CMBS (conduit, SASB, large loan)

Does your product fit here?

CMBS (commercial mortgage-backed securities) is the term securitization market for commercial real estate loans. You’re pooling loans secured by income-producing commercial properties into rated bonds sold to institutional investors. The market has three distinct product types with different execution paths, and knowing which one fits your loan is the first step.

Products that fit here:

• Conduit CMBS: Pooled loans from multiple originators aggregated into a single securitization. Loans are typically 10-year fixed-rate with 25-30 year amortization, secured by stabilized properties generating current cash flow. Loan sizes range from $5M to $100M+. Multiple banks/originators contribute loans to reach target pool sizes of $800M-$1.5B. This is the workhorse of CRE securitization.
• SASB (Single-Asset Single-Borrower): One loan on one property (or a portfolio of properties under a single borrower). Trophy assets, Class A properties, institutional sponsors. Loan sizes typically $200M+, though deals as small as $100M can clear. Can be fixed or floating rate. Custom tranching tailored to the specific asset. This is the premium execution for the highest-quality collateral.
• Large Loan / Floating Rate: Loans of $50M+ that don’t fit neatly into conduit. Often floating rate with shorter terms (3-5 years). May include light transitional elements (some lease-up remaining, minor capex). Executed either as standalone deals or small pools of 5-15 loans.

What does NOT fit here:

• CRE CLOs: Transitional loans with business plan execution risk, actively managed pools with reinvestment periods, predominantly floating rate. That’s a different product with different investors. See CRE CLOs.
• Residential bridge/fix-and-flip: 1-4 unit properties with residential borrowers. Different regulatory treatment, different securitization market. See Bridge / Fix-and-Flip.
• Agency multifamily: Loans that qualify for Fannie Mae or Freddie Mac execution have a separate, typically cheaper path. If your multifamily loan can go agency, it usually should.
• Mezzanine or preferred equity: These sit behind the first mortgage and aren’t directly securitizable in CMBS. Some structures include mezzanine as additional collateral, but the CMBS loan itself is the senior mortgage.
• Ground-up construction: Properties with no current income and 18+ months to stabilization don’t fit CMBS underwriting. You need income to service the debt.

Edge cases

Light transitional in conduit: Some conduit programs accept loans with minor transitional elements. A property at 85% occupancy with a clear path to 95% in 12 months can work. A property at 60% occupancy undergoing major renovation does not fit.

Large loan vs. CRE CLO: A $75M floating-rate loan on a property in lease-up could execute via large loan CMBS or contribute to a CRE CLO. The decision depends on property status (how transitional?), sponsor preference, and market execution conditions. If the property is 80%+ stabilized, CMBS is likely. If it’s 60% leased with a 24-month business plan, CRE CLO fits better.

SASB vs. large loan: SASB is an execution format. Large loan is a loan type. A $300M loan on a trophy office building is a large loan that executes via SASB. A $75M floating-rate loan on a suburban multifamily is a large loan that might execute in a floating-rate pool rather than standalone SASB.

Credit tenant deals: Single-tenant properties leased to investment-grade tenants (Walgreens, government agencies) have specialized execution paths. The credit is the tenant, not the real estate. These can trade inside CMBS levels when structured properly.

How lenders will classify you

Product Type	Loan Size	Rate Type	Term	LTV Range	Property Status
Conduit	$5M-$150M	Fixed	10 years	65-75%	Stabilized (>85% occupied)
SASB	$200M+	Fixed or floating	5-10 years	55-70%	Trophy / stabilized
Large Loan / Floating	$50M+	Floating	3-5 years	65-75%	Near-stabilized

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Market benchmarks and comps

Market size and issuance

CMBS is a mature market with approximately $600B in outstanding securities. Annual issuance fluctuates significantly based on spreads, property fundamentals, and capital markets conditions.

