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3217_harborCMA_apr2013.qxd:Layout 1 4/22/13 12:11 PM Page 1 I N S U R A N C E R E V I E W & A N A L Y S I S Trusted by the world’s leading lenders A publication of Autumn issue 2014 sponsored by CRE Finance World Autumn 2014 57 of CMBS mature in 2016 and 2017 cash flow growth will need to exceed leverage increases for the industry to gain solid long term equilibrium. As it stands now the CMBS industry has not achieved a sustainable basis for improved bond performance, but has benefited from a compressing cap rate environment which is facilitating leverage increases that will be difficult to support in a higher rate environment. 1 A “repeat loan” is counted as its collateral property leaves one CMBS transaction and enters another (in light of new issuance). DBRS excludes pari passu loans or loans that exist in multiple CMBS transactions at the same time. There have been approximately 3,700 instances of repeat loans in CMBS. 2 When the issuance loan amount of a repeat loan increases over its previous issuance loan amount we call this a “cash-out”, to reflect the net cash realized by the owner(s) of the collateral property; likewise if a loan amount decreases we call it cash-in. Cash-in, reflects strong and sustainable lending practice especially when accompanied by cash flow growth, and especially in absence of past delinquency in the loans’ original life. It strongly indicates that the loan is capable of performing at its leverage point. 3 Roughly speaking the 2004-2007 vintages. 4 Defined as loans that had originally transferred to the special servicer and were subsequently originated in new CMBS issuance. Special thanks to Lawrence Xie, Henry Zhen and Fenix Zhang. Repeat Loans in CMBS I N S U R A N C E C O N S U L T A N T S WITH OFFICES IN NEW YORK AND MIAMI Telephone: (212)336-0816 Lfields@harbor-insurance.com Harbor Group is the premier insurance consulting firm to investment banks, capital market lenders, and commercial banks. For over 20 years, from comprehensive insurance review to advisory services, our seasoned expertise provides prudent, time-sensitive counsel.


CREFW-Fall2014 10.15.14
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