CMBS SASB: Single-Asset, Single-Borrower Conduit Loans
While the average CMBS, or commercial mortgage backed security, often consists of a pool of 50-100 loans, single-asset, single-borrower (SASB) conduit loans consist of one, large loan for a single property that is securitized and sold on the secondary market. These SASB loans are becoming an increasingly popular form of financing for the largest and most exclusive commercial properties.
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While the average CMBS, or commercial mortgage backed security, often consists of a pool of 50-100 loans, single-asset, single-borrower (SASB) conduit loans consist of one, large loan for a single property that is securitized and sold on the secondary market. These SASB loans are becoming an increasingly popular form of financing for the largest and most exclusive commercial properties.
For example, in July 2018, Brookfield Management Group received a $1.2 billion SASB CMBS loan from conduit lenders Citibank and Goldman Sachs to refinance the iconic Bahamas-based Atlantis Resort and Casino. And, a few months earlier, in April 2018, Blackstone Group Real Estate Partners received a $382 million CMBS SASB loan from Morgan Stanley and Wells Fargo.
In the first quarter of 2018, CMBS SASB loan volume increased nearly 230% over the first quarter of 2017, meaning that these loans are an increasingly popular product for both borrowers and CMBS investors alike. However, in order to qualify, properties must typically be worth in the hundreds of millions, be owned by highly reputable borrowers, and be located in ultra high-end markets.
Related Questions
What is a CMBS SASB loan?
A CMBS SASB loan is a single-asset, single-borrower conduit loan that consists of one, large loan for a single property that is securitized and sold on the secondary market. These loans are becoming increasingly popular for the largest and most exclusive commercial properties, and typically involve loans of at least $200 million, though they may range up to $3 billion. SASB loans are generally only reserved for exclusive, Class A properties like high-end apartment buildings in top markets, and are known to offer lower leverage than regular CMBS loans. SASB loans can also be collateralized by a group of cross-collateralized/cross-defaulted properties all owned by the same borrower, or by related borrowers in some rare cases. Source, Source, Source.
What are the benefits of a CMBS SASB loan?
CMBS SASB loans offer a number of benefits, including:
- Lower leverage than regular CMBS loans
- Flexibility when it comes to loan-to-value (LTV) ratios
- Fixed interest rates
- Cross-collateralized and cross-defaulted loans
- Loans of at least $200 million, and often up to $800 million to $1 billion+
These loans are typically reserved for exclusive, Class A properties like high-end apartment buildings in top markets. They are becoming an increasingly popular form of financing for the largest and most exclusive commercial properties.
What are the risks associated with a CMBS SASB loan?
The risks associated with a CMBS SASB loan are similar to those associated with traditional CMBS financing. These include the risk of default, the risk of prepayment, and the risk of interest rate fluctuations. Additionally, SASB loans are generally cross-collateralized and cross-defaulted, meaning that if one loan defaults, all of the loans in the portfolio are affected. This increases the risk for investors who purchase weaker-ranked tranches of commercial mortgage-backed securities. Source, Source, Source.
What are the requirements for a CMBS SASB loan?
What are the advantages of a CMBS SASB loan over other financing options?
CMBS SASB loans offer a number of advantages over other financing options. These include:
- Lower leverage than regular CMBS loans
- Flexibility when it comes to loan-to-value (LTV) ratios
- Financing for exclusive, Class A properties
- Loans of at least $200 million, and up to $3 billion
Source: Single Asset Single Borrower (SASB) CMBS Loans: What You Need to Know, Single-Asset Single-Borrower CMBS Explained