CMBS investors should think twice before replacing a special servicer

in the market-are returning as a growing source of funding for commercial real estate (CRE) investors. This is due in part because they offer an easy way to access capital. For example, the end lender on a shopping center in Illinois could be a pension fund in Sweden, whose manager has never been to the United States.

borrowing entity. These differences, driven by the experience of CMBS investors and special servicers and, in some instances, the bankruptcy of General Growth Properties ( GGP ) 6, add complexity to CMBS 2.0 loan originations. If you n egotiated a CMBS loan for a borrower under

The only "lender" party to a CMBS loan that can engage in restructuring discussions on an individual loan in a CMBS pool is the "Special Servicer". The roles and duties of the respective servicers under a CMBS loan are specified in the governing Pooling and Service Agreement ("PSA").

Ted Borter, the co-head of the real estate financing group at Goldman Sachs, said no doubt, but there’s a bigger "mega issue" hampering the CMBS industry’s growth right now that must be tackled, stat: its servicing. "It’s very frustrating to lose a deal to a life company because of CMBS servicing issues," Borter said.

CMBS Special Servicers and Adverse Selection in Commercial Mortgage Markets: Theory and Evidence Abstract. Special servicers play an important role in reducing losses associated with troubled loans. One of these functions involves the administration and disposition of troubled loans.

Newer, more stringently regulated CMBS afford investors steady returns and borrowers better service and terms in the current low-interest rate environment.

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The current wave of CMBS lending has been referred to as both "CMBS 2.0" and "CMBS 3.0." What distinction do you think people are trying to draw by using CMBS 3.0, and do you think it is justified? CMBS 3.0 was a term that was used by a few originators and others in the securitization community for a very short

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