There has been a lot of speculation about what the remainder of the year will bring for commercial mortgage-backed securities (CMBS), and much of that talk has to do with concerns that there won't be as many loan originations in 2016 as there were in 2015.

Well, there is certainly no way to predict how the year will shake out in that category, but there has been some positive CMBS news so far in 2016.

Research firm Trepp recently released a report on CMBS delinquency rates, and things are going in a positive direction based on its data. As of February, CMBS delinquency rates were at 4.15 percent, down from a high of 10.34 percent in June of 2012, and 143 basis points lower from the same year-ago period.

Though multifamily loan defaults inched up six basis points from January, this commercial real estate property sector is at the lowest overall percentage rate of other products, registering at just 2.37 percent. Retail made a significant step, improving to 5.47 percent, from 5.62 percent, while office dropped to 4.98 percent, after being at 5.24 percent the prior month.

Of the top five loans that are newly delinquent, the biggest one was a hotel in Rye Brook, N.Y., as well as three retail properties and one multifamily development.

Additionally, we found out that the CRE Financial Council (CREFC) is happy about new CMBS-related legislation. H.R. 4620 recently passed the House Financial Services Committee. The bill, also called the “Preserving Access to CRE Capital Act,” would, as CREFC explains, helps: “risk retention parameters for CMBS while maintaining the core components of risk retention, ensuring continued market liquidity and affordable financing options for borrowers.”

The main points that CREFC illustrates, and are in favor of, are that the proposed bill would potentially ease risk-retention rules for single borrowers and single-asset purchasers. It would also make a Qualified Commercial Real Estate Loan (QCRE) easier for lenders to achieve and give B-piece buyers to use a “senior/subordinate structure.”

The main problem CMBS investors face is that it's an election year. Unfortunately, issues relating to commercial real estate are not normally focused on when there are other topics on the table, regardless of the bi-partisan support it received.

Investors in commercial real estate are victims of their own success, it seems. Demand for assets is reaching record highs, but that means nothing if capital can't get properly allocated toward those aspirations.

The interest-rate conundrum is behind us, and it's mostly certain at this point that there will not be a crisis as a result.

But the unfortunate thing is that, despite great CRE fundamentals throughout commercial real estate property sectors, outside influences change the financial markets.

The industry is definitely going in the right direction, though, and it seems like there is more to applaud than worry about.

Well, there is certainly no way to predict how the year will shake out in that category, but there has been some positive CMBS news so far in 2016.

Of the top five loans that are newly delinquent, the biggest one was a hotel in Rye Brook, N.Y., as well as three retail properties and one multifamily development.

The interest-rate conundrum is behind us, and it's mostly certain at this point that there will not be a crisis as a result.

But the unfortunate thing is that, despite great CRE fundamentals throughout commercial real estate property sectors, outside influences change the financial markets.

The industry is definitely going in the right direction, though, and it seems like there is more to applaud than worry about.

Instant Insights /

CMBS News: So Far, So Good in 2016

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