Global credit turmoil has spilled over into the market for bonds backed by US commercial mortgages, threatening to push down property prices and scuttle deals. Financial Times
Issuance of US commercial mortgage-backed securities fell to $6.3bn in October, a drop of 84% from record levels of $38.5bn in March, according to Commercial Mortgage Alert, a trade publication.
The decline in CMBS issuance is crucial because such securities have provided an estimated 40 to 60% of financing for new commercial property purchases in recent years.
Moody’s index of commercial real estate prices is expected to show that prices flattened or fell in September, after rising nearly 14% in the 12 months to August. RBS Greenwich Capital predicts US commercial property prices will fall 10-15% next year.