CMBS Heads Into 2007 With Strong Pipeline

Erika Morphy is co-editor of Debt and Equity Journal, from which this article is excerpted.

i>Dallas-CMBS volumes in 2006 will probably reach or exceed levels from 2005–a record-breaking year in which CMBS issuance totaled close to $170 billion, an 80% rise from 2004. To understand why this slice of the real estate capital market continues its upward trajectory, consider what Dan Smith, the recently appointed managing director of RBC Capital Markets‘ real estate mortgage capital division, has to say.

Some three months after RBC launched its US platform–luring Smith from GE Real Estate to lead the initiative–the institution is preparing to close on a sale of nearly $300 million of bonds. It also has more than $2 billion in the pipeline, he adds. Smith spoke with Debt & Equity Journal earlier this month during a business trip to New York City where he was talking with potential partners. By the end of 2006, Smith says, CMBS will probably exceed last year’s volume, registering between $180 billion to $200 billion. “Rates have been friendly and deal flow has been strong,” he concludes.