CMBS Originations
Maybe this is a bit of a silly question, but can someone give me a bit of background on what CMBS Originations Analysts actually do? Any resources you could point me towards would be helpful too.
What I have found online seems interesting, but I haven’t been able to find much granular information about what these types of roles entail.
Thanks!
It depends on the shop. Since we are now in CMBS 2.0, a majority of the originations teams handle deals from cradle to grave (meaning they originate, underwrite and close them). At these shops the analyst will act as a jack of all trades. You will be tasked with screening and performing initial underwriting of potential deals, corresponding with the broker/analyst/borrower (to various degrees depending on the originator's relationship and your overall experience), drafting term sheets, (assuming your team wins the deal) gathering and performing the initial review of due diligence, inputting 3rd party docs, drafting write ups on the deal, and take on whatever tasks needed to close the deal (create charts, perform additional market research, site visits, etc.)
Right now, CMBS origination analysts aren't doing much of anything.
Otherwise, what biffanderson said.
The bigger shops are still churning out deals (not to the same extent though) - but yea agree with what biffanderson said. Adding to that, once the loan is closed, CMBS analysts will also communicate with their capital markets/securitization counterparts and answer rating agency, b-piece investor stuff, etc.
Apart from the cap markets perspective, its not a whole lot different from what a non-cmbs CRE underwriter would do.
Agreed 100%. The biggest difference between a CMBS analyst and any other CRE analyst is the securitization aspect. However, this can be a massive pain in the ass for most analysts I've spoken with.
And don't forget, if you're in NYC, managing group Seamless orders
How does securitzation play into this? Are there any opps for CMBS originators to eventually become MBS traders?
Securitization and CMBS originations are two separate groups. Although, with the current volatility, Securitization has now become the "boss" to originations. The ability to sell loans is even more paramount today when the average loan makes so little and B-Piece Buyers are kicking more and more loans.
With that said, in the originations and underwriting teams, you often work with the securitization team to answer any B-Piece Buyer and Rating Agency questions.
I have never seen an originator become a trader. The issue is traders really do not look at real estate in the same way as an originator. Trading involves figuring out when it is a good time to buy and sell bonds; whereas, originators are always looking to structuring deals.
CMBS Origination - How do CMBS origination teams at banks stack up against one another? (Originally Posted: 06/10/2015)
Curious to know what everyone's opinion is on CMBS origination teams at certain banks. Obviously JPM, DB, etc are strong, but more curious about the smaller (relatively), yet established programs (Barclays, Citi, etc). Looking for any insight in terms of general perception in the market from all angles (those in CMBS/CRE lending, borrowers, capital markets), corporate culture, salary, and generally anything you would want to know when considering these options as prospective future employers. Any insight will be much appreciated. Thanks in advance.
Can't really classify/rate/stereotype orgination teams across each bank. Teams generally have their own culture that stems from the lead originator. Base salaries will be fairly similar at all of the aforementioned shop.
Bonus is much more dependent on how your origination team performs (i.e. amount and profitability of loans the lead originator brings in), rather than how, for example, Citi's commercial real estate finance group performs over the course of the year.
One of the few defining characteristics between banks is their risk tolerance. Shops like UBS and Loancore tend to go after loans further out on the risk spectrum, which are generally more profitable. So there may be higher upside, and downside, at those platforms.
The best advice I can give is that if you are joining an origination team as a junior member (analyst or associate) make sure you are joining a team with a strong lead originator. If the lead originator sucks, it doesn't matter which bank employs you. You will not get paid.
During the interview process, ask how much they have originated each year over the past few years and their pipeline/expectations for the current year. Anything over $500MM per annum is reasonably strong. That's a good start.
Is it true that CMBS originations have dramatically slowed down across all firms? If so why? (Originally Posted: 03/26/2017)
I work at a lifeco and I've been told that CMBS originations have slowed down dramatically due to Trump getting elected and holding off until he deregulates the industry. Apparently my firm only originated 3 CMBS loans in 2016. Are others experiencing a slowdown in this or is it propaganda.
CMBS is in the crapper for sure but it doesn't have anything to do with Trump. The problems with CMBS are related primarily to two points -- (1) dislocations in marketplace resulting from Dodd Frank risk retention rules imposed at the end of 2016 impacting issuers and lower tranche CMBS bond (B piece) buyers and (2) the continued low interest rate environment creating competition from Agency, lifeco/balance sheet and bank lenders. A lot has been written about the impacts of risk retention on the CMBS market, including on this board, so I'm not going to rehash that. The primary benefits of CMBS used to be higher leverage and 10 year non-recourse debt with decent periods of IO; the downside was prepayment obstacles, either with defeasance or yield maintenance. Nowadays, banks of all sizes are offering up to 7 year non-recourse deals without the prepayment hassles for better quality deals. Agency and lifeco lenders are taking all the quality lower leverage deals. Also, problems in the bond markets created situations where CMBS lenders couldn't quote rates to their borrowers until, or even after, closing. Therefore, CMBS deal quality has gone down -- you see lot of secondary market stuff, retail, limited service hospitality, etc.
That said, CMBS can still be a good option for really big single asset or single borrower portfolios deals. Not sure when or how this all gets worked out. CMBS will continue to have tough times but other capital providers should continue to do just fine.
Any updates on large CMBS originators?
What are the exit ops for a middle of the road firm in terms of activity for CMBS originations? Major metro area and the firm is well known, coming from the equity side possible to go back to the equity side in a few years?
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