Year	Conduit Issuance	SASB Issuance	Large Loan / Floating	Total
2019	$58B	$25B	$12B	$95B
2020	$35B	$15B	$8B	$58B
2021	$78B	$48B	$22B	$148B
2022	$52B	$35B	$15B	$102B
2023	$38B	$22B	$10B	$70B
2024E	$42B	$25B	$12B	$79B

For context: peak issuance was $230B in 2007. The market cratered to $12B in 2009 after the financial crisis. Recovery has been gradual, with different cycle dynamics than the 2007 bubble.

Performance benchmarks by product type

Metric	Conduit	SASB	Large Loan / Floating
60+ day delinquency (current)	4.5-5.5%	2-3%	3-5%
60+ day delinquency (pre-COVID)	1.5-2.5%	<1%	1-2%
Loss severity (historical avg)	35-45%	25-35%	30-40%
WAL (at issuance)	4.5-5.5 years	3-5 years	2-4 years
Prepayment rate (CPR)	2-5%	3-8%	10-20%

The key metric: special servicing rate

The special servicing rate tells you what percentage of loans have been transferred from the master servicer to the special servicer due to default or imminent default. When a loan goes to special servicing, workout conversations begin.

Current special servicing rates by property type (2024):

Property Type	Special Servicing Rate	Trend
Office	11-13%	Rising
Retail	8-10%	Stable
Lodging	4-6%	Declining
Multifamily	2-3%	Stable
Industrial	<1%	Stable

Illustrative pricing. See pricing disclaimer.

Office is the story. Post-COVID work-from-home trends have fundamentally changed office demand. Class B and C suburban office is particularly challenged. CBD trophy office is more resilient but still facing headwinds.

What “good” performance looks like

• Delinquency rate below 2% for post-2015 vintages
• Loss severity below 40% on liquidations
• Servicer advancing on 95%+ of loans (indicates confidence in eventual recovery)
• No single property type above 35% of pool
• DSCR coverage of 1.3x+ on new production

Red flag performance benchmarks

• Delinquency rate above 5% for any recent vintage
• Office concentration above 30% with vintage exposure pre-2020
• DSCR coverage below 1.2x at origination
• Special servicing transfer rate exceeding 8% annually
• Significant exposure to tertiary markets or single-tenant properties with near-term lease expiry

Current market conditions (2024)

The CMBS market is working through two concurrent challenges:

Office distress: Loans originated in 2014-2019 based on pre-COVID assumptions are hitting maturity into a fundamentally changed market. Office valuations are down 25-40% from peak. Refinancing is difficult.

Rate transition: Loans originated at low rates (3-4% coupons) are maturing into a higher-rate environment. Even performing properties may struggle to refinance at current rates without capital infusion.

Spreads have widened 75-150 bps from 2021 lows across the capital structure. AAA conduit spreads were inside swaps + 75 bps in late 2021. Today they’re swaps + 140-175 bps.

Important: If you’re looking at a conduit loan on an office property originated in 2014-2019, assume it has issues until proven otherwise. The 2014 vintage is particularly concerning as 10-year loans hit maturity in 2024.

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What lenders and investors focus on

1. Property type and quality

Property type drives everything in CMBS. The same metrics that look acceptable for industrial can kill an office deal.

Property type hierarchy (2024 market):

Property Type	Investor Appetite	Typical Spread Impact
Industrial	Strong	-10 to -20 bps
Multifamily	Strong	Flat
Retail (grocery-anchored)	Neutral	Flat to +10 bps
Lodging (select-service)	Selective	+10 to +25 bps
Retail (mall)	Weak	+25 to +50 bps
Office (CBD Class A)	Selective	+25 to +50 bps
Office (suburban/Class B)	Very weak	+50 to +100 bps or excluded

Illustrative pricing. See pricing disclaimer.

Within property types, quality matters. Class A properties in primary markets command better execution than Class C properties in tertiary markets.

Location tier impact:

• Top 25 MSAs: Full advance rates, standard pricing
• Secondary MSAs (26-75): 3-5% advance rate haircut, +10-20 bps spread
• Tertiary/rural: May not be eligible, significant pricing premium if accepted

2. Debt service coverage ratio (DSCR)

DSCR measures the property’s ability to pay debt service from operating income. It’s calculated as Net Operating Income (NOI) divided by annual debt service.

