CMBS

Mothy187

So many reasons. But here's one The commercial real estate market has nearly $3 trillion in outstanding loans and approximately $1.8 trillion in commercial loans scheduled to mature in 2026. Factors like rising interest rates since 2021, increased office vacancy rates due to remote work, and declining underwriting standards in commercial mortgage-backed securities (CMBS) have contributed to a period of heightened financial stress. They've been rolling these loans out but a "tsunami" of debt will be due., and there's way too many vacancies. If there's a downturn in the economy more buisnesses shut down...so more vacancies and that means no rental income to pay back the loans. These empty buildings that sit empty will need to be refinanced at rates much higher than covid, so the free ride will be over and the loans will come due. Plus a bunch of other super shady financial practices that I won't get into that mirror 2008 stuff

BadTakeBill

I do CMBS and ABS, there is a significant amount of data center issuance but it’s honestly not as big as you think so far. Still sizable but like not utterly destructive yet.

BagHoldersOfAmerica

"BREAKING: The delinquency rate on Commercial Mortgage-Backed Securities (CMBS) for offices jumped +103 basis points in January, to a record 12.3%. This surpasses the post-2008 Financial Crisis peak by 1.6 percentage points. The CMBS delinquency rate has soared +600% over the last 3 years. Meanwhile, the delinquency rate for multifamily CMBS rose +30 basis points, to 6.9%, the 3rd-highest since December 2015. The overall US CMBS delinquency rate increased +17 basis points, to 7.5%, the highest in at least 5 years." TLDR: Commercial real estate is fucked

thefoodiedentist

Yes, several types of defaults are at or near record highs, including auto loan delinquencies for subprime borrowers, credit card delinquencies, and office commercial mortgage-backed securities (CMBS) delinquency rates. The rise is largely due to higher interest rates, record car prices, and increasing consumer debt. Thete are more loans than just cc loans.

movdqa

I think that the Fed is more constrained in the current debt and inflation environment to do a bailout again. One piece of news that I saw from October is the Palisades Mall in W. Nyack NY appears to be in a takeover or default. Their AAA-rated CMBS bonds lost $72 million. How can you have this happen with a AAA rating? I'd normally expect the rating to decline as the risk increased.

redditdoesnotapprove

* Data from Trepp Inc. shows that the overall delinquency rate for commercial mortgage-backed securities (CMBS) recently rose to around **7.13%** (June 2025) for all property types combined. [Trepp+2Trepp+2](https://www.trepp.com/trepptalk/cmbs-delinquency-rate-up-slightly-in-june-office-hits-record-high?utm_source=chatgpt.com) * Specifically for the **office property** sector, the delinquency rate reached a new record of about **11.08%** in June 2025. [Scotsman Guide+2Weekly Real Estate News+2](https://www.scotsmanguide.com/news/office-delinquency-rate-for-mortgage-backed-securities-hits-record-high-in-june/?utm_source=chatgpt.com) * Some commentary says this office-sector CMBS delinquency rate “surpassed levels seen during the 2008 financial crisis”.[](https://investorsobserver.com/news/empty-desks-soaring-defaults-office-real-estate-pushes-cmbs-delinquencies-to-record-high/?utm_source=chatgpt.com)

GneissFrog

>OFFICE CMBS DELINQUENCY RATE SURGES TO 11.7 PERCENT — HIGHEST LEVEL IN HISTORY AS PROPERTY STRESS DEEPENS ACROSS US COMMERCIAL REAL ESTATE too much winning

Notilting

No, CMBS is mainly for commercial properties, like office buildings, malls, hotels, etc. It doesn’t directly hit the residential market. But if things get bad enough in commercial real estate, it will spill over into the broader economy, banks, credit markets, investor sentiment, basically everything will get shaken up.

ISometimesCamp

I don’t know shit about CMBS. Does this affect the residential market too??

MatthewLilly

CDO and CMBS are basically the same thing, so I'm not surprised the system is screwing over again

MambaOut330824

The reality isn’t as alarmist as the headline. - single mortgage backed CMBS are less common and always contained risk - This CMBS is tied to a mall property. Nothing new or novel here. Malls have been closing for over a decade now. It’s the Amazon effect still taking place - Similar CMBS in trouble are tied to office space and malls. This isn’t some new contagion foreshadowing some new risk There is risk still, but understanding the “why” of these properties/ CMBS makes it make sense. Until this starts happening in masse, I consider it an isolated incident tl;dr - the economy won’t be crashing because of this, yet

think_up

> The trade was set in motion after Black Diamond Capital Management bought more than 70% of the top-ranking slice in a commercial mortgage-backed security tied to the struggling Palisades Center shopping mall in West Nyack, New York. The firm then used its position to acquire the sole mortgage backing the CMBS at a discount, triggering the bond’s liquidation So the fund bought enough of the junior “controlling class” to become the directing certificateholder. That role can appoint or replace the special servicer and approve major actions like loan sales. This is where they gained control. > In March it sent a letter proposing Mount Street, a London-based firm that that works out soured loans on behalf of bondholders, as the deal’s new special servicer. Here they exercised the right to replace the special services and approve a loan sale. > By September, Black Diamond had reached an agreement with Mount Street to purchase the underlying loan backing the CMBS for $170 million. Buying “at a discount” - because the loan was distressed, the trust sold it below par to the fund. > A report for bondholders shows that Mount Street received only three bids for the loan and did not solicit a wider auction. By contrast, in a similar recent CMBS deal, a special servicer contacted more than 500 potential buyers Obviously shady. > Bondholders in the top-rated tranche recovered about 70 cents on the dollar, while lower-ranked holders were wiped out, according to the deal’s latest remittance report. After the trust sells its only asset, it has cash but no collateral. This triggered the bond’s liquidation. Senior loan holders get paid first and the waterfall trickles down until the money is all gone and junior subordinated debt gets wiped out. So even the AAA tranches took a hit. And they still own the dam mall after it’s all over. This is so much of what’s wrong with Wall Street. They manufactured a default and wiped out investors in the process. None of this *needed* to happen. Literally just pure greed.

jarMburger

There’s been talk about CMBS in crisis since fed started raising rates in 2022. In fact there were several private credit funds created in anticipation of large number of distressed CMBS assets. Unfortunately, those funds are still on the sideline as too many would be saviors want to do the same. Not everyone can be Howard Mark.

