-performing loans held by troubled financial institutions.
According to Joe Rubin, national director of financial services for Ernst & Young Real Estate Practice, the international growth of CMBS was the big news in the CMBS world in 2000, a trend likely to deepen in 2001.He cautions, however, against expecting the meteoric growth witnessed in the US market just three years ago.
"We expect to see steady expansion of CMBS throughout world markets in the next few years, but each market has its own unique obstacles to meet and overcome," Rubin says. "Nevertheless, there will be major opportunities for United States and domestic issuers in these markets."
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