Minimum DSCR thresholds:

Property Type	Minimum DSCR	Target DSCR
Multifamily	1.20x	1.30-1.40x
Industrial	1.25x	1.35-1.45x
Retail	1.30x	1.40-1.50x
Office	1.30x	1.40-1.50x
Lodging	1.50x	1.60-1.75x

In-place vs. stabilized DSCR: In-place uses current rent roll and current expenses. Stabilized uses projected rent and expenses at full occupancy. For conduit, in-place DSCR must meet the threshold. Stabilized is for modeling, not underwriting.

DSCR calculation nuances: Different originators calculate NOI differently. Adjustments for straight-line rent, below-market leases, management fee normalizations, and capital reserves can swing DSCR by 10-15%. You need to understand how the calculation is done, not just the number.

3. Loan-to-value (LTV)

LTV caps vary by property type and quality:

Property Type	Maximum LTV
Multifamily	75%
Industrial	70-75%
Retail (grocery)	70%
Retail (mall)	65%
Office (Class A)	65-70%
Office (Class B/C)	60-65% or excluded
Lodging	65-70%

Appraisal methodology matters: Going concern value assumes the property continues operating with current tenants. Dark value assumes the building is vacant. For single-tenant properties with near-term lease expiry, investors may look at dark value, which can be 20-40% below going concern.

Refresh requirements: If market conditions change significantly between origination and securitization, the rating agencies may require an updated appraisal. This can create execution risk if values have declined.

4. Sponsor quality

CMBS loans are non-recourse to the sponsor, but sponsors still matter for two reasons: they control property operations, and they’re on the hook for carve-out liabilities.

Net worth and liquidity requirements:

• Typical net worth requirement: 100% of loan amount
• Typical liquidity requirement: 10% of loan amount (cash or unencumbered liquid assets)
• Purpose: Ensures sponsor can fund capital calls, pay carve-out liabilities if triggered

Experience requirements:

• Track record in property type and market
• Demonstrated ability to manage similar assets
• No significant prior defaults or foreclosures

Carve-out guarantees (bad boy guarantees): Non-recourse has exceptions. Fraud, intentional misrepresentation, bankruptcy filing, environmental liability, and certain other “bad acts” trigger full or partial recourse. The sponsor guaranty backs these carve-outs.

5. Lease structure and rollover

The rent roll is the asset. Understanding tenant risk is critical.

Key metrics:

• WALT (Weighted Average Lease Term): Longer is better. A 7-year WALT means on average you have 7 years before tenants can leave.
• Near-term rollover: What percentage of rent expires in years 1-2? More than 30% is a concentration risk.
• Major tenant concentration: Single tenant above 20% of base rent is a flag. What happens if they leave?

Lease quality factors:

• Tenant credit rating (investment-grade vs. sub-investment-grade)
• Below-market vs. above-market rents (mark-to-market risk)
• Renewal probability (location-specific, tenant-specific)
• TI/LC obligations on rollover (tenant improvement and leasing commission costs)

Note: A property with 95% occupancy but 40% rollover in year 2 from below-market leases is riskier than a property with 85% occupancy and a 7-year WALT. Occupancy snapshots don’t tell the whole story.

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Typical structures used

Conduit CMBS

The conduit process aggregates loans from multiple originators into diversified pools.

How it works:

1. Origination: Banks and specialty originators make loans to borrowers. Loans are underwritten to securitization standards from day one.
2. Aggregation: Originators accumulate loans for 2-4 months until reaching target pool size ($800M-$1.5B typical).
3. B-piece marketing: Before the securitization prices, the B-piece (first-loss position, typically BBB- through unrated) is sold to a dedicated buyer who conducts loan-level diligence.
4. Loan kicks: The B-piece buyer can reject (“kick”) loans that don’t meet their standards. Kicked loans go back to the originator.
5. Rating agency process: S&P, Moody’s, Fitch, KBRA, and/or DBRS rate the proposed structure.
6. Marketing and pricing: Investment-grade tranches are marketed to insurance companies, banks, and asset managers. Pricing is set via bookbuilding.
7. Settlement: Typically 2-4 weeks after pricing. Loans transfer to the trust; bonds are issued to investors.

