European CMBS: 2012 Outlook

北京穆迪投资者服务有限公司 Oliver Moldenhauer


　　The limited availability of refinancing for maturing loans will be the key threat to the creditquality of outstanding commercial mortgage-backed securities (CMBS) transactions in 2012.

　　A significant gap exists between refinancing needs and available financing in the overallEuropean commercial real estate market. With banks in the process of shedding risky assetsand deleveraging to meet regulatory capital requirements, financing will be available only forlowly leveraged loans secured by prime properties. However, most of the loans maturing in2012 are secured by non-prime properties, which make up the majority of collateral securingEuropean CMBS transactions.

　　We therefore expect an increase in defaults and/or restructurings in 2012.

　　Most of the loans maturing in 2012, which are secured by non-prime properties, will not berepaid but will be extended by servicers to avoid losses arising from property value declines.

　　If underlying cash flows from the properties are insufficient to make loan payments,however, the servicer is likely to start the work-out process, which could take the form offorced property sales or loan foreclosures. Whilst there have been few such enforcementactions to date, we believe they will increase in 2012.

　　In 2012, there will be no significant new issuance because (i) the investor base for this assetclass is very small; and (ii) CMBS offers no economically viable exit for originators.

　　This report gives an outlook on the main drivers of the credit quality of outstanding CMBSin 2012. Our sister Central Scenarios report includes the five-year forward-looking keyassumptions that we use in our quantitative rating assessment and will be updated at thebeginning of next year.