The market for private-label commercial mortgage-backed securities (CMBS) recorded 23 conduit and single-borrower transactions with a total balance of $17.85 billion during the first quarter, according to new data from Trepp Inc. This marked a 39% increase from the $12.83 billion of issuance in the fourth quarter and was nearly four times greater than the $5.98 billion of issuance from the first quarter of 2023 – it was also the highest issuance level since the $20.56 billion from the second quarter of 2022.
Trepp noted the first quarter was dominated by single-borrower deals, with five transactions at $1 billion-plus. Blackstone Group-owned properties backed seven of the single-borrower deals, with the largest being the $2.35 billion BX Commercial Mortgage Trust, 2024-XL5 backed by a loan against a portfolio of 186 industrial properties with 16.59 million square feet that Blackstone Real Estate Partners acquired in 2019.
“Spreads on benchmark CMBS bond classes — the risk premiums that investors require – ended last year at 145 basis points more than Treasurys,” said Orest Mandzy, managing editor for Trepp’s Commercial Real Estate Direct. “That tightened to just more than 90 basis points for the latest CMBS conduit deal to be issued this year. As CMBS prices increased, lenders were able to reduce loan rates. That’s exactly what happened. The seven conduit deals that priced this year carry an average coupon of 6.09%. That compares with the 6.87% average coupon for all of last year’s conduits. On the other hand, CMBS lending appeared to be quite profitable during the first quarter, as top-line profit margins averaged 4.2%, up substantially from a year ago.”
;
