{"id":9289,"date":"2023-05-22T04:27:54","date_gmt":"2023-05-22T12:27:54","guid":{"rendered":"https:\/\/bmcre.freewebsite.org.in\/wp1\/?p=9289"},"modified":"2023-05-22T05:09:18","modified_gmt":"2023-05-22T13:09:18","slug":"bank-of-america-cuts-cmbs-outlook-fitch-predicts-more-downgrades-freddie-mac-issues-first-2023-multiborrower-deal","status":"publish","type":"post","link":"https:\/\/bmcre.freewebsite.org.in\/wp1\/2023\/05\/22\/bank-of-america-cuts-cmbs-outlook-fitch-predicts-more-downgrades-freddie-mac-issues-first-2023-multiborrower-deal\/","title":{"rendered":"Bank of America Cuts CMBS Outlook, Fitch Predicts More Downgrades, Freddie Mac Issues First 2023 Multiborrower Deal"},"content":{"rendered":"\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t

A Weekly Look at the Commercial Mortgage-Backed Securities Business<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t
Bank of America Securities is cutting its CMBS issuance forecast due in part to weakness in office demand and deals. (CoStar)<\/figcaption>\n\t\t\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t

By\u00a0<\/strong>Mark Heschmeyer,\u00a0<\/strong>CoStar News\u00a0<\/strong>January 19, 2023 | 3:08 A.M.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t

Bank of America Cuts CMBS Outlook:<\/strong>\u00a0Despite generally optimistic reports emanating from the Commercial Real Estate Finance Council\u2019s annual meeting this month, Bank of America Securities came away from the convention reducing its prediction for the issuance of commercial mortgage-based securities.<\/p>

\u201cIncreasing interest rates and expectations of slower economic growth have made it more difficult for borrowers and lenders \u2014 and buyers and sellers \u2014 to see eye-to-eye regarding the value of an asset or the amount of debt proceeds that will be available for a given loan,\u201d Alan Todd, managing director and head of CMBS strategy for Bank of America Securities, wrote in his weekly report. \u201cWe therefore reduce our 2023 gross issuance forecast to $45 billion to $60 billion, down from $85 billion to $100 billion.\u201d<\/p>

Given the current interest-rate uncertainty, many borrowers have voiced a preference for shorter-term financing rather than a traditional 10-year loan, Todd said. That presents the prospect that the market could see multi-borrower CMBS deals with five-year terms, but those types of deals likely won\u2019t become a long-lasting phenomenon.<\/p>

\u201cObviously, our forecast can change if conditions improve or deteriorate or if interest rates fall, but we expect to the extent those events occur they will likely do so in the second half of the year,\u201d Todd said.<\/p>

Separately, Kroll Bond Rating Agency reported on talk at the convention of other difficulties getting multiborrower deals off the ground.<\/p>

There were some concerns that creating such CMBS deal pools would be more challenging going forward, given investors\u2019 lack of appetite for office and retail properties, and for multifamily properties constrained by cash flow due to slowing rent growth and increasing expenses.<\/p>

Fitch Predicts More Downgrades:<\/strong>\u00a0The bond ratings firm Fitch Ratings expects a greater number of revisions downward to negative from stable this year as worsening economic conditions \u2014 including rising interest rates, high inflation and slowing economic growth \u2014 contribute to a deterioration in creditworthiness.<\/p>

Fitch expects property-level cash flows to decline from 2022 levels due to weakening demand, slowing revenue growth and increased expenses; as a result, Fitch expects to see more maturity defaults with heightened refinance concerns; market challenges relating to a shift to a new normal of flexible work protocols; and continued performance concerns in the retail sector.<\/p>

Rating actions stabilized in 2022 with property-level cash flows recovering from their pandemic lows, improved valuations, more loans being resolved, and better-than-expected recoveries on sales.<\/p>

The majority of the downgrades in 2022 were in retail, factoring in higher loss expectations on lower-tier regional malls with sustained or further performance deterioration and\/or increased refinance concerns.<\/p>

Some downgrades in 2022 also incorporated underperforming Class B and Class C office loans as a contributory factor. Fitch said it\u2019s growing wary of older office properties with rigid layouts, for which demand is waning.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t

A $104 million loan on Bay Ridge at Nashua in Nashua, New Hampshire, led Freddie Mac\u2019s first multiborrower offering of the year. (Jeff Tippett\/CoStar)<\/p>

Freddie Mac Issues First 2023 Multiborrower Deal:<\/strong>\u00a0Freddie Mac went to market issuing a $1.13 billion CMBS deal, FREMF 2023-K153. The deal\u2019s primary assets are 47 fixed-rate loans secured by 37 multifamily properties, six manufactured-housing communities and four healthcare properties.<\/p>

The top 10 loans by loan amount represent 56.7% of the pool, according to the offering marketing material. The two largest loans in the pool are secured by\u00a0Bay Ridge At Nashua,\u00a0a 412-unit garden-style multifamily complex located in Nashua, New Hampshire, with a loan of $104.1 million; and\u00a0Bayberry Hill Estates,\u00a0a 424-unit mid-rise apartment in Framingham, Massachusetts, with a $99.9 million loan. Capital One Multifamily Finance provided the two loans.<\/p>

