US Commercial Mortgage Market Improves

Posted on 28 November, 2012 by Jodee Redmond

US commercial property owners who may have been worried about being able to refinance existing mortgage debt earlier this year may find their situation vastly improved now. Credit markets have strengthened in recent months, and mezzanine debt has become a lot easier to find. As a result, some deals which would not have been workable a few months ago are now able to be restructured in a way that has put a smile on property owners’ faces.

The owner of the Fashion Outlets mall in Las Vegas, AWE Talisman, was in this situation earlier in the year. Credit markets were not strong enough to refinance the full $107 million in debt owing on the property.

A solution was found to refinance the 376,000 square-foot mall, though. Instead of borrowing all the funds needed for the deal from a single source, the deal was split in two parts: $32 million in mezzanine funding and a further $73 million in senior debt was put together into commercial mortgage-backed securities at terms the owner found very attractive.

Current investor demand for yield is quite strong in a market where interest rates are historically low. The result has been a boom in commercial mortgages, and conditions have not been this favorable since 2008.

The commercial-mortgage bond market is expected to see $46 billion in new issues this year. In 2013, the numbers will be even better, with issues expected to rise to as high as $65 billion.

In the last few months, the amount of mezzanine debt has also risen. The exact amount has not been tracked, but it has played a role in a number of high-profile transactions, including the refinance of the Extended Stay America hotel chain.




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

Interest Rates Impact on Commercial Property

Commercial Property Investment Outlook for 2023

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants