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1H24 CMBS Issuance Nearly Triples From 2023

According to Trepp, total CMBS issuance in 1H24 reached $42.29B, or three times as much as in the first half of 2023.
  • Domestic private-label CMBS issuance reached $42.29B in 1H24, nearly 3x the $16.47B seen in 1H23.
  • 61 deals went down in 1H24, up from 25 in 1H23, with a significant shift to single-borrower deals.
  • Higher CMBS issuance reflects a broader adjustment to higher interest rates and stabilizing property valuations.
Key Takeaways

The first half of 2024 has been great for CMBS issuance, as reported on Globest.

By The Numbers

Domestic private-label CMBS issuance totaled $42.29B, nearly three times more than the $16.47B recorded in 1H23, according to Trepp data. 

The substantial rise in CMBS issuance reflects strong market performance. In fact, the $24.6B issued in Q1 alone was almost 50% higher than the total from 1H23.

The number of CMBS deals also surged to 61 in the first half of 2024, up from 25 in 1H23. There was a notable shift in the types of deals, with single-borrower transactions dominating the market. 

  • In 1H23, conduit deals accounted for 56.91% of total issuance, while single-borrower deals made up 43.09%.
  • In 1H24, conduit deals dropped to 28.77%, with single-borrower deals rising to 71.23%. Over 80% of these single-borrower deals were secured with floating-rate mortgages, indicating borrower confidence in stable or decreasing interest rates.

The Bigger Picture

If the current pace of CMBS issuance continues, 2024’s total issuance could surpass that of 2016, 2018, and potentially 2017. This year’s issuance levels are also higher than the post-pandemic six-month average of $37.02B and the 10-year average of $37.92B.

The rise in CMBS issuance indicates the CRE market is finally adjusting to higher interest rates and stabilizing valuations. Overall, property owners and bond buyers appear to have forced themselves to adapt to new market conditions despite lingering uncertainties. 

Notably, 40% of the single-borrower deals in 1H24 involved properties owned by Blackstone Group (BX) and its affiliates, highlighting their substantial influence in the sector.

Looking Ahead

1H24 has marked a significant rebound for CMBS issuance, reflecting a broader market adjustment to higher interest rates and new valuation norms. But despite strong CMBS performance in 1H24, Trepp cautions recent issuance may not predict activity for 2H24. 

An emerging trend is the broader use of 5-year mortgages, which offer greater flexibility compared to conventional 10-year conduit loans. This shift suggests borrowers are seeking more adaptable financing options, and will continue to do so for the foreseeable future.

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