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FINANCIAL MARKET COURSES

Securitization - Commercial Mortgage-Backed Securities

Mortgage-backed securities can be classified as residential or commercial mortgage-backed securities (CMBS). This course focuses on the CMBS market, which is more varied and complex than its residential mortgage-backed equivalent. The CMBS market grew tremendously in the years leading up to the global financial crisis, as investor appetite for real estate products increased and interest rates remained relatively low. CMBS products were pivotal in distributing risk across a wide variety of investors.

 

This course will cover the mechanics and structures of CMBSs, the analysis of CMBS collateral, and the rating of CMBSs. As with the RMBS market, the CMBS market in the US developed much earlier, and has traditionally been the innovator of new products. In this course, descriptions refer to the US CMBS market, unless otherwise stated.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Outline the structure of commercial mortgage-backed securities and describe the dynamics of the commercial mortgage-backed securities market

    Analyze the collateral characteristics of a commercial mortgage-backed security (CMBS)

    Outline the rating process for CMBS transactions

  • COURSE OUTLINE

    Topic 1: Mechanics & Structure of CMBS Transactions

    CMBS Transactions

    Call Protection

    CMBS Structure

    Servicing the Loans

    CMBS Market Development

    Topic 2: Analyzing CMBS Collateral

    Analyzing a CMBS

    Multi-Borrower Transaction Credit Assessment

    o Weighted Average LTV Ratio

    o Debt Service Coverage Ratio

    o Lease Expiry

    o Average Tenant Quality

    o Origination & Servicing

    o Seasoning

    o Level of Diversification

    Single Property Transaction Credit Assessment

    o Cash Flow & Leverage

    o Property Valuation or Marketability

    o Capital Expenditure Requirements

    o Environment & Planning Issues

    o Loan Structure

    o Senior & Subordinated Positions

    Topic 3: CMBS Ratings

    Rating Agency

    o Loan Level Analysis

    o Pool Level Analysis

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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