KBRA Releases CREFC Day Three Recap
NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases the recap for day three of the
CREFC conference. The third and final day of the conference involved a
program consisting of three sessions, including an education session
called CMBS 201: Servicing Participants and Processes.
The opening session of the day—Commercial Mortgage-Backed
(In)Securities: Challenges and Opportunities Facing CMBS—delved into the
current state of the CMBS market and started with a discussion of
issuance volume. Panelists noted CMBS issuance, particularly in the
conduit space, has been adversely impacted by a variety of factors,
including government-sponsored enterprise (GSE) originations, a shift in
property type allocations, a limited pool of maturing CMBS loans and an
increased number of financing sources. Notwithstanding issuance
concerns, one panelist noted credit metrics are healthy, credit
enhancement levels are stable, and the conduit space is “very
Panelists also advanced numerous ideas on how to improve the CMBS
product offering, including: reversing the placement of amortization and
interest-only (IO) periods during the loan term (aka, IO on the back
end); reducing the multiple levels of review by servicing parties;
reallocating certain duties from the master to special servicer and
encouraging a stronger relationship between the two parties; and
standardizing the definition of common terms in the PSA (including net
cash flow and loan triggers). Overall, the panelists identified many
challenges and opportunities facing the CMBS market and noted that,
since the Great Financial Crisis and in the wake of implementing risk
retention, the market has proved to be resilient.
The day’s second panel—At the Table or on the Menu?: CRE Government and
Regulatory Update—discussed political and regulatory matters influencing
the commercial real estate (CRE) capital markets. Key topics included
trade wars with China and Mexico tariffs, the upcoming 2020 election,
and CRE regulatory policies: HVCRE, Opportunity Zones, GSE reform, CECL,
beneficial ownership, CFIUS, and HMDA.
This concludes our coverage of the June 2019 CREFC conference. KBRA was
proud to sponsor the event, along with over 30 other firms.
Related Publications: (available at www.kbra.com)
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About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus. KBRA is also recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.
Russell Barber, Associate
Santiago Alvarez, Associate Director
Mike Brotschol, Senior Director