For most of the past two years, the CMBS market has been learning to price risk without the one thing it used to rely on most: actual sales. Instead, a wave of refinancing has taken over the new-issue pipeline, forcing investors and lenders to lean on appraisal-based values and loan performance as stand-ins for bona fide transaction marks.
This theme surfaced on a recent episode of Trepp's TreppWire Podcast, where the hosts walked through loan-purpose data dating back to 2006 and found that today's issuance is skewed toward refinancings to a degree not seen since the last major rate shock. The result is a market where price discovery is happening more by spreadsheet than by bidding war—and where misreads are easier to make.
A Market Priced Off Appraisals
Historically, new CMBS deals featured a healthier mix of acquisition and refinance loans, which provided investors with a steady supply of arm's‑length trades to anchor cap rates and spreads. That mix has shifted sharply since the Fed began hiking interest rates. In 2021 and 2022, acquisitions drove as much as the mid‑30% range of new issuance; by 2023, that share had dropped into the low double digits and has stayed there.
Refinancings, by contrast, have climbed to nearly 60% of 2026 issuance, after running at 65% to 70% in 2023–2025, versus a long‑term average in the mid‑50% to low‑60% range. In other words, the market is now dominated by loans underwritten to appraisals and updated cash flows rather than to cleared auction prices or marketed sales.
"With all of the refinancings, you get appraisal values, but you don't get transaction values, and so there's still some discovery left in the market, because you haven't had enough sales transactions in a lot of markets to actually determine what is the real value of some of these assets," said Lonnie Hendry, Chief Product Officer at Trepp and co‑host of the show.
For investors who remember 2007 or 2021 all too vividly, the composition of issuance is starting to feel like its own sentiment indicator. In their review of the data, Trepp's team noted that when acquisition share pushes into the low‑ to mid‑30% range, the market is typically running hot—and by the time it hits the high‑30% or higher, it often signals a valuation bubble. Today's numbers suggest the opposite problem: a market still digesting the last cycle's froth while new trades remain scarce.
Refis As a Proxy for Risk
In this environment, refinancing behavior is becoming an important surrogate for price signals. Deals that can refinance on schedule, even at lower proceeds and higher coupons, are effectively demonstrating that the capital stack can re‑equilibrate at today's rates. Deals that cannot are telling a different story about underlying NOI, sponsor flexibility and the true level of impairment.
Trepp's analysis of loan purpose across sectors highlights how uneven this re‑equilibration is. Multifamily, for example, saw acquisition shares in 2021 and 2022 spike to roughly half of new issuance—47% to 50%—before collapsing back into the single digits in 2025 and 2026.
Lodging was even more extreme, with acquisition accounting for 63% of 2021 hotel issuance as investors rushed into properties that had suddenly rebounded on the back of post‑pandemic demand and strong RevPAR. These surges left a long tail of aggressively priced assets that now must refinance in a higher‑rate world, often with flat or declining NOIs.
Where refis are clear today, especially for assets acquired during that late‑cycle buying frenzy, the new coupons and reduced proceeds are doing the quiet work of resetting valuations. Where they do not, the workout structures, modifications or eventual distressed sales will become the de facto marks.
According to TreppWire co‑host Stephen Buschbom, head of applied research and analytics at the CRE data firm, elevated refinance shares today should be read as part of a broader transition rather than as a sign of market health or distress in isolation.
"In an average market I would say in any given location, whether you look at MSA or you look at city or you look at the zip code or you look at a region, one to 3% of the total property population will trade in a given year," he noted, arguing that recent years like 2021 are better viewed as anomalies than benchmarks.
That framing matters for CMBS investors trying to interpret the flood of refi‑driven issuance. A refinance at lower leverage with stronger structure may represent a healthy repricing, even if it never shows up as a sale comp. At the same time, a portfolio full of refinanced loans tells you more about who can still write a check than about what a third‑party buyer would pay.
Reading Signals That Exist
The practical implication is that investors and lenders need to squeeze more information out of the data points they do have. In a refi‑heavy market, that means scrutinizing shifts in debt yields, DSCR, extension behavior and loan‑level business plans instead of relying on a handful of headline cap rates.
The TreppWire team pointed out that a "sharpshooter's market" puts a premium on asset selection and operating performance because, with rates elevated and cap rates sticky, most value creation must come from NOI growth rather than multiple expansion.
Loan purpose data can help. When the refinance share is sitting near the top end of its historical range across the market, it suggests that many borrowers are in "extend and amend" mode rather than tone‑setting sales. When acquisition share begins to climb back into the mid‑teens and above in a given sector or geography, it may indicate that sellers are finally accepting the new clearing prices—and that fresh, arm's‑length trades are beginning to replace appraisals as the inputs to valuation.
Until then, refis will continue to do the work sales used to do. They are revealing which assets can support today's capital structures, which sponsors can inject fresh equity and which business plans still pencil at current coupons. For CMBS investors, the challenge is to treat those signals as what they are: imperfect, but still invaluable clues to where the next true clearing prices are likely to land.
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