Sad_Chest1484

My post from yesterday: NBIS: The Bear Case So I know this is going to rile up a lot of you folks, but I think it’s important to understand the type of risks you are in to de-risk or reconsider adding exposure. The neocloud business is a new frontier in the AI world, where future valuations and most importantly demand is unknown. Let’s start with valuations: 1) NBIS is trading at 9x EV/ Sales (2026 est.), 100x revenue in a capital intensive business and at a large premium to PEERS who trade at 3-6x EV/Sales. You see software companies trading at these valuations because they are asset lite. So right off the bat - I see this as an outlier. Sure you can talk about how their software means less compute hours, but data centers are a commodity + asset. 2) Profitability. Oracle has released documents showing 10-15% margins on their cloud infrastructure business. who knew nvidia gpus, electricity, land, and demand for servicing the hottest sector on earth was expensive? They guided towards 35% net profits because they also have a software business that has 60%+ margins via their SaaS unit. This offsets the negative drag from building out the cloud AI infrastructure. NBIS does not have this natural offset. Most importantly, people do not appreciate the depreciation angle of these underlying assets. If you look at their I/S, depreciation cost has grown significantly. That will weigh on future EPS growth. So bottom line, we can expect low margin, capital intensive (high depreciation from assets), to weigh significantly on earnings. I would not pay 100x sales for a company with this profile. 2) Conditional earnings. NBIS cannot book revenue until it delivers. Little secret here, NBIS has not secured the compute to deliver for the current MSFT contract. How do you expect them to fulfill another contract? This is the same problem with Oracle. People disregarded Oracle missing on earnings this quarter because they could not build fast enough. They only cared about future demand and the potential contracts they secured. NBIS, a much smaller company, does not have some “alpha” to achieve a more robust process to build data centers. You need to deliver to get paid. 3) Capex funding. So this is where it hits you the most as an equity holder. NBIS to continue to grow, can not do it affordability in the ABS, CMBS, IG corporate side. They will continue to issue convertibles, preferred shares, or straight up equity. Dilution is a REAL dilemma. For context, Oracle bond straight as a massive premium to similar rated bonds in the same sector. The recent $38bln issuance is bad bad bad for capital planning. Their leverage ratios are not good to fund this massive capex cycle. NBIS in 2026 will spend $2 for every $1, with still negative EPS. Money does not grow on trees, and there is a ton of scrutiny on how data centers companies are funding their plans, every additional dollar becomes more scarce. 4) Lastly, the future is unknown for demand. Hyper scalers are moving towards neocloud as a short term stop gap because of the scarcity of cloud in the short term. People do not appreciate this enough - but when I look at these valuations it’s like you assume a high 60% CAGR on growth perpetually. Cloud and semis tend to be very cyclical industries. Companies like MSFT and meta, neocloud is a brilliant solution. You are able to lock in the compute at a decent rate without having the assets and funding on your balance sheet. If supply = demand, you just walk away when your lease is over. You need perfect execution to secure funding, achieve cost optimization to bring GPM higher, and assume a high Ai capex growth for the next 5-10 years to justify the current valuation of this company. PT: 65 (3x EV sales). Positions: None yet

Trollogic

As someone who works in the field, there are far more capital requirements for banks and insurers. Basel rules have been implemented for the majority of the developed world since 2008 and the US has separate capital rules and reporting which are also significantly more stringent than what existed in 2008. Regulation in that area has increased. Just wanted to clarify that bit. That said, private credit and NBFIs are the ways companies have been just doing the exact same thing. The debt is a lot higher rated though and the focus on investment grade (IG) financial products with more visibility into the underlying asset classes/pools is a lot clearer. I recall a few years ago folks were worried about CRE and CMBS due to COVID and post covid lower CRE usage, but the defaults ended up remaining low. Happy to talk more about it if interested :)

Capable_Paper1281

Interesting, thanks.  CMBS default has been creeping up for years, and there's even an obscure government agency that monitors this stuff and has been putting out alarming reports for a while, with zero press coverage.

Top-Meaning2626

Issuing "Gay Sex Alert" for CMBS

likamuka

Office CMBS Delinquency Rate jumps to 11.7%, the highest level in history Fucking clown show with no adults in charge.

reflectiveatlas

Office spaces are at the highest delinquency (11.22%) from the data available to me, which is June of 2010. I stopped the actual deep analysis when I realized it would be $300/month to get the CMBS data from Morningstar. Even if I was able to show beyond a reasonable doubt that my predictions would be correct, getting it in front of the right people would have been challenging. So unless anyone wants to give me CMBS or private equity valuation data, we probably won't know unless something breaks.

EventHorizonbyGA

Real estate does not do well in a recession. CMBS defaults are rising. The real estate market is closer to imploding than running.

EventHorizonbyGA

Well we haven't seen inflation for a couple of reasons. One companies had surplus supply at the beginning of the year, second larger companies were able to front-run tariffs and lastly most CEOs have been scared of Trump so haven't passed through costs yet. But, for smaller businesses tariffs have been tantamount to a death nail. Farmers still haven't recovered from Trump's policy decisions in his last term. One thing people don't understand is the economy is a very big freight train. It takes a very, very long time for you to see any effect from policy changes. * Inflation is stable - well, not really. It's 50% higher than target. * There is no trade war - well, not really. Most foreign leaders are less emotional than Trump and will wait out his term and/or the SCOTUS. Most people believe SCOTUS is going to over turn the tariffs. * The United States is experiencing massive investment because of the tariffs - No. This is patently false. The same thing happened last time Trump was in office. CEOs will agree to invest. But, they don't. It's an easy soundbite to commit to invest at some point in the next 5 to 10 years. It's another thing to actually invest. * GDP - 80% of US GDP is services which is easy to boost by inflating the money supply. Which the Fed is still doing. I am going to assume, you mean "catastrophe" as in the stock market? As long as there are ongoing share repurchases the market isn't going to collapse. As soon as they stop. It will plummet. This is simple supply and demand. In terms of the economy, for the latest data I have the rate of bankruptcies in the US is up 13% Y/Y. CMBS default rates are at all time highs of 11%. In terms of layoffs, July was a record and is up 12% Y/Y for July. [https://www.bls.gov/news.release/jolts.t05.htm](https://www.bls.gov/news.release/jolts.t05.htm) It's quite possible you just don't know what data to look at.

