Brad Anderson, of Wells Fargo Commercial Mortgage, sent me some interesting info on the CMBS market and the impact it is having on Conduit Lenders and borrowers.
* Because of the heavy supply and the weak demand for CMBS by hedge funds and other institutional investors the spreads charged by the conduits to borrowers have soared in the last week. A typical conduit loan on a Self Storage deal is likely to be priced at 180 basis points over the treasury yield. This represents a 50 basis point or one-half percent increase in interest rates to the borrower over the last week. According to Brad there is $58,658.60 MM in CMBS supply hitting the market in the third quarter.
It looks like higher spreads are hear to stay for a while.