CMBS financing may have fallen out of popularity this cycle, but it remains a great middle-ground debt solution for borrowers. Mark Ritchie of Newmark Realty Capital describes CMBS as the goldilocks solutions, with balanced rates that can be appealing given the right terms.

“Here’s the Goldilocks metaphor. Borrowers need to explore their alternatives. There is a middle ground where CMBS provides the ‘just right’ debt capital solution. Today CMBS leverage and rates aren’t too high, nor are they ridiculously low,” Ritchie, a principal at NRC, tells “The right set of terms can be extremely appealing. Unfortunately for many borrowers a CMBS lending solution has become the loan of last choice, maybe for valid reasons due to a checkered past, however in it’s contemporary structure CMBS offers a compelling option for the demands of today’s equity.”

Specifically, CMBS is a good fit for urban and secondary and tertiary markets. These are often areas where other capital sources are less aggressive in pricing. “Even the top urban markets on the West and East coasts—think San Francisco, Los Angeles, New York City—can benefit from the ability of CMBS to provide an attractive funding solution,” says Ritchie. “With a 65% loan-to-value, 10-years interest only structure available, the right CMBS execution creates strong cash flow over the life cycle of asset ownership, which we have seen as a driving consideration in today’s market environment.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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