EventHorizonbyGA

Every account I manage is hedged. Specifically, I am rolling $SPY Puts on any strength. In general, I hate hedging as it's a waste of money but this scenario is the rare case where you can hedge effectively. 9 times out of 10 I will just go to cash when the market begins to make no sense. As I did last December for a few months. I've been able to increase the hedge with no additional capital over the last two months so if the larger market sells off I will profit. If the tide continues to run on share repurchases I will still profit. If there is a definitive event to hedge, I will roll into the same OTM strategy. Let's say for example if there is a CPI/PPI data release that is likely going to be very, very rough (hint.) But, currently I have been just buying Puts on strength and flipping them on weakness and repeat. And I just buy back more each time and hold the freebies. I am also hedging my hedge with shorter duration calls. I did the same strategy from December of 2019 through the COVID collapse. Inflow/outflow data was showing weakness before the January Congressional meeting over COVID. Back then I just rotated profits into a black swan OTM pay. The Friday before the collapse SPY puts cost me 5 cents in the morning and 8 cents by close. That data showed the market was brittle. COVID just was a monumental hammer. As long as the VIX is low - hedging is cheap. But, more importantly what the low vix is telling you is the market does not think the market is going either way very fast or sustained in the next 30 days so flipping has been pretty easy. This can change (and will change) but as long as you pay attention to data releases each morning it's pretty easy to know what to do and when. More to your point, I haven't own any stock in any index since 2022. I haven't owned any indexes since December of 2024. What is happening now was preordained a long time ago. The market is a like a giant locomotive. It takes a very, very long time to change direction. Gold started running September of 2022. I am not really concerned either way about a recession. The US has been in a rolling recession since 2022. Just not the entire population at the same time. There are plenty of really cheap stocks out there if you look. And even if the market crashes they will just become cheaper. Maybe not the ones you are holding. But, they are out there. I am worried about share repurchases ending. There is a rule you should learn. What people are talking about is rarely what is actually going to break. When Share Repurchases end is what you need to worry about. I am also worried about the AI economy imploding. But, this is going to take out the stocks retail is crowded into, tech and take out the private sector nothing I hold. We own private equity in a few AI-adjacent companies mostly in the energy space which might require recapitalization but there is little risk of zeroing out. Because even if data centers die, the US is going to still need energy. But, if the investor class (prime/ private label account holders) suffer losses they will dump some assets. And REITs are locked. My guess is CMBS is where they will start. No one I know is particularly stressed at this point though. My co-manager is in Hawaii about to ride a hurricane and even my intern is in Bali for a month.

jnas_19

The delinquency rate on US commercial mortgage-backed securities (CMBS) for offices spiked to 11.7%, an ATH. Office CMBS delinquencies are 1 percentage point above the post-2008 Financial Crisis peak.

Miramarmechanic

“The multifamily delinquency rate soared another 113 basis points to 6.57%.[CMBS Delinquency Rate Climbs Again in April, Led by Multifamily & Lodging Surges](https://www.trepp.com/trepptalk/cmbs-delinquency-rate-climbs-again-in-april-2025?hs_amp=true) “ https://preview.redd.it/qrpybpdjc8lf1.jpeg?width=1179&format=pjpg&auto=webp&s=67f99a7ce60ff91fccb502af7613c06979c55190

Miramarmechanic

“The multifamily delinquency rate soared another 113 basis points to 6.57%.[CMBS Delinquency Rate Climbs Again in April, Led by Multifamily & Lodging Surges](https://www.trepp.com/trepptalk/cmbs-delinquency-rate-climbs-again-in-april-2025?hs_amp=true) https://preview.redd.it/ce51938fc8lf1.jpeg?width=1179&format=pjpg&auto=webp&s=663a76807f7406cff56eabec80cf2ffe47c53aa1

Miramarmechanic

“The multifamily delinquency rate soared another 113 basis points to 6.57%.[CMBS Delinquency Rate Climbs Again in April, Led by Multifamily & Lodging Surges](https://www.trepp.com/trepptalk/cmbs-delinquency-rate-climbs-again-in-april-2025?hs_amp=true) “

Miramarmechanic

https://preview.redd.it/urgrvlzh98lf1.jpeg?width=1179&format=pjpg&auto=webp&s=921e658fd2b150f7a52e58dd98060eeb58bc95a4 Multi family CMBS delinquencies rose from 1.5 percent to 6.5 percent in one year.

Either-Lie-9000

when tits up- what do we short first? \- quantum + other shithousery \- CMBS's \- big tech \- not tesla ??????

Immediate-Sky9959

When Countrywide started their program of REFI at no cost, at a VERY PLESANT sit down with MR. CASHIN, myself and our Head of FICC Trading, he said in late '04 things are going to get real BUMPY and REAL fast. He didn't name names but implied about some other players in the CMBS, MBS, NO-DOC loans, both agency and NON-AGENCY loans, were problematic.

ActPowerful7001

That’s right shut up and be quiet. People like you act like using chat gpt for anything completely invalidates everything someone says. It’s a fucking tool smarty, you just need to know how to use it. I’m an Agency CMBS trader at a BB bank and copilot is extremely helpful for analysis. Hell based on your posts you use it too for analysis you hypocrite.

IrvTheSwirv

Whenever you read an MSM article where some CEO or whatever is complaining about WFH the very first thing that should be popping into your head is “CMBS”. Literally all that is ever really about.

Immediate-Sky9959

You obviously really did not understand the ramifications of Bear's portfolio. Over leveraged at 145% in MBS, CMBS, CMO's, IO/PO's, Whole Loans, CDO's, SubPrime mgts. Things got progressively worse in that space, REPOs were requiring more and more collateral for the same money's. When Merrill seized $1 trl in assets from one of Bear's funds,in 2007, it became apparent how Bear was carrying them was less than 10% of what they were actually worth in the open market. Merrill had $1trl in assets that they finally sold off in the neighborhood of $120mm. Then in July of the same year, two subprime hedge funds had lost nearly all of their value amid a rapid decline in the market for subprime mortgages. Why don't you try and point out the similarities?

FlounderBubbly8819

And I’ve worked in CMBS for 7+ years so I’m very familiar with how these deals work too. Go ask your bosses who worked in RMBS before the GFC how those deals lined up compared to the ones today. I guarantee you the credit quality is substantially better. Fannie Mae RMBS default rates have topped 1% since 2009 and for good reason. The industry has much tougher underwriting and credit standards than a generation ago

FlounderBubbly8819

You’re trying to force a one-to-one narrative where it doesn’t fit. Yes, cycles exist but saying “what happened in 2008 residential is happening now in commercial” is surface-level at best. In 2008, residential was massively overleveraged with structurally unsound loans, fraudulent underwriting, and systemic exposure through opaque derivatives. That was a household-debt-driven collapse.  Commercial real estate today faces headwinds but it’s not systemically embedded in bank balance sheets the same way. CMBS exposure is more limited, and most loans are with regional banks or private lenders, not global institutions. As for pensions “buying junk”, yes they hold a mix of risk assets, but they’re not loading up on synthetic CDOs like it’s 2006. Risk exists, but this isn’t a carbon copy of last time. It never is. Cycles matter, but analysis needs to go deeper than “things go up, so they must crash”

Imjusherefotiddies

As much as I would like to add weight to rating agencies, I wonder if they still have the same value specially after finding out that these ratings can be brought and paid for like how CMBS and MBS securities were kinda rated during 08-09.

