"The fear in the marketplace is, to some degree, unjustified,"said Jun Han, author of the study and a principal of JHP Capital,at a press conference at the Waldorf-Astoria hotel. "CMBS can be avery good investment if you are a long-term investor."

|

Han looked at about 20,000 loans in nearly 700 bonds and testedthem against three historical recessions and worst-case scenarios.He found that most investment-grade CMBS will have low instances ofdefaults, losses and yield degradation.

|

And the fact that CMBS has "mortgage" in its name alone could becausing it problems, Han said.

|

Han also said that one thing the commercial real estate markethas going for it, unlike other down cycles, is that there is not anoverbuilding scenario. For example, 1% of commercial real estate'stotal inventory is under construction right now, as opposed to therecession of 1991, when 7% was underway. "There's really not a lotof construction activity," he said.

|

Concludes the report: "Commercial real estate fundamentals arestrong and commercial mortgage delinquencies are near record lows.There is no skeleton in the closet: The markets are in balance,with construction low and demand still solid."

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.