Loan contribution economics:

Metric	Typical Range
Maximum LTV	65-75%
Coupon	5.5-7.5% (varies by rate environment)
Origination fee	0.5-1.0%
Contribution spread	Par or slight premium/discount
B-piece buyer cut	3-5% of loan balance (cost to originator)

B-piece buyer role:

The B-piece buyer is the gatekeeper of loan quality. They review every loan in detail, including site visits on larger properties. They can kick any loan for any reason. Lenders compete for B-piece buyer approval because getting kicked means carrying the loan longer (negative carry) and potentially selling at a discount.

The B-piece buyer also typically controls special servicer appointment. When loans default, the B-piece buyer directs workout strategy through their affiliated special servicer.

Major B-piece buyers: Rialto Capital, LNR Partners, Fortress Investment Group, Cerberus Capital, Torchlight Investors, Benefit Street Partners.

SASB (single-asset single-borrower)

SASB execution is for your best collateral: trophy buildings, institutional sponsors, stabilized cash flows.

When SASB makes sense:

• Loan size $200M+ (smaller deals have high fixed costs relative to proceeds)
• Property is Class A or irreplaceable
• Sponsor is institutional with track record
• Cash flows are stable and predictable
• You want custom structure (tranching, prepayment, etc.)

Structure:

• Single loan, typically 5-10 tranches ranging from AAA to unrated
• Can be fixed or floating rate
• Interest-only structures common for lower leverage
• Custom call protection negotiated per deal

Execution advantages:

• No B-piece buyer kick risk (you know your loan will execute)
• Custom tranching to optimize investor demand
• Pricing typically inside conduit for quality assets
• Sponsor relationship and control maintained

SASB pricing (2024):

Tranche	Spread (Swaps + or SOFR +)
AAA	115-150 bps
AA	150-200 bps
A	200-275 bps
BBB	300-425 bps
Sub-IG	500-800 bps

Illustrative pricing. See pricing disclaimer.

Premium assets (trophy office, prime multifamily) price at the tight end. Secondary market assets or higher leverage trades at the wide end.

Large loan / floating rate

Large loan fills the gap between conduit (stabilized, fixed-rate) and CRE CLO (transitional, floating-rate).

Characteristics:

• Loan size: $50M-$300M
• Rate: Floating (SOFR + spread)
• Term: 3-5 years with extension options
• Property status: Near-stabilized or light transitional
• Structure: Standalone SASB-style or small pools (5-15 loans)

When large loan floating works:

• Sponsor wants floating-rate exposure (plans to prepay)
• Property has minor transitional elements (85%+ occupied but not fully stabilized)
• Borrower wants shorter initial term with flexibility
• Rate environment favors floating over fixed

When CMBS vs. CRE CLO vs. warehouse

Factor	Conduit CMBS	SASB	CRE CLO	Warehouse
Property status	Stabilized (85%+)	Stabilized, trophy	Transitional	Either
Loan size	$5M-$150M	$200M+	$10M-$150M	Any
Rate type	Fixed	Either	Floating	Either
Term	10 years	5-10 years	2-5 years	Variable
Execution timeline	60-90 days	3-6 months	3-6 months	4-8 weeks
Minimum scale	N/A (contribute to pool)	Single loan	$300M+ portfolio	$50M+
Flexibility	Low	Medium	Medium	High
Best for	Standard stabilized CRE	Trophy assets	Transitional portfolios	Pipeline building

Decision tree for CRE originators:

1. Is the property stabilized (85%+ occupancy, stable NOI)? If yes, consider CMBS conduit or SASB.
2. Is the property transitional with business plan execution risk? If yes, CRE CLO is more appropriate.
3. Is the loan $200M+ on a trophy asset? SASB is likely best execution.
4. Are you building pipeline and need flexibility? Start with warehouse; term out later via CMBS or CRE CLO.

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Asset-class-specific structural features

Defeasance and prepayment

CMBS loans have significant prepayment protection to protect investors from early payoff.

