Trepp Releases First-Half 2021 CMBS Recap: Strong Overall Issuance but Why Is the Conduit Market Lagging?

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Trepp, a leading provider of data, insights, and technology solutions to the structured finance, commercial real estate (CRE), and banking markets, has released a report assessing CMBS issuance in the first half of 2021. The report can be accessed here:

A strong first half in the CMBS market delivered a robust $67 billion in private-label issuance. Commercial real estate collateralized loan obligations (CRE CLOs) topped $20 billion, a full-year record, after only six months. Single-asset single-borrower (SASB) issuance came in just over $31 billion, surpassing all of 2020 and well on pace to eclipse the average annual volume from before the pandemic.

So, what happened in the Conduit market?

First-half issuance came in at $14.7 billion following $28.5 billion in 2020. In the three years before the pandemic, the market averaged over $45 billion per year in issuance. When the sector that has historically been the issuance frontrunner starts running a distant third place, it leads the market to start asking questions.

If the other areas of the market have bounced back and appear to be thriving, why is conduit lending lagging so far behind?

“Conduit CMBS is largely the underwriting of stabilized historical cash flow. Time, stability, and a stronger understanding of the post-pandemic tenant, consumer, and the economy will reduce the uncertainty that is negatively impacting retail, office, and hotel markets,” said Trepp’s Head of CMBS Products, Darren King.

In Trepp’s analysis of issuance data, property concentrations stood out more than anything. Historically office, retail, and lodging ranked in first, second, and third place but over the last year those three now rank first, third, and sixth. Diving deeper into each CRE property type, the story becomes more clear. Hotel loan volume is down 73% compared to the three years pre-pandemic. Retail volumes are down 66%. Office lending is down by dollar volume though it has outperformed on a relative basis (overall conduit issuance is down 44%, office is down 29%).

To access the full report, including an overview of the first-half issuance in 2021, differences among private-label CMBS, conduit, SASB, and CRE CLO issuance, property concentrations, and more, click here:

For daily CMBS and CRE commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, founded in 1979, is a leading provider of data, insights, and technology solutions to the structured finance, commercial real estate, and banking markets. Trepp provides primary and secondary market participants with the solutions and analytics they need to increase operational efficiencies, information transparency, and investment performance. From its offices in New York, San Francisco, and London, Trepp serves its clients with products and services to support trading, research, risk management, surveillance, and portfolio management. Trepp subsidiary, Commercial Real Estate Direct, is a daily news source covering the commercial real estate capital markets. Trepp is wholly owned by Daily Mail and General Trust (DMGT).

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