TheGoodCod

Got a migraine but here are some ideas. (if you go to archive.org you can get access to any of these articles you don't have access to) https://www.forbes.com/sites/markfaithfull/2025/04/28/american-consumers-turn-to-buy-now-pay-later-for-groceries-as-high-costs-bite/ >American shoppers are increasingly using buy now, pay later loans to buy groceries, and more people are paying bills late, according to a spending intentions survey from Lending Tree released Friday. https://www.bloomberg.com/news/articles/2025-03-06/late-car-loan-payments-auto-delinquencies-spike-to-highest-level-in-decades https://www.multihousingnews.com/2025-cmbs-delinquency-rates/#:~:text=The%20Trepp%20CMBS%20Delinquency%20Rate,from%20%2436.0%20billion%20in%20February. >The Trepp CMBS Delinquency Rate ticked back up in March 2025, with the overall delinquency rate increasing 35 basis points to 6.65 percent. https://www.bloomberg.com/news/articles/2025-02-13/us-consumer-debt-delinquency-hits-highest-in-almost-five-years https://www.bloomberg.com/news/newsletters/2025-04-08/financing-standstill-triggers-alarm-for-debt-dependent-companies .

LiteratureOwn1960

A 30% tariff on Chinese exports would definitely make things more expensive for the average person. I don’t have the exact numbers, but it’s pretty clear that a good chunk of everyday stuff comes from China electronics, clothes, household goods. If those prices go up 30%, it’s definitely going to hit people’s wallets. And the whole pre market hype feels like it’s just masking real problems like mass layoffs, the office CMBS market hitting 2008-level delinquencies. No one’s really talking about that, but it’s there, bubbling under the surface

MindMugging

Based on your description, I don’t think you’re incorporating majority of the risks. Not that I’m saying what you’re thinking is completely wrong. Fair disclaimers: I don’t know the company DX and I don’t usually dig into REITs. Just know the high level methods in analyzing them. - DX invest in mbs and cmbs. Don’t know if they hold physical buildings or just paper. All I can think about is exposed to personal mortgage delinquencies and office buildings delinquencies - stable post covid. CMBS contracts generally runs 10 year contract. Have we seen most the contracts roll over yet? Are there any contract cliffs? - personal mortgage delinquencies is way too complicated to get into. I’m going to assume we aren’t seeing another GFC - general REIT. Dividends is nice but 16% + a 2% price return is pretty much all the value for it. Imagine a company had a ROE of 18%, which is not rare, and everything else held constant. The value of the company go up 20% so then wouldn’t the market cap go up by that same amount? Like I said everything else like supply/demand/irrational-investor aside. - so what’s the difference? You do you, and adding reit is not a bad idea for diversification but I’m just adding this to get you to think about what dividend means in relationship to the company as a whole.

anon_lurk

Well we are seeing some problems with commercial real estate, so if they are all wrapped up in CMBS the same way then you better buckle up.

HarkansawJack

CMBS is in big time trouble. All major banks are holding massive underwater CMBS delinquencies

TomatoSpecialist6879

There's no trade brother, not unless the absolute top level people decide to push junk bonds onto national banks not part of the big boys table and let them die on purpose. Because just like 2008, they all know what's happening and it's crime all over, but the administration and the Feds refuse to let the sky fall. I'm not THAT terminally online, but online enough that I remember seeing you post since at least 2022. You should remember the Q1 2023 bank run; people found the SVB short play because those idiots loaned money to FTX. Their collapse led to a bank run hunting, that's when CMBS came into the spotlight. FRC collapse was suppose to be the first of many, and was suppose to cause an '08 level recession. But they just dissected the assets(aka the toxic debt problem) and have different banks each take one part of the asset to equally share the problem and made it all disappear. I'm guessing with the recent renewed interest in CMBS again, we may or may not see at least one bank get pushed out to be the scapegoat for the year. [Check the latest list for banks with most CMBS exposure](https://www.americanbanker.com/list/20-u-s-banks-with-the-largest-commercial-real-estate-loan-volume), then focus only on the national banks because they have the least amount of ways to escape from bank runs(no foreign assets for them to draw from). EWBC and OZK almost got pulled down by FRC crash, who knows if they can survive this time round when their names are on the list.

TomatoSpecialist6879

I've seen people talk about CMBS crash since the pandemic started in 2020, peaking in 2023 when DDs about playing the crash keep popping up all over because of China's real estate meltdown. Even Burry talked about it and saying "this will be the catalyst for US market crash". Truth is this only affects 1%ers and banks, so nobody cares because they'll just keep kicking the can down the road like they did for the past 5 years. There may or may not be cracks, but honestly all the banks have been quietly offloading their mortgage portfolios, plus they'll just scape goat a medium size bank to take the fall. I still remember First Republic died in April 2023 just because of CMBS RUMORS which caused a bank run, made like 400k off puts thanks to Burry posted that list of banks ordered by who has the most CMBS loans.

MillionBEAR_

BREAKING: The delinquency rate on commercial mortgage-backed securities (CMBS) for offices rose to 10.3% in April, near the highest on record. Delinquency rates on these loans are now up 9 percentage points over the last 3 years By comparison, delinquency rates hit 10.7% at the post-2008 peak. The multifamily delinquency rate surged 113 basis points in April, to 6.57%, the highest since 2015. The overall US CMBS delinquency rate jumped to 7.03%, the highest since January 2021.

Immediate-Sky9959

NO ONE works on past numbers, not equities, Rates, options, CDX, CMBS, MBS, Treasuries, Corp.Bonds. Pay attention and maybe you'll learn something

IvoShandor

These are CMBS loans, not bank or institution loans. CMBS loans are securitized an sold off in bonds. (like he Big Short, but for CRE) Bond holders will either not get their payment or the special servicer who steps in "extends and pretends" with the borrowers. Basically they just extend it, ride it out rather than going through the default process. That's their bail out.

