Capital Markets Update Week of 2/12

February 12, 2024

Private-Label CMBS and CRE CLOs

Year-to-date private-label CMBS and CRE CLO issuance totals $8.1 billion, more than double the $3.8 billion for the same period last year. In another busy week for the private-label market, three CMBS transactions, totaling $1.2 billion, priced, including:

  • BX 2024-MF, a $550 million SASB backed by a floating-rate loan for Blackstone, secured by 10 multifamily properties.
  • GSMS 2024-70P, a $395 million SASB backed by a fixed-rate loan for DTH Capital and Rose Associates, secured by a one-million sf mixed-use building at 70 Pine Street in Lower Manhattan.
  • MCR 2024-HTL, a $281 million SASB backed by a floating-rate loan for MCR Hotels, secured by 16 hotels across 11 states.

CMBS lenders are expecting a strong resurgence in issuance in 2024, according to origination projections provided to Commercial Mortgage Alert. Lenders estimate 2024 volume will reach $98.5 billion, up 150% from the $39.3 billion in 2023.

CRE CLO Issuance. According to Commercial Mortgage Alert, CRE CLO issuers are forecasting $31.9 billion in volume, a more than four-fold increase over last year’s $6.7 billion.

Spreads Continue to Trend Tighter

  • Conduit AAA and A-S spreads were unchanged at +93 and +135, respectively last week. Year to date, AAA and A-S spreads have tightened 23 bps and 30 bps, respectively.
  • Conduit AA and A spreads were tighter by 15 bps and 25 bps to +175 and +275, respectively. Year to date, AA and A spreads have tightened by 50 and 100 bps, respectively.
  • Conduit BBB- spreads were tighter by 35 bps to +725. Year to date, BBB- spreads have come in by 175 bps.
  • SASB AAA spreads were tighter by 5 – 10 bps to a range of +130 to +160, depending on property type. Spreads have narrowed from +160 to +188 at the start of the year.
  • CRE CLO AAA and BBB- spreads remained at +155 and +565, respectively. Spreads are tighter for the year by 45 bps and 35 bps, respectively.

Agency CMBS

  • Agency issuance totaled $2.6 billion last week, consisting of $1.3 billion in Freddie K and Multi-PC transactions, $1.1 billion in Fannie DUS, and $196 million in Ginnie PLs.
  • For the year, agency issuance stands at $10.7 billion, 6% higher than the $10.1 billion for same-period 2023.

The Economy, the Fed, and Rates…

  • Equities on a Tear. A milestone was reached last week, with the S&P 500 topping 5,000 for the first time, setting a record high as investors continue to bet on a resilient economy. The Fed’s unlikely “soft landing” may become a reality with unemployment low and inflation seemingly under control.
  • The Fed kept rates at a 22-year high for a fourth straight meeting in January, and while officials signaled their openness to cuts eventually, it may not happen as soon as some had hoped. As noted by Yung-Yu Ma, Chief Investment Officer at BMO Wealth Management:
“The big driver for the rally is the realization that the US economy is unlikely to falter in the way that the average prognosticator had expected. A better economy, healthy profits, and lower inflation is providing the fuel.” 
  • In what likely fueled some of the optimism in the equity markets was data that, in the past, few paid any attention to. On Friday, the government published its annual revisions to seasonal adjustment factors for monthly inflation data. Usually small and therefore ignored, the adjustments came into focus because of what happened a year ago: revisions significant enough to cast doubt on whether the battle to tame inflation was working. As noted by Fed Governor Christopher Waller in a speech last month:
    “Recall that a year ago, when it looked like inflation was coming down quickly, the annual update to the seasonal factors erased those gains. My hope is that the revisions confirm the progress we have seen, but good policy is based on data and not hope.”
  • This year, however, the Bureau of Labor Statistics confirmed that inflation was about the same as initially reported after incorporating annual revisions, according to new data published Friday. Consumer prices, excluding food and energy items, rose at a 3.3% annualized rate in the final three months of 2023, matching the previous reading. Ian Lyngen, Head of US Rates Strategy at BMO Capital Markets, noted:
    “Today’s data primarily serves to solidify the market’s perception that Powell has made significant progress on inflation and therefore rate cuts will be in the offing, if not in March, then May or June.”
  • In contrast to the above, market expectations for Fed rate cuts this year ebbed further, as futures traders slashed the likelihood of a March rate cut to 16%, down from 65% a month prior. Expectations for a May cut were also downgraded to 71%, down from 94%. Next week, consumer price data for January is expected to show further slowing, which Fed officials have said is a condition for pivoting to cuts after 11 rate increases over the past two years.

  • Treasury yields rose with doubt building in the market that the economy will require as many rate cuts this year as had been priced in. Two- and five-year Treasury yields reached their highest levels since December, at 4.48% and 4.14%, respectively. The 10-year Treasury yield was up 16 bps on the week, ending at 4.18%.

  • You can download CREFC’s one-page MarketWatch with statistics covering the economy and the CRE debt capital markets here.

    Contact Raj Aidasani ( with any questions.


    Raj Aidasani
    Managing Director, Research

    The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.

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