Real Estate Investment Strategies
CMBS maturity schedule ($bn)
Dislocation grows in U.S. CRE due to a confluence of
public market, financing & regulatory pressures
Regulations just now taking effect
Risk retention stunting $50-100bn CMBS
origination market
Various regulations reducing bank dealer inventory of
CMBS by over 75% since 2011
HVCRE (Basel 3) curtailing
bank development lending
Sizeable buyer base ($15-20bn per year) disappearing due to new
FINRA regulations for non-traded REIT disclosures
Spreads (basis points)
CMBS sensitivity to HY market heightened with
reduced dealer inventory
1000
900
800
700
600
500
400
Jan '15
May '15
Oct '15 Feb '16 Jul '16
CMBX.BB.7
-Barclays HY
Dec '16
10-year unwind of debt and private equity is upon us
500
280
400
Peak CMBS maturities
in 2016/2017
300
200
100
0
CMBS
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
■Banks
■Life Cos ■ Other
PIMCO
Dec-00 Index=100
Moody's/RCA CPPI: Major Markets and Non-Major
Markets Composite
230
Prior peaks
180
130
80
National
'07 '08 '09 '10 '11 '12 '13
Major Markets
'14
'15
'16
Non-Major Markets
As of 31 December 2016. SOURCE: Markit and Barclays (top right), Federal Reserve, Trepp, Morgan Stanley Research (bottom left), CBRE Research, Real Capital Analytics, Moody's/RCA CPPI (bottom right)
HVCRE: High volatility commercial real estate, CMBX: Markit CMBX Index, Barclays HY: Barclays US Corporate High Yield Index
Refer to Appendix for additional outlook and risk information.
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