Defeasance: The borrower substitutes the loan collateral (the property) with government securities that replicate the remaining cash flows. The property is released; the trust continues to receive payments. This is expensive: the borrower buys a portfolio of Treasuries sufficient to match all remaining payments.

Defeasance cost example: A $50M loan at 5% with 5 years remaining might cost $3-6M to defease, depending on the rate environment. When rates have risen since origination, defeasance is cheaper. When rates have fallen, it’s more expensive.

Yield maintenance: An alternative prepayment penalty calculated as the present value of the rate differential between the loan rate and a Treasury benchmark over the remaining term. Formula varies by deal.

Lockout periods: Typically the first 2 years of a 10-year loan are locked out from any prepayment. No defeasance, no yield maintenance, no prepay.

Open periods: The final 3-6 months are typically open for prepayment at par. This aligns with expected refinancing at maturity.

Practical impact: If you’re a borrower, assume you’re locked in for 10 years unless you’re willing to pay significant penalties. If you’re selling the property, the buyer typically assumes the loan rather than defeasing.

Servicing structure

CMBS servicing is split between master servicer and special servicer.

Master servicer:

• Handles performing loans
• Collects payments, processes distributions
• Monitors covenant compliance
• Reports to trustees and investors
• Examples: Wells Fargo, KeyBank, Midland Loan Services

Special servicer:

• Takes over when loans default or become imminent default
• Controls workout strategy: modification, extension, foreclosure, deed-in-lieu
• Compensation structure incentivizes resolution (workout fees, liquidation fees)
• B-piece buyer typically controls special servicer appointment
• Examples: LNR Partners, Midland, Rialto, CWCapital

Transfer triggers: A loan transfers to special servicing when it’s 60+ days delinquent, when borrower requests modification, when the loan is deemed non-performing, or when other significant events occur (sponsor bankruptcy, material adverse change).

Servicer advancing: The master servicer advances principal and interest to investors even when the borrower isn’t paying, provided the servicer believes recovery is likely. This keeps bond investors whole during workout. Advancing typically continues until the servicer determines the loan won’t recover.

Tranching and credit enhancement

CMBS uses senior/subordinate structures to create rated tranches.

Typical capital structure (conduit):

Tranche	Size	Rating	Enhancement
A-1	25%	AAA	30%
A-2	25%	AAA	30%
A-S	10%	AAA	20%
B	5%	AA	15%
C	5%	A	10%
D	5%	BBB	5%
E	3%	BB	2%
F/G	2%	B/NR	0%

Enhancement = cumulative subordination below the tranche. The AAA tranches have 20-30% of subordination below them, meaning they’re protected until losses exceed 20-30% of the pool.

Interest-only (IO) classes: Stripped from the excess interest on the loans. IO holders receive the difference between the weighted average coupon on the loans and the weighted average bond coupon. IO is highly sensitive to prepayment and loss timing.

Waterfall mechanics: Principal payments flow sequentially (A-1 first, then A-2, etc.). Interest payments are made pro-rata. In loss scenarios, the most junior tranches absorb losses first.

Loan-level provisions

Lockbox and cash management:

• Hard lockbox: All tenant payments go directly to a lender-controlled account. The lender releases funds to the borrower monthly for expenses, retaining reserves and debt service. Standard for larger loans.
• Soft lockbox: Funds flow through borrower accounts but switch to hard lockbox if certain triggers are hit (DSCR decline, delinquency, etc.). Common for smaller loans or lower-leverage deals.
• In-place cash management: Funds flow to a lockbox with excess cash retained by the lender. Typically triggered post-default.

Reserves:

Reserve Type	Purpose	Typical Sizing
TI/LC (Tenant Improvement / Leasing Commission)	Fund re-leasing costs	$1-3/SF/year for office
CapEx	Fund capital repairs	$0.20-0.50/SF/year
Ground lease	Prepay ground rent if applicable	12 months
Debt service	Cushion for payment timing	1-3 months
Rollover	Fund specific upcoming lease expiries	Deal-specific

Property release provisions: Multi-property loans may allow release of individual properties upon paydown (typically 115-125% of allocated loan amount for the released property).

