CRE Debt ‘Compelling', With Caveats

WASHINGTON, DC—From the depths of the 2008 global financial crisis, many sectors of commercial real estate have recovered nicely, and “nearly every major financial index in the US has recovered to levels that are better than pre-crisis levels,” writes Ed Shugrue, CEO of Talmage LLC. However, CRE debt, and specifically CMBS, continues to lag, Shugrue writes in the latest issue of CRE Finance World, published by the CRE Finance Council.

Even so, Shugrue sees it as a promising investment vehicle. “Until the $360 billion of maturing CMBS debt is resolved with some clarity and/or the CMBS market can grow to closer to $1 trillion in size (thereby affording broader research and trading support), we see CMBS as a compelling field of investment able to provide a wide array of investors access to returns that range from core to opportunistic, from AAA to CCC, and from six months to 30 years,” he writes. “What we find particularly compelling about CMBS is the ability for investors to customize investments to fulfill very specific risk/reward parameters for a particular asset.”