Why CMBS loans make sense for borrowers

It has been our experience that many borrowers tend to shy away from the CMBS markets do to what amounts to a general lack of understanding of the conduit world.

Without a doubt conduit financing provides the best pricing available in the market for permanent loans and can also climb the leverage curve in an aggressive fashion.

There is also a misconception that CMBS financing involves a higher degree of complexity and therefore is more difficult to work through the closing process. At Pacific Security Capital we close transactions in the agency, life company, and CMBS world and of the three, we believe there is more certainty of execution with less complexity in the conduit world than either of the other two arenas.

The only real issue that could surface as a complicating factor is dealing with operating issues that run afoul of loan covenants post securitization as dealing with the sub-servicer or master-servicer can at times provide some difficulty. However, the key to navigating the CMBS world is in understanding the process going in so that you can manage your transactional risk.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085