In the frenzied, ever-changing world of business, one thing many people tend to forget is that all businesses share one thing in common: they all need a place to start out in. For this reason, commercial real estate loans can impact the success (and failure) of any business. Commercial real estate lending is a business in itself with a number of variables at play. In fact, commercial real estate investing doesn’t produce billions of dollars — it produces trillions.
From 2014 to 2017, it is thought that $1.4 trillion in commercial mortgages will mature. Of that trillion dollars, nearly a quarter of it — $350 billion — comes from commercial mortgage-backed securities. Commercial mortgage-backed securities (or CMBS for short) are a special mortgage-backed security that is supported by commercial mortgages as opposed to residential ones. CMBS often consist of a pool of various commercial mortgages that are rolled into one, clearly-defined piece of debt that can be transferred from agent to agent. CMBS are one of the most popular kinds of commercial real estate loans.
As stated, $350 billion-worth of CMBS mature every year. One-hundred-and-thirteen billion dollars is expected to mature in 2016 alone! There are 35 CMBS lenders that lend and manage up to 11,000 maturing loans. Needless to say, of all the different kinds of commercial mortgage loans available, CMBS are one of the most popular and trusted today.
Businesses — from the local corner store to a multinational corporation — couldn’t get anything done were it not for commercial real estate loans to support their facilities. Google, Apple, Sony, and Amazon — among many, many other companies — wouldn’t have gotten off the ground without the help of commercial mortgage lenders. They provide an invaluable service for the business of America. And you know what they say: “the business of America is business.”
What do you think about commercial real estate loans and commercial mortgage-backed securities? Do you or anyone you know have any experience with them? Feel free to leave a question or comment at the bottom.