Books_and_Cleverness

You’re talking about retail and industrial which are generally super strong right now. The CMBS defaults are largely driven by office which sucks ass.

zer0sumgames

This is a symptom of horrible lending decisions made within the past 5-7-10 years. CMBS lenders generally issue higher interest rate debt at market-high valuations. So if the owner says his building is worth $15mm and he can produce a proforma and an appraisal that supports that valuation, then the CMBS lender will lend at that valuation. But many commercial loans--office loans in particular--rely on maintaining a certain amount of occupancy. So they underwrite the whole thing assuming 95% occupancy or something like that, and the loan is a term loan of 5, 7, 10 years or so. But as we all know, office occupancy declined precipitously in covid, and the borrowers (who cashed out on huge valuations) aren't collecting rents sufficient to meet the debt service coverage ration. And so they go into cash management, which means that the CMBS's vampire "special servicers" take over and charge exorbitant fees, and default interest for short payments, and shit like that. It begins a death spiral for the building. And behind the CMBS lenders are the people I like to call the "council of vampires." These are the bond holders. These CMBS lenders fund their loans with pools of investors who buy a bond that guarantees a certain rate of return. These people do not negotiate. Full stop. They want their return. They are too disconnected from the property to give a shit about the borrower or the market or whatever. Gives us the return, fuck you. Default interest, fuck you! But what ends up happening is the borrower, of course, gets sucked dry. And then the lenders foreclose or take the property back through a deed in lieu of foreclosure. And then....well, that's the rub. And then what? Now these underperforming buildings are owned by teams that don't really understand them or give a shit about them. Maybe they are sold at a loss. Maybe they try to operate them. But at the end of the day, it is the council of vampires who gets fucked. That's not a Main Street problem. That's a vampire problem. The owners who initially borrowed the money largely cashed out with their original financing agreement. They usually have some sort of personal guarantee but good luck getting at it.

Soapbox503

Think it comes down to the FED showing commercial real estate loan defaults and this chart showing only CMBS bundled deals. (I.E probably the lower credit deals get bundled, per usual)

9551HD

CMBS gonna blow the fuck up

Spy300

>BREAKING: HOTEL, MULTI FAMILY, OFFICE LOANS REACH RECORD DISTRESS LEVELS >https://cred-iq.com/blog/wp-content/uploads/2025/04/CRED-iQ-CMBS-Distressed-Rates-by-Property-Type-Mar-2025-1.png Tariffs are the dagger Spy 300

Spy300

>**BREAKING: HOTEL, MULTI FAMILY, OFFICE LOANS REACH RECORD DISTRESS LEVELS** >https://cred-iq.com/blog/wp-content/uploads/2025/04/CRED-iQ-CMBS-Distressed-Rates-by-Property-Type-Mar-2025-1.png tariffs are the dagger Spy 300

Spy300

**US ECONOMY WAS ALREADY FUK BEFORE TRADE WAR** >https://cred-iq.com/blog/wp-content/uploads/2025/04/CRED-iQ-CMBS-Distressed-Rates-by-Property-Type-Mar-2025-1.png

Spy300

He started a trade war when the economy was already tanking https://cred-iq.com/blog/wp-content/uploads/2025/04/CRED-iQ-CMBS-CRE-CLO-Distressed-Rates.png

9551HD

I can't wait for small businesses to start closing up shop, commercial real estate to be deserted, and the already stressed post-covid wfh CMBS market to absolutely implode. Global financial crisis 2 electric boogaloo!

Most-Inflation-1022

>I worked with IRS, CDS, CDX and CMBS for many years I worked with those too, in addition to CMBS, CDO, ABS, CLO, squared, cubed and synthetic versions of those, so you know that some of the securities had to had higher warehousing rates when synthetics, squared and cubed couldnt catch a bid or catch a bid at breakeven. MRL and LEH were ultimately fucked due to this, while others either got bailed out ot in case of GS had perfect hedges. My point was if banks need to HTM more Ts at 4.1 than reg environment dictates, their capital is tied into this excess since secondary wont touch 410 on 10Y. This for me is warehousing access capacity and basically being short rates WHILE waiting to AFT for some % bonds. What can happen is borrowing costs of these banks delta + vs their HTM yield which leads to lower profits which leads to more risk taking. The hedge here is short the buck vs JPY and USD. As to Powell, if he needs to raise during negative growth to prop the dollar and keep inflation in check, he will.

Slotstick

Very interesting read! This sounds very similar to SVB regarding the HTM securities portion. Please correct me if I am wrong, my understanding of your comment is: 1. That banks are carrying large losses that if were marked to market would show they are insolvent. 2. The current environment is shaping up to push rates higher while the politics try to push it lower. 3. The bond market won’t take this paper at these lower rate. I worked with IRS, CDS, CDX and CMBS for many years. I agree that, similar to AIG, the amount of leverage out there may really exceed the banks ability to lend. One of the commenters below said the whole theory is predicated on the ability for the market to accept lower rate paper to refi. I think most agree the market won’t buy at 4.1/4.2, but the part that I was confused about is how that triggers the subsequent issues and making the dollar trade profitable. In theory, the HTM book could be held and then there is no asset impairment and the banks are fine. That just becomes a waiting game assuming they can avoid any bank runs. Does the dollar trade require the bond to be sold at that lower rate or would inflation with geo political risk increasing get you to the same point? I’m not certain yet that the administration can force rates lower without Powell abdicating his responsibility. Do you see a scenario that they could? As a side note, I was thinking while writing this what’s the negative to decreasing rates. I am just thinking out loud as a thought exercise. In theory, it should cause inflation to take off. We have seen scenarios where it doesn’t, but I think most agree that if we were to lower in the current environment it would be very inflationary due to the protectionist policies being levied. This would obviously hurt the middle and lower class, but is that enough to hurt the economy in a significant manner? The middle class has been largely eroded in my opinion and there have even been some reports (albeit I have not checked their accuracy) that spending is occurring at the top 10% bracket and it makes up for the majority of consumer demand. If that is true, then it has implications for the banking sector and this analysis. It would imply the banking risks are concentrated to policies that affect that top group and would see minimal impact from policies at the cost to the lower classes. Which I think largely aligns with what the current admin is doing. I am trying to figure out the end goal for the current admin to formulate a plan so maybe this word vomit on my part has no traction. Figured I’d throw it out there and see what people’s thoughts are.

