Commercial mortgage-backed securities (CMBS) are non-recourse, fixed-rate, 5-10 year loans originated by Wall Street banks (Goldman, JPM, Morgan Stanley, BofA) and securitized into rated bond pools. For NYC commercial real estate — office, retail, hotel, and large multifamily — CMBS is often the highest-proceeds option in the senior debt stack.
Conduit vs SASB
Conduit CMBS pools 25-75 smaller loans (typically $5M-$100M each) into a single security. Pricing is set by the AAA spread plus the loan's credit grade. Single-asset single-borrower (SASB) CMBS securitizes one large loan ($100M+, often $500M+) as its own deal — used for trophy NYC office, large hotel portfolios, and major multifamily. SASB allows more bespoke structure (interest-only, flexible release provisions) at a tighter coupon than conduit.
CMBS Structure Basics
Standard CMBS loans run 10 years with 30-year amortization (often 2-5 years interest-only), 65-75% LTV at origination, and DSCR floors of 1.25-1.50x. Pricing is typically 10-year Treasury + 175-275 bps depending on asset class and credit quality. Loans are non-recourse with bad-boy carveouts. Prepayment is via defeasance (substituting Treasury collateral) or yield maintenance — both are expensive and inflexible.
When CMBS Wins
CMBS typically wins for: large office (>$50M, where agency doesn't go), retail, hotel, mixed-use, and large multifamily where the proceeds advantage over agency outweighs the prepayment inflexibility. CMBS loses for: rent-stabilized multifamily (where agency MAH execution wins), small loans (<$5M), and value-add stories (where bridge or transitional debt is needed first).
- CMBS pricing tightens in healthy bond markets and widens in stressed markets — timing the rate lock matters.
- SASB structures support trophy NYC assets; the bond investors want institutional-grade real estate.
- Defeasance costs scale with interest rate movement post-origination — model it before assuming the prepayment.
- Skyline maintains relationships with major CMBS originators and can introduce sponsors to active capital.
Robert Khodadadian and Skyline Properties have brokered NYC commercial real estate transactions financed by every major CMBS originator. The firm has closed $976M+ across NYC deals where CMBS structure was a material execution variable. Email info@skylineprp.com for confidential introductions to CMBS lenders matched to a specific deal.