Recently I took a call from one of our most active CMBS conduit relationships. “Mike, I need $100 million in CMBS conduit loans by year-end, can you help me out?” On one hand, I was surprised; on the other, not so much. It’s just another example of how quickly the CMBS conduit lending market can change course. A few weeks ago, I was worried that CMBS conduit lenders were going to stop providing quotes for new loans amid unending spread widening that sapped profits from closed loans waiting to be securitized. Plus, the repricing of loans that were being underwritten while spreads were widening was unnerving for both borrowers and CMBS conduit lenders. Pricing for new loans being put under application was extremely difficult. The CMBS conduit lending market was very uncertain.
Fast forward a few weeks: The stabilization of loan spreads (albeit at much higher levels) has provided confidence to a handful of CMBS conduit lenders that now need to meet year-end production goals. These lenders believe spreads have stabilized in the near term and are pricing loans at these levels in anticipation of quick securitization. Hence the need for volume to get this accomplished.
“We have completed a number of transactions this year with this relationship,” said Michael D. Sneden, Executive Vice President of ValueXpress. “It is our go-to relationship as all the loans closed at promised loan proceeds levels. In fact, one borrower received more proceeds than what he applied for.”
“So I told our relationship manager that we would help him meet his goals,” said Sneden. “Now I need help from my colleagues in the field to submit loans as soon as possible.”