chuan_l

f you meant the " zero accountability " part ..  Then thats a special privilege reserved for the market makers. The banks and funds have T+35 clearance for FTDs , so its ample time to pull synthetic shares out of their ass. Then roll them again when the month is done ..  For the CMBS , the instrument of choice is through credit default swaps. Though these are at the banking level of investment. You could do puts on " ishares cmbs ETF " , or find out the companies or REITs that own said properties. Its something that usually doesn't have a lot of volatility ..  — Just because you asked , CMBS delinquency reached 11 % last month : \[ [https://wolfstreet.com/2024/12/31/office-cmbs-delinquency-rate-spikes-to-a-record-11-surpassing-the-peak-of-the-financial-crisis/](https://wolfstreet.com/2024/12/31/office-cmbs-delinquency-rate-spikes-to-a-record-11-surpassing-the-peak-of-the-financial-crisis/) \]

chuan_l

If you meant the " zero accountability " part .. Then thats a special priviledge reserved for the market makers. The banks and funds have T+35 clearance for FTDs , so its ample time to pull synthetic shares out of their ass. Then roll them again when the month is done .. For the CMBS , you can't directly bet against it as credit default swaps are at the bank level of investment. Though you can do puts on " ishares cmbs ETF " , or find out the companies or REITs that own said properties. Its something that usually doesn't have a lot of volatility .. — Just because you asked , CMBS delinquency reached 11 % last month : \[ [https://wolfstreet.com/2024/12/31/office-cmbs-delinquency-rate-spikes-to-a-record-11-surpassing-the-peak-of-the-financial-crisis/](https://wolfstreet.com/2024/12/31/office-cmbs-delinquency-rate-spikes-to-a-record-11-surpassing-the-peak-of-the-financial-crisis/) \]

chuan_l

The conflict of interest is also quite blatant :  For example david ingss , who is " citadel " global head of operations ..  Still sits on the DTCC board of directors ! Then the " cat nms plan " to consolidate the audit trail has been stuck in limbo since around 2012. When it was a recommendation to fix the last market crash. There is still no way to audit any NYSE trades at all .. Which also means zero accountability for " dark pool " trades ..  There are still massive amounts of illegal " synthetic " shares created. By " citadel " and pretty much all the large banks and hedge funds who now depend on it to turn a profit. Its financial fraud along with their arbitrage. Focused on stealing the silverware , while larger macro economic problems loom ..  Nobody is talking about CMBS either .. Those credit backed mortgage securities are utter junk ..  Its the same situation as 2008 , and will blow up ! Half of new york is now shuttered and businesses are dead and emptied. The description of the financial versus real world is getting further and futher apart. No wonder they're all moving to new zealand ..  — Your ship is full of horse shit : \[ [https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/](https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/) \]

chuan_l

The conflict of interest is also quite blatant :  For example david ingss , who is " citadel " global head of operations ..  Still sits on the DTCC board of directors ! Then the " cat nms plan " to consolidate the audit trail has been stuck in limbo since around 2012. When it was a recommendation to fix the last market crash. There is still no way to audit any NYSE trades at all .. Which also means zero accountability for " dark pool " trades ..  There are still massive amounts of illegal " synthetic " shares created. By " citadel " and pretty much all the large banks and hedge funds who now depend on it to turn a profit. Its financial fraud along with their arbitrage. Focused on stealing the silverware , while larger macro economic problems loom ..  Nobody is talking about CMBS either .. Those credit backed mortgage securities are utter junk ..  Its the same situation as 2008 , and will blow up ! Half of new york is now shuttered and businesses are dead and emptied. The description of the financial versus real world is getting further and futher apart. No wonder they're all moving to new zealand .. — Your ship is full of horse shit : \[ [https://wolfstreet.com/2024/12/31/office-cmbs-delinquency-rate-spikes-to-a-record-11-surpassing-the-peak-of-the-financial-crisis/](https://wolfstreet.com/2024/12/31/office-cmbs-delinquency-rate-spikes-to-a-record-11-surpassing-the-peak-of-the-financial-crisis/) \]

chuan_l

The conflict of interest is also quite blatant :  For example david ingss , who is " citadel " global head of operations ..  Still sits on the DTCC board of directors ! Then the " cat nms plan " to consolidate the audit trail has been stuck in limbo since around 2012. When it was a recommendation to fix the last market crash. There is still no way to audit any NYSE trades at all .. Which also means zero accountability for " dark pool " trades ..  There are still massive amounts of illegal " synthetic " shares created. By " citadel " and pretty much all the large banks and hedge funds who now depend on it to turn a profit. Its financial fraud along with their arbitrage. Focused on stealing the silverware , while larger macro economic problems loom ..  — Nobody is talking about CMBS either ! Those credit backed mortgage securities are utter junk ..  Its the same situation as 2008 , and will blow up ! Half of new york is now shuttered and businesses are dead and emptied. The description of the financial versus real world is getting further and futher apart. No wonder they're all moving to new zealand ..

chuan_l

The conflict of interest is also quite blatant :  For example david ingss , who is " citadel " global head of operations ..  Still sits on the DTCC board of directors ! Then the " cat nms plan " to consolidate the audit trail has been stuck in limbo since around 2012. When it was a recommendation to fix the last market crash. There is still no way to audit any NYSE trades at all .. Which also means zero accountability for " dark pool " trades ..  There are still massive amounts of illegal " synthetic " shares created. By " citadel " and pretty much all the large banks and hedge funds who now depend on criminal actions to turn a profit. Its financial fraud along with their arbitrage. Focused on stealing the silverware , while larger macro economic problems loom ..  — Nobody is talking about CMBS either ! Those credit backed mortgage securities are utter junk ..  Its the same situation as 2008 , and will blow up ! Half of new york is now shuttered and businesses are dead and emptied. The description of the financial versus real world is getting further and futher apart. No wonder they're all moving to new zealand ..

chuan_l

The conflict of interest is also quite blatant :  For example david ingss , who is " citadel " global head of operations ..  Still sits on the DTCC board of directors ! Then the " cat nms plan " to consolidate the audit trail has been stuck in limbo since around 2012. When it was a recommendation to fix the last market crash. There is still no way to audit any NYSE trades at all .. Which also means zero accountability for " dark pool " trades ..  There are still massive amounts of illegal " synthetic " shares created. By " citadel " and pretty much all the large banks and hedge funds depend on that to turn a profit. Its financial fraud along with their arbitrage. Focused on stealing the silverware , while larger macro economic problems loom ..  — Nobody is talking about CMBS either ! Those credit backed mortgage securities are utter junk ..  Its the same situation as 2008 , and will blow up ! Half of new york is now shuttered and businesses are dead and emptied. The description of the financial versus real world is getting further and futher apart. No wonder they're all moving to new zealand ..

chuan_l

The conflict of interest is also quite blatant : For example david ingss , who is " citadel " global head of operations .. Still sits on the DTCC board of directors ! Then the " cat nms plan " to consolidate the audit trail has been stuck in limbo since around 2012. When it was a recommendation to fix the last market crash. There is still no way to audit any NYSE trades at all .. Which also means zero accountability for " dark pool " trades .. There are still massive amounts of illegal " synthetic " shares created. By " citadel " and pretty much all the large banks and hedge funds depend on that to turn a profit. Its financial fraud along with their arbitrage. Focused on stealing the silverware , while larger macro economic problems loom .. — Nobody is talking about CMBS either : Those credit - backed mortgage securities are utter junk .. Its the same situation as 2008 , and will blow up ! Half of new york is now shuttered and businesses are dead and emptied. The description of the financial versus real world is getting further and futher apart. No wonder they're all moving to new zealand ..