Assumption and transfer: CMBS loans are assumable (new buyer takes over the loan) subject to lender approval and an assumption fee (typically 0.25-1.0%). This is a feature, not a bug: it allows property sales without defeasance.

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Rating agency treatment

S&P approach

Key assumptions:

• LTV stress: Haircuts of 15-35% applied to appraised value, varying by property type
• DSCR stress: Net cash flow reductions of 10-20%
• Cap rate stress: 25-100 bps added to in-place cap rates
• Vacancy assumption: Higher vacancy assumed even for fully leased properties

Property type adjustments: S&P applies property type-specific haircuts. Office faces harsher treatment than multifamily. Class B/C properties face harsher treatment than Class A.

Subordination sizing: S&P sizes subordination to achieve target rating stress levels. AAA must survive a “AAA stress scenario” that typically implies 20-30% property value decline and elevated defaults.

Moody’s approach

Key methodology:

• Property quality score: 1-5 scale based on location, construction, tenancy, management
• Loan quality assessment: Structural features that enhance or detract from credit (reserves, lockbox, sponsorship)
• Herfindahl score: Pool concentration measure; more diversified pools get better treatment

LTV and DSCR adjustments: Moody’s adjusts underwritten values using their own cap rates and NOI assumptions, often resulting in “Moody’s LTV” being higher than stated LTV.

Loss severity assumptions: Property type-specific, ranging from 25-30% for multifamily to 40-50% for office.

Fitch approach

Key methodology:

• Sustainable net cash flow: Fitch calculates its own view of sustainable NOI, often lower than underwritten
• Cap rate stress: Fitch applies stressed cap rates by property type and market tier
• Rollover stress: Explicit modeling of lease rollover and re-leasing costs

Fitch is known for conservative treatment of office and retail, often requiring higher enhancement levels than other agencies for properties with near-term rollover.

KBRA and DBRS

KBRA: Active in CMBS with a growing market share. Generally seen as constructive on collateral quality and may offer more favorable treatment for certain property types. Competitive on timing and fees.

DBRS: Strong in Canadian CMBS and expanding U.S. presence. Known for detailed property-level analysis. Competitive alternative to the Big Three.

Dual rating vs. single: Most conduit deals carry two ratings (typically S&P plus Moody’s or Fitch). SASB deals sometimes use single ratings. Insurance company buyers often require at least two ratings. Using KBRA or DBRS alongside a major agency can provide execution flexibility.

Typical credit enhancement levels

Rating	Conduit	SASB (Trophy)	SASB (Standard)
AAA	25-30%	18-22%	22-27%
AA	18-23%	13-17%	16-21%
A	12-17%	8-12%	11-15%
BBB	6-10%	4-7%	5-9%
BB	2-5%	1-3%	2-4%

Enhancement levels have drifted higher since 2020, reflecting increased conservatism around office, lease rollover, and rate stress.

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Diligence focus areas

For originators contributing to conduit

You’re going to face B-piece buyer diligence. Here’s what they’ll scrutinize:

Property-level diligence:

• Physical inspection (typically for loans >$10M)
• Environmental Phase I (required) and Phase II (if triggered)
• Appraisal review against comps
• Lease audit (verify top tenant leases match representations)
• Operating statement analysis (3 years historical, trailing 12-month)

Sponsor diligence:

• Net worth and liquidity verification
• Background check (litigation, bankruptcy history)
• Track record review (other properties, other CMBS loans)

Common reasons loans get kicked:

Issue	Frequency	Mitigation
Appraisal above market	High	Order defensible appraisal; use recognized appraiser
Environmental concerns	Medium	Address known issues; budget for remediation
Lease quality (below-market, short-term)	Medium	Document renewal probability; adjust underwriting
Sponsor concerns	Low	Verify financial representations; address history
Property condition	Medium	Complete deferred maintenance before contribution

Timeline:

Phase	Duration
Loan origination and rate lock	30-60 days
Pool formation and B-piece marketing	2-4 weeks
B-piece diligence and kicks	2-3 weeks
Rating agency process	3-4 weeks
Marketing and pricing	1-2 weeks
Settlement	2-4 weeks
Total (origination to settlement)	10-16 weeks

For capital providers evaluating CMBS investment

Loan tape analysis:

Required fields: Loan ID, property name, property type, city, state, MSA, loan amount, LTV, DSCR, coupon, maturity, occupancy, WALT, major tenants, sponsor name.

