Borrowers Get Upper Hand With Floating-Rate CMBS Loans
Commercial mortgage-backed securities (CMBS) lending has become more popular as more lenders compete for businesses. As these lenders enter the CMBS market, loans known as "floaters" are becoming available. Borrowers are sometimes willing to pay a higher interest rate in order to borrow significantly more capital. And CMBS loans are traditionally nonrecourse, which is appealing to borrowers.
"The [lender] clients that we’re seeing that have been in the space are having a tougher time getting deals," said Financial Services Attorney Joseph Steinberg. "There are more lenders willing to do these floating-rate, short-term loans."