CMBS Deal Metrics Bear Watching in 2016


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Somerville: The use of pro forma income calculations isn’t a factor in 2015.

NEW YORK CITY—While the CMBS market in 2016 may face headwinds from a variety of directions, continuing declines in underwriting will be an area of particular focus. So says Fitch Ratings, which notes that new issuance credit metrics have worsened across the board in 2015, although the ratings agency maintains a “stable” rating for CMBS.

Of particular importance, Fitch says in an outlook report, has been “the bar-belling” of metrics, with some Fitch-rated loans receiving significantly worse than average cash-flow haircuts, debt service coverage ratios and loan-to-values. The average credit enhancement at ‘AAAsf’ through third-quarter 2015 was 50.0 basis points higher than the 2014 average and 187.5 bps higher than the 2013 average. It’s also twice as high as the average in 2007, Huxley Somerville, managing director and head of US CMBS at Fitch, says in a video segment…

CMBS Deal Metrics Bear Watching in 2016

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