Stratification tables to run:

• LTV distribution (<60%, 60-65%, 65-70%, 70-75%, 75%+)
• DSCR distribution (<1.2x, 1.2-1.3x, 1.3-1.4x, 1.4x+)
• Property type breakdown
• Geographic breakdown (state, top MSAs)
• Lease rollover schedule (years 1-2, 3-5, 6-10)
• Sponsor concentration

Property-level review:

For larger investments or concentrated pools, sample property reviews are standard:

• Physical inspection reports
• Appraisal review and comp analysis
• Lease audit verification
• Operating statement trending

Servicer evaluation:

• Master servicer track record (advancing history, reporting quality)
• Special servicer workout performance (recovery rates, timeline)
• Special servicer control (who appointed them, potential conflicts)

Historical performance analysis:

• Originator track record by property type and vintage
• Compare to benchmark indices (CMBX, Trepp CMBS Performance Index)
• Adjust for pool composition differences

Key data fields for tape analysis

Field	Why It Matters
LTV	Maximum leverage indicator
DSCR	Cash flow coverage
Occupancy	Current utilization
WALT	Lease stability
Coupon	Interest rate exposure
Maturity	Refinance timing
Property type	Sector risk
Market tier	Location risk
Sponsor	Operational risk

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Active participants

Conduit originators / underwriters

Major banks:

• JPMorgan Chase
• Wells Fargo
• Goldman Sachs
• Morgan Stanley
• Bank of America
• Citigroup
• Deutsche Bank
• Barclays

Specialty originators:

• Ladder Capital
• Starwood Property Trust
• Arbor Realty Trust
• Ready Capital
• UBS

B-piece buyers

• Rialto Capital Advisors
• LNR Partners
• Fortress Investment Group
• Cerberus Capital Management
• Torchlight Investors
• Benefit Street Partners
• KKR
• Brookfield Asset Management

Special servicers

• LNR Partners (Starwood)
• Midland Loan Services (PNC)
• KeyBank National Association
• Wells Fargo
• CWCapital Asset Management
• Greystone Servicing

Trustees

• Wells Fargo Bank, N.A.
• U.S. Bank National Association
• Wilmington Trust
• Deutsche Bank Trust Company Americas

Legal counsel

Issuer/originator counsel:

• Cadwalader, Wickersham & Taft
• Dechert
• Sidley Austin
• Mayer Brown

Underwriter counsel:

• Orrick, Herrington & Sutcliffe
• Latham & Watkins
• Skadden, Arps, Slate, Meagher & Flom

Rating agencies

• S&P Global Ratings
• Moody’s Investors Service
• Fitch Ratings
• KBRA (Kroll Bond Rating Agency)
• DBRS Morningstar

Institutional investors

Insurance companies (primary AAA-A buyers):

• MetLife
• Prudential
• Principal
• TIAA
• New York Life
• Lincoln Financial

Banks (regulatory capital-sensitive):

• Regional and community banks (for CRA credit)
• Large banks (for trading inventory)

Asset managers and credit funds:

• BlackRock
• PIMCO
• Invesco
• Marathon Asset Management
• Angelo Gordon

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Red flags and off-market characteristics

Performance red flags

• Office concentration above 35%: Especially problematic for 2019 and earlier vintages. Office is the distressed sector.
• Near-term rollover above 30%: More than 30% of rent expiring in years 1-2 creates execution risk and potential value decline.
• DSCR below 1.15x: Properties that barely cover debt service have no cushion for NOI decline.
• Sponsor with prior CMBS defaults: Check the sponsor’s track record in other securitizations.
• Special servicing rate above 10%: High special servicing indicates broad pool distress.

