A surge of fourth-quarter deals is expected to lift full-year U.S. commercial mortgage-backed securities issuance to at least $46 billion, far above earlier estimates. Some $14.9 billion of transactions are expected to price in the fourth quarter, according to a review by Commercial Mortgage Alert. That would be on top of the $30.9 billion of activity in the first nine months of the year.
At midyear, issuance totaled $18.3 billion. While that appeared to put the sector roughly on track to reach the $38-billion annual projection by a panel of CMBS bond pros, a blowout in spreads in May and June put a damper on lending, threatening to depress second-half activity. But a bull market that began in July bolstered the competitive position of CMBS shops, and lending has picked up significantly — especially in the past month — leading to new entries in the deal calendar.
Five issues totaling $4.4 billion are scheduled for this month, including two that priced this week. Seven offerings totaling $6.5 billion are in the queue for November. And three transactions totaling $4 billion are on tap for December.
The projected $14.9 billion of fourth-quarter deals would exceed the $12.5-billion average of the second and third quarters and more than double the first-quarter volume of $6 billion — a sign that the sector is gaining momentum after a long slump caused by the financial crisis and the ensuing recession. What’s more, several single-borrower transactions now under discussion could be added by yearend, continuing a surge of such deals.