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Commercial Mortgage Backed Securities (CMBS)

Updated: Jul 9, 2020

What is commercial mortgage-backed securities (CMBS)?

Commercial mortgage-backed securities (CMBS) are fixed-income investment products, secured by commercial real estate rather than residential real estate. CMBS can provide liquidity for real estate investors and commercial lenders.

Loans are usually included in trusts and are highly diversified in terms, terms of property types and amounts. Fundamental loans securitised to CMBS include loans for properties such as apartment buildings and complexes, factories, hotels, office buildings, office buildings, and shopping malls that are usually within the same trust.

Mortgage loans are generally considered to be non-recourse debts, that is, any consumer or commercial debt that is only secured by the mortgage. In case of default, the lender shall not seize any assets of the borrower that exceed the collateral.

Because CMBS are complex investment tools, they require a wide range of market participants-including investors, main service providers, main service providers, special service providers, direct certificate holders, trustees and evaluation agencies. Each of these participants plays a specific role to ensure the proper implementation of CMBS.

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