Tom Jaros quoted in Chicago Daily Law Bulletin article on CMBS market
October 10, 2011
Tom Jaros, a partner in the firm's Real Estate Practice Group, was quoted in the October 11, 2011, Chicago Daily Law Bulletin article, "Lawyers expect uncertainty in CMBS' future." The article discussed the state of the past year's commercial mortgage-backed securities (CMBS) market.
In the article, Jaros describes the evolution of the CMBS market- from it's popularity in the late 1990's (largely in part to nonrecourse loans) to the recent affects of turmoil on Wall Street, and where the CMBS stands now.
From the article:
In January, the market returned with more conservative underwriting and approaches to lending, Jaros said. But again, he saw that "everyone started getting a little fast and loose" over the spring and summer.
Some securitization pools that went to bondholders in August got dinged by the rating agencies, who said, 'Wait, we're not going to do this again,'" he said. " 'You've loosened your underwriting standards, so we're not going to highly rate your bonds.'"
As Wall Street recently increased CMBS interest rates, clients considered returning to commercial banks or insurance companies for financing, he said.
Jaros said he still sees a market for CMBS, closing a $50 million deal and a $35 million deal in the past two weeks. He said many others with mortgages that mature through 2014 will need to refinance and look to CMBS as a source of capital.
"That's where I see the vibrancy of the CMBS market really helping the economy — if it's there to finance the deals that are financeable," he said.