CMBS Loans for Multifamily Properties are Starting to Making a Comeback

After a rocky start to the year, lenders are starting to originate a number of CMBS loans, according to an article in National Real Estate Investor. According to the article, shock waves rolled through the financial markets early this year as investors worried about negative economic news from Europe and China, while stock markets fell sharply. So far, CMBS issuance is down 41 percent from this time in 2015. 

CMBS loans are often important for multifamily borrowers who require smaller loans or financing for Class-B or Class-C apartment properties. As the markets have calmed, borrowers are now able to get a CMBS loan that covers 70 percent of the value of an apartment property, with an interest-only period of three years or less at an interest rate of 275 to 300 basis points over swaps. This rate is slightly higher than those offered by the government-sponsored enterprises in their multifamily programs. However, while interest rates for CMBS loans are almost as low as offers in the fall of 2015, lenders are still cautious, offering smaller loans relative to the size of the property.

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