Spy300

>**BREAKING: US OFFICE LOAN DELINQUENCIES REACH ALL TIME HIGHS** https://cred-iq.com/blog/wp-content/webp-express/webp-images/uploads/2024/12/CRED-iQ-CMBS-Distressed-Rates-by-Property-Type-Nov-1068x1068.png.webp

Spy300

>**BREAKING: US REAL ESTATE DELINQUENCIES SKY ROCKET AS U.S. ECONOMY CRUMBLES AND FED PLAYS STUPID** https://cred-iq.com/blog/wp-content/webp-express/webp-images/uploads/2024/12/CRED-iQ-CMBS-Distressed-Rates-by-Property-Type-Nov-1068x1068.png.webp

Additional-Season335

Existing home sales 14 year low, new construction building dropping for the past year, office CMBS delinquencies at the Great Recession high near 11%, median home prices falling for the past year, credit card and auto loan 90 day delinquencies at 14 year highs, manufacturing jobs decreasing for the past year Do you want me to go on? Because I got more.

Additional-Season335

Starting in January. (I think) Schiller PE Ratio almost at 39 - Sahm rule recently triggered -LEI chart signaling a recession - Inverted Yield curve - historic cyclical low in unemployment (which precedes recessions) back in April 2023 - recessions after rate cuts about 80% of the time - Office CMBS delinquencies at housing crash/Great Recession highs 10.4% - credit card and auto loan 90 day delinquencies at 14 year highs - geo political issues/wars - existing home sales at 14 year lows

Thencewasit

Why do you think the current 2 to 3 million is farm worker visas is not sufficient for the current agricultural production?  What is the correct amount of agricultural workers?  Why do you support having second class people to subsidize giant businesses? You are also woefully ignorant about tomato harvesting.  Harvesting tomatoes is highly mechanized.  By 1970, 99.9% of California's tomato crop was harvested mechanically.   https://www.plantsciences.ucdavis.edu/news/how-mechanical-tomato-harvester-prompted-food-movement If local speculators are able to purchase housing and not use it then why do we have so many multi family foreclosures right now?  We have a 4% delinquency rate on multifamily and almost 8% delinquency on CMBS.  Why are lenders buying back loans out of CMBS to keep the delinquency rate below liquidation rates?

treesRfriends13

Anyone worried about CMBS delinquency rate?? Shits above 10%

Shoopscooper

I did and it was not good. I still have some $10 VLY puts riding until the beginning of 2026, but probably lost about half my money on all my other puts before I pulled out. I do think CRE is gonna to fuck someone at some point, but it's going to be hard to catch that falling knife. "Survive til 2025" was the CRE motto and now 2025 is upon us and rates are still high.  Very recent article regarding the aforementioned and where CMBS are currently sitting: https://wolfstreet.com/2024/11/30/office-cmbs-delinquency-rate-spikes-to-10-4-just-below-worst-of-financial-crisis-cre-meltdown-fastest-2-year-spike-ever/ Pretty interesting this isn't being covered in any mainstream media.

Alec_NonServiam

Lump sum 70/30 VTI/IEF, draw down the IEF over time into VTI if you want to play it safe. I prefer IEF to BND or the like because I like treasuries as a hedge better than corporate paper, MBS, or CMBS.

Every-Shop-3315

# Office Blgd with $92m Loan - Selling for $14m. How do I short its CMBS Tranche? I invest in Commercial Real Estate I think there is money to be made off of this CMBS loan Traunche. Who knows how to short CMBS? Property Details: 750,000 sqft Office, 100% vacant, no line of site to a new tenant. 80% vacancy in the surrounding area. CMBS details: 620,000,000 loan amount, 82 properties. Subject property Allocation: 92,000,000 Making up 14% of the loan amount this CMBS has to be severely discounted and if not, we should short it. How do we make money off of this?

creemeeseason

They didn't go into the lending aspect as that's less of their business. They do talk about valuations of sold properties getting cut. From costar's prospective, they make money on transactions. More sales, even forced sales, are good for business. They offered this as well: "Users of CoStar now have a comprehensive view of global owners with portfolios greater than 25 properties. CoStar will become even more valuable as the resetting of commercial property values begins to kick in '25 and '26. $930 billion of loans are due in '24 with approximately 30% of this total extended from last year. CMBS delinquency rates remain elevated and office delinquencies have increased notably to 7.7%. Simultaneously, I believe that there are green shoots in the office market fundamentals that may motivate buyers looking for opportunistic value. As a result, I believe you will see more transactions on 10x in the year ahead."

robbinhood69

Last time I looked into the CMBS etf it only tracked certain investment grade CMBS and had not thaat much office

Fangslash

personally this isn’t worth the risk because unlike 2008 CMBS crisis is well known for at least 4 years and the market is well adjusted for this, unless you have a good reason to believe the recession will hit before your expiry date that been said this might be a great black swan hedge, thanks for sharing

random-meme422

Dawg, the losses in question relate to RMBS. And CRE properties that back CMBS are primarily class A. Just for context class an offices are still seeing high occupancy and extremely high rents. Not everything is some shitty outdated 1950s office lmao

IceColdPorkSoda

CMBS is a fraction of the RMBS market.

