Place your CMBS Bets

It seems a large percentage of our Quick Poll respondents are fond of fairytales, with 70% of respondents stating their belief that "CMBS is sleeping," far outweighing pessimistic respondents who said "CMBS is dying" (12%) and "CMBS is dead" (18%).Aden W. Kun, a vice president with Newport Beach, CA-based real estate investment bank Buchanan Street Partners, thinks Prince Charming may eventually come around and wake the CMBS market.

I would take the side that it's sleeping, unless you think it's going to be a slow death. There's still some activity going on in the market. However, it's slowed appreciably. At the end of last year at this time we were running about $107 billion of US CMBS, and this year at end of May 2008 we're a tad under $11 billion US CMBS. It's been pretty dramatic.

There are a lot of reasons for that. Investors have gotten burned. There's been doubt whether the ratings have been accurate. In June, you bought a triple-A bond, but you'd have to ask yourself, 'Does it really have a triple-A risk character?' The implication is if the triple-A bond wasn't really a triple-A risk, that means you're not really being compensated.

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