Key Features of CMBS Loans
Non-Recourse
Borrowers aren't personally liable; lenders can only pursue the property itself.
Fixed Interest Rates
Terms of 5, 7, or 10 years offer payment stability.
High Leverage
Loan-to-Value (LTV) ratios up to 75%.
Asset-Based Underwriting
Approval is based on property income, not borrower credit.
Prepayment Restrictions
Most loans require yield maintenance or defeasance, making early payoff costly.
Minimum DSCR
Typically, 1.25x, with higher thresholds for riskier asset types (e.g., unflagged hotels or special-use properties).
How CMBS Loans Work
Origination
A commercial mortgage is issued by a lender.
Securitization
The loan is pooled with others and placed in a trust.
Bond Issuance
The trust issues securities backed by the loan pool.
Investor Returns
Investors receive interest and principal from borrower payments.
Servicing
Third party to do the servicing on behalf of the Investors.
Eligible Property Types
CMBS loans are available for a wide range of commercial properties:
Standard Properties
Multifamily, office buildings, retail centers, industrial, hotels, and self-storage
Special-Use Assets
Marinas, healthcare facilities, parking structures, and more
CMBS Loan Variations
Interest-Only Options
Frequently offered at the start of the loan term, increasing DSCR and cash flow.
Variable-Rate Loans
Less common due to risk exposure, but available in certain structures.
SASB Loans
For large, high-value single assets (typically $200M+), securitized individually.
Benefits of CMBS Financing
- Competitive interest rates and favorable loan terms
- Higher leverage compared to traditional financing
- Non-recourse protection for borrowers
- Broader asset eligibility, including complex or unconventional properties
Let's Talk About Your Loan
If you're exploring financing for commercial property, a CMBS loan could be the right solution.
Contact us today to learn more and discuss your mortgage needs with one of our specialists.
