Commercial Mortgage-Backed Securities Basics: Understanding the Structure, Terms, and Lifecycle of a CMBS Loan

CMBS loans are a type of real estate loan that has a first position mortgage secured on commercial rather than residential real estate and they are typically offered by commercial banks, conduit lenders, or investment banks at relatively low fixed interest rates. CMBS are bonds and the mortgage loans that are pooled to form a single commercial mortgage-backed security act as the collateral in the event of default, with principal and interest passed on to investors.

Some common features of CMBS loans include fixed terms of five to 10 years, with amortizations typically between 25 and 30 years. CMBS loans are usually more flexible than other types of loans typically offered by agency lenders and they can be used to finance various types of commercial properties, including retail, office, and mixed-use properties.

CMBS loans are complex transactions with several participants, including the originator, underwriter, a master servicer, a special servicer, investors, trustees, and rating agencies. Each of these participants plays a particular role in the transaction and their role is defined in the loan documentation that accompanies the transaction.

Listen as our authoritative panel discusses how CMBS loans work, the advantages and disadvantages of these types of loans, and deal characteristics with respect to loan size, interest rate, collateral type, and key loan document provisions. The panel will also discuss structuring CMBS loans from the perspectives of both the lender and the borrower.