New Lenders Stepping Up to Refinance Debt

Anup Agarwal

In the latest episode of the NAREIT Podcast, Anup Agarwal, head of mortgage-backed securities and asset-backed securities with Western Asset Management Company, discussed the impending wave of commercial mortgage debt maturities and how the financial markets are reacting.

As much as $200 billion in maturing loans will need to be refinanced this year. However, despite concerns about the functioning of the market for commercial mortgage-backed securities, Agarwal downplayed possible concerns about refinancing.

"People have talked about this wave of refinancing for the CMBS market since about 2010, and we have seen those waves of maturities continue to be refinanced," he observed.

Agarwal did acknowledge that new regulations governing risk retention have dampened expected CMBS issuance. However, other lenders have surfaced in the marketplace, such as money managers and insurance companies, according to Agarwal.

"If anything, we have kind of seen the refinance activity kind of shift from CMBS directly into a loan format," he said. That is especially true for class-A properties, according to Agarwal.

"Money managers… realize there are changing market conditions, and we are adjusting ourselves... by creating funds that can buy loans directly," he said.

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