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Repeat Loans in CMBS The loan experienced strong cash flow growth of 7% yoy from 1998 to 2004 (the first repeat), and then 5% yoy from 2004 to 2007 (the second repeat). But loan growth yoy was nearly 26% between 2004 and 2007 (the second repeat), compared with a 3% yoy change at the first repeat. At the same time DSCR decreased just 2% yoy in the second repeat despite the large increase in leverage. The massive loan increase of 100% in absolute terms between 2004 and 2007 was funded by a dramatic change in the loan’s debt constant. During the first repeat, the interest rate of the loan dropped substantially but the debt constant of the loan remained high (even increased), as the loan’s amortization CRE Finance World Autumn 2014 52 term became significantly more conservative. During the second repeat the interest rate of the loan remained relative low (although it increased), but the debt constant dramatically reduced as amortization disappeared from the loan — the impact of which is best observed by the dramatic changes in this loan’s exit debt yield. This loan had significant cash outs at both of its repeats. Case 2. Bay View Community MHC The Bay View Community MHC loan is secured by a large mobile home community that was twice repeated in CMBS, originating in 2003, then reappearing in 2007 and finally 2013. Figure 2 Bay View Community MHC


CREFW-Fall2014 10.15.14
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