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CMBS MARKET
How big is the market?
Cost of borrowing
Access to lower capital costs
•Risk transfer
•New securities
COLLATERAL
•What types of loans are being securitized?
•What are the typical loan terms?
•Balloon Loans; Floating Rate Loans
THE PLAYERS
•Originators ( Life Companies, Institution Lenders, Banks and Investment Banks)
•Investment banks
•Servicers, Trustees, Sub-Services, Special Servicers
•Rating Agencies
•Investors (who they are).
CMBS STRUCTURE (illustrated with hypothetical numerical example)
•Flow of Funds
•Liquidating Trusts
•Single Borrowers, Multiple Properties
•Multiple Borrower, Multiple Properties
•Conduit Deals
•Fusion Deals
•Senior-Subordinated Structures
CREDIT ENHANCEMENT
•Subordination levels (use numerical example)
•Rating Agencies' DSCR and LTV criteria
•Over-Collateralization
•Reserve Funds; Lock Box, Cash Trap
•Credit Tenant Leases
ANALYSIS
•Bond spreads
•Relative value analysis
•Importance of Swap Market
•Understanding what's a swap (numerical example of deriving a swap spread)
•How CMBS investors use swaps to hedge (numerical example)
•Performance with comparable investment vehicles (Corp. Bonds, etc.)
RISK
•Credit Risk (numerical example)
•Default incidence (review and survey of default studies)
•Balloon risk (numerical example)
•Prepayment Risk B Prepayment penalties
•5-4-3-2-1 penalty
•Payment lockout
•Yield maintenance (numerical example)
•Defeasance (numerical example)
OTHER TOPICS
•Rating Servicers
•The increasing importance of the B-Piece buyers= market
•Floating rate deals
•CMBS derivatives – IOs, etc.
•International CMBS markets
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