Eagle Rock Properties in New York acquired the two properties\u00a0along with three others in November for $500 million. Three additional loans in FREMF 2023-K153 back the other Eagle Rock-acquired properties. New York Community Bank provided financing of $119 million for the remaining three.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

A Weekly Look at the Commercial Mortgage-Backed Securities Business Bank of America Securities is cutting its CMBS issuance forecast due in part to weakness in office demand and deals. (CoStar) By\u00a0Mark Heschmeyer,\u00a0CoStar News\u00a0January 19, 2023 | 3:08 A.M. Bank of America Cuts CMBS Outlook:\u00a0Despite generally optimistic reports emanating from the Commercial Real Estate Finance Council\u2019s annual meeting this month, Bank of America Securities came away from the convention reducing its prediction for the issuance of commercial mortgage-based securities. \u201cIncreasing interest rates and expectations of slower economic growth have made it more difficult for borrowers and lenders \u2014 and buyers and sellers \u2014 to see eye-to-eye regarding the value of an asset or the amount of debt proceeds that will be available for a given loan,\u201d Alan Todd, managing director and head of CMBS strategy for Bank of America Securities, wrote in his weekly report. \u201cWe therefore reduce our 2023 gross issuance forecast to $45 billion to $60 billion, down from $85 billion to $100 billion.\u201d Given the current interest-rate uncertainty, many borrowers have voiced a preference for shorter-term financing rather than a traditional 10-year loan, Todd said. That presents the prospect that the market could see multi-borrower CMBS deals with five-year terms, but those types of deals likely won\u2019t become a long-lasting phenomenon. \u201cObviously, our forecast can change if conditions improve or deteriorate or if interest rates fall, but we expect to the extent those events occur they will likely do so in the second half of the year,\u201d Todd said. Separately, Kroll Bond Rating Agency reported on talk at the convention of other difficulties getting multiborrower deals off the ground. There were some concerns that creating such CMBS deal pools would be more challenging going forward, given investors\u2019 lack of appetite for office and retail properties, and for multifamily properties constrained by cash flow due to slowing rent growth and increasing expenses. Fitch Predicts More Downgrades:\u00a0The bond ratings firm Fitch Ratings expects a greater number of revisions downward to negative from stable this year as worsening economic conditions \u2014 including rising interest rates, high inflation and slowing economic growth \u2014 contribute to a deterioration in creditworthiness. Fitch expects property-level cash flows to decline from 2022 levels due to weakening demand, slowing revenue growth and increased expenses; as a result, Fitch expects to see more maturity defaults with heightened refinance concerns; market challenges relating to a shift to a new normal of flexible work protocols; and continued performance concerns in the retail sector. Rating actions stabilized in 2022 with property-level cash flows recovering from their pandemic lows, improved valuations, more loans being resolved, and better-than-expected recoveries on sales. The majority of the downgrades in 2022 were in retail, factoring in higher loss expectations on lower-tier regional malls with sustained or further performance deterioration and\/or increased refinance concerns. Some downgrades in 2022 also incorporated underperforming Class B and Class C office loans as a contributory factor. Fitch said it\u2019s growing wary of older office properties with rigid layouts, for which demand is waning. A $104 million loan on Bay Ridge at Nashua in Nashua, New Hampshire, led Freddie Mac\u2019s first multiborrower offering of the year. (Jeff Tippett\/CoStar) Freddie Mac Issues First 2023 Multiborrower Deal:\u00a0Freddie Mac went to market issuing a $1.13 billion CMBS deal, FREMF 2023-K153. The deal\u2019s primary assets are 47 fixed-rate loans secured by 37 multifamily properties, six manufactured-housing communities and four healthcare properties. The top 10 loans by loan amount represent 56.7% of the pool, according to the offering marketing material. The two largest loans in the pool are secured by\u00a0Bay Ridge At Nashua,\u00a0a 412-unit garden-style multifamily complex located in Nashua, New Hampshire, with a loan of $104.1 million; and\u00a0Bayberry Hill Estates,\u00a0a 424-unit mid-rise apartment in Framingham, Massachusetts, with a $99.9 million loan. Capital One Multifamily Finance provided the two loans. Eagle Rock Properties in New York acquired the two properties\u00a0along with three others in November for $500 million. Three additional loans in FREMF 2023-K153 back the other Eagle Rock-acquired properties. New York Community Bank provided financing of $119 million for the remaining three.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"elementor_theme","format":"standard","meta":{"footnotes":""},"categories":[51,48],"tags":[],"class_list":["post-9289","post","type-post","status-publish","format-standard","hentry","category-2023-q1","category-economic-news"],"_links":{"self":[{"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/posts\/9289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/comments?post=9289"}],"version-history":[{"count":7,"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/posts\/9289\/revisions"}],"predecessor-version":[{"id":9310,"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/posts\/9289\/revisions\/9310"}],"wp:attachment":[{"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/media?parent=9289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/categories?post=9289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bmcre.freewebsite.org.in\/wp1\/wp-json\/wp\/v2\/tags?post=9289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}