At a time when the industry is worried about changes in traditional bank CRE lending, other forms of financing understandably get extra attention. One is CRE collateralized loan obligations, or CLOs, whose issuance, according to Trepp, has outpaced the conduit CMBS market in 2021 and 2022.

Making them popular are a "flexible structure, relative basis attractiveness, higher relative yield, and floating rate structure," says the firm. But while tracking CRE CLO issuance, where usually the instruments were favored by investors, 2023 has brought a "dip" in issuance.

CRE CLOs offer higher yields because of greater risks: lower debt-service coverage ratios and higher loan-to-value ratios, meaning more leverage and less room for problems in net cash flow. Not unsurprising to Trepp, as the loans in CRE CLOs are typically shorter-term forms of financing like bridge loans, mezzanine loans, and B-notes.