Mike Hilton at PPM Partners comments on CMBS market return
Mike Hilton, partner at PPM Partners, has commented on the first European commercial mortgage backed securities (CMBS) bond issued by any provider since the start of the financial crisis five years ago.
We believe that this is a significant development for the European debt market and note that the underlying asset class was German residential properties. The German residential market is widely regarded as both the most stable and also the most attractive property investment market in the developed world at the present time. The fact that this asset class was chosen to form the basis for the first commercial mortgage bond since 2007 is a clear sign that investors see the benefits of this asset class.
PMM believes that other there will be further bond issuances in the German residential sector in near future which both assist investors in financing their acquisitions in the space as well as highlighting the attractions of the asset class.
The return of CMBS to the European property market marks an important moment for the sector, which is struggling from a lack of bank lending. The market peaked in 2006 with €67bn of issuance, before grinding to a halt in 2009.
JPMorgan snapped up three quarters of the commercial mortgage bonds. The balance of the bonds, which are priced at just under 4%, were purchased by long-term investment funds, including M&G and Aviva.