NOT_MartinShkreli

What if I told you that every tourist destination site has an Airbnb bubble where they package up the rental loans into CMBS tranches And those people took out HELOCs to buy homes over list, raising appraisals for nearby homes, then taking out more HELOCs to buy more rental properties … and all of a sudden none of the airbnbs in my area are full and slashing prices in a desperate attempt to get any money

NOT_MartinShkreli

Situation near me is “Airbnb is free money if you’re rich” … and we have an Airbnb bubble with them also now not being filled, people took out HELOCs to buy additional rental properties and packaged that shit up into CMBS tranches to offset failing office space

NOT_MartinShkreli

And to make matters worse, near me they’re packaging up multiple Airbnb properties and condos / apartments into CMBS tranches to offset failing office spaces. The Airbnb owners take out HELOCs to buy more homes over lost, driving up appraisal values … more HELOCs… more Airbnb bought. All of a sudden these places are not being filled and when it collapses it’ll be 2008 on steroids because single owners will lose every home in a cascading domino of leveraged debt

NOT_MartinShkreli

That’s what’s happening around me, except the homes are all Airbnb properties packaged into CMBS tranches to offset failing office spaces

NOT_MartinShkreli

Which is even crazier because near me people are taking out multiple HELOCs on Airbnb properties to bid over list on more of them. Which drives up valuations and more HELOC to take out. Then they package those multi rental units into CMBS tranches because it’s not a mortgage anymore, it’s commercial real estate. They’re running the 2008 playbook on CMBS right now. Airbnb unit numbers and apartment builds are bonkers near me and they are not being filled

NOT_MartinShkreli

And Evernote wild is if you group a bunch of Airbnb properties together and apartment buildings into CMBS tranches. It’s like 2008 again but slightly different tune

NOT_MartinShkreli

That is actually happening when they bundle these rental properties into CMBS tranches because it’s unregulated

RossRiskDabbler

Have we forgotten how CMBS and RMBS (structured real estate) grew like a bubble and blew up the ocean?

LemonTigre1

Oct '07 called, they want their sentence back. [CNN Money Article - 9 Oct '07](https://money.cnn.com/2007/10/09/markets/markets_0500/ ) No history doesn't repeat, but it usually rhymes. So far, on the GFC bingo card we've hit: -Election year -50 bps cut mid-Sep -an over-valued equities market (esp. tech and housing) -extremely over-leveraged HF and banks (derivatives and CMBS) I'm sure I'm missing some, but here are some new ones: -Consistentlyn downward-revised employment data -redefined inflation metrics But you're probably right, **"iT's DiFfErEnT tHiS tImE"**

NOT_MartinShkreli

They basically did not regulate CMBS after 2008 so the greedy banks moved over to CMBS by buying up tons of homes and building “affordable housing units” to rent out and package into CMBS. The failing CMBS properties of work offices is being swapped out for large amounts of short term and long term rental units. If things go to hell, it’ll be 2008 on steroids because they ran back the same play book with way more money at stake

NOT_MartinShkreli

And when the airbnbs continue to not be filled near me it’s going to be catastrophic So many people took out HELOC to buy inflated assets and continued borrowing to buy additional properties. It’s like a CMBS bubble on homes

InternationalSpare28

Yes, private equity (PE) is a bubble. Rehypothecation is a word you should be familiar with--PE firms reuse collateral across multiple loans, sometimes up to 140% of their original value, expanding leverage without increasing underlying assets. When liquidity tightens or asset values drop, multiple creditors claim the same collateral, leading to forced liquidations. The industry’s size-growing from $500 billion to $8 trillion in 20 years-has been driven by financial engineering as you said, debt-financed buyouts (LBOs), and structured financial products akin to mortgage-backed securities (MBS), such as SLABS (Student Loan Asset Backed Securities), CLOs (Collateralized Loan Obligations), and CMBS (Commercial MBS), which all contributed to the 2008 crisis. With shadow banking providing unregulated capital, and central banks managing liquidity in complex ways (50bps cut at ATHs…?), the bubble is increasingly fragile and at risk of unraveling. Liquidity injections will keep it from collapsing for a while, but the FED will have to get increasingly more intrusive to keep assets elevated, such as using Japan’s creation QQE (Qualitative-Quantitative Easing). It’s inevitable that it crashes, but if the FED pull off a soft landing is yet to be seen

redditmodsRrussians

Unless those CMBS comes with a pager/walkie talkie, they aint blowin up shit. Took a whole bunch of readin to get to the gold bug push. You sir truly are the lord of all rainbow bears.

REmonkey13

Office CMBS loans are a problem, but otherwise the sector is performing better than you’d expect

Ziggy-Stardust

It’s based on CMBS data

RossRiskDabbler

Blistering barnicles; this is so dead; this shit with Cedar; it's like acquiring ABACUS and flying upside while instutitional sits short. Lord this will be painful. Cedar REIT focuses on "primary focus on grocery-anchored shopping centers in the Northeast" Every CMBS owner or RMBS owner I know; sees a decline; and higher insurance prices. With banks not willing to lend. This is dead in the water; let alone bid/ask man. But well done on the profit.

Potato_Octopi

CMBS has been an ugly spot for a while. Lower rates will help, but not solve all those problems. That's not really a new thing though.. CRE has been watched pretty closely. I've seen a few articles over the years on CRE on FT's blog Alpahville. [https://www.gspublishing.com/content/research/en/reports/2024/05/16/73962ee6-c108-4e2b-9a04-a55d4af8519f.html](https://www.gspublishing.com/content/research/en/reports/2024/05/16/73962ee6-c108-4e2b-9a04-a55d4af8519f.html) I think the closest thing to a CRE apocalypse would be what we already had hit a couple years ago with the regional banking crisis.

kingjack03

You should look at corporate mortgages and vacancies. Lots of institutions have a good amount of exposure in their bond funds due to CMBS. A good chunk of those mortgages are due in 2026 and vacancies aren’t going down.

Economy-Spray-8197

Playing devil's advocate here, but one could argue that there is something of that nature potentially looming. CMBS market is in an awful spot because of office sector. Lots of office is going vacant as lease terms expire, and keys are being handed back to banks. A large amount of office focused REITs are super cash constrained with no real way out. On top of this, the 10 year almost hit 3.7 today, making it a much better time to try to sell off commercial assets to mitigate losses(Many of these losses will not be realized until that time, as many companies record inflated book values on financials). Banks with high exposure to office backed CMBS could very easily be the first domino.

MathandMarketsCFA

If you want synthetic short CMBS exposure you’d short the public REITs that borrow in CMBS and own the equity - all the CRE CLO guys You as an individual cannot play in cmbs you don’t have enough money to qualify

Special_Chair

Did you get the answer and trade? I’m looking into trading CMBS too

persian_mamba

As someone who works in middle management in CMBS lending at a large bank... a lot of real estate articles people post are flawed and I can refute them but this one is actually pretty spot on. Most people think real estate is full of greedy landlords who wanna make a lot of money and ruin the world, but it's mainly just laziness like this.