Structural red flags

• Limited carve-outs: Non-recourse is standard, but weak carve-out language allows sponsor bad behavior without consequence.
• Insufficient TI/LC reserves: Office and retail properties need meaningful reserves for re-leasing costs.
• Soft lockbox without triggers: Cash management should tighten automatically when performance deteriorates.
• Single-tenant properties with short remaining term: What’s the plan when the tenant leaves?
• Ground lease with unfavorable terms: Subordinate ground lease positions or above-market rent resets can impair value.

Market red flags

• Negative absorption in submarket: If the property type/market is losing tenants, new leasing will be difficult.
• Cap rate expansion: Rising cap rates mean falling values and refinance challenges.
• Declining NOI trends: Properties with shrinking cash flows are deteriorating.
• Sponsor liquidity stress: If the sponsor is struggling elsewhere, they may not fund capital calls here.

Process red flags for originators

• B-piece buyer concentration: Fewer B-piece bidders means weaker pricing and higher kick rates. A healthy market has 3-5 active bidders per pool.
• Rating agency methodology changes: Mid-process changes can disrupt deal economics. Monitor agency publications.
• Wide bid-ask on securities: If the secondary market is illiquid, new issue execution will suffer.
• Conduit shelf constraints: Some originators have internal limits on balance sheet exposure. If they’re full, your loan may sit.

Note: Before committing to a conduit execution path, verify the originator’s current capacity and the B-piece market appetite. Call the major B-piece desks and gauge interest. A soft market can leave you holding a loan longer than planned.

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Process timeline

Conduit loan contribution

Phase	Typical Duration	Key Activities
Term sheet and commitment	2-4 weeks	Negotiate terms, sign commitment
Closing and funding	4-6 weeks	Documentation, closing conditions
Hold period	30-90 days	Accumulate for pool formation
B-piece marketing	2 weeks	Package presentation to B-piece buyers
B-piece diligence	2-3 weeks	Loan-level review, kicks, negotiations
Rating agency process	3-4 weeks	Submission, review, final ratings
Marketing and pricing	1-2 weeks	Roadshow, bookbuilding, pricing
Settlement	2-4 weeks	Transfer, funding, legal close

Total origination to securitization settlement: 3-5 months

SASB execution

Phase	Typical Duration	Key Activities
Mandate competition	2-4 weeks	RFP, bank meetings, mandate award
Due diligence and structuring	4-6 weeks	Property diligence, tranche sizing
Rating agency engagement	4-6 weeks	Application, review, indicative ratings
Documentation	4-6 weeks	Legal drafting, negotiation
Marketing	2-3 weeks	Investor outreach, roadshow
Pricing and closing	2-4 weeks	Bookbuilding, pricing, settlement

Total mandate to closing: 4-6 months

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Market benchmarks: spreads and pricing

Conduit spreads (as of 2024)

Rating	Spread (Swaps +)	Enhancement
AAA (A-1, A-2)	140-165 bps	27-30%
AAA (A-S)	170-195 bps	20-23%
AA	205-235 bps	15-18%
A	265-310 bps	10-13%
BBB	365-450 bps	5-8%
BB	550-750 bps	2-4%

Illustrative pricing. See pricing disclaimer.

Historical comparison

Period	AAA Spread	BBB Spread
2021 (tights)	65-80 bps	180-220 bps
2019 (pre-COVID)	85-100 bps	250-300 bps
2024 (current)	140-165 bps	365-450 bps

Illustrative pricing. See pricing disclaimer.

Spreads have widened materially from 2021 lows, reflecting rate volatility, office concerns, and reduced investor appetite for CRE risk.

What drives your execution

Pool composition factors:

Factor	Impact
Office concentration	-10 to -50 bps for <20%; penalty above
Multifamily/industrial weight	+10 to +20 bps for heavy weighting
Geographic diversity	Premium for broad distribution
Sponsor quality	Marginal impact
Average LTV	Tighter is better
Average DSCR	Higher is better

Execution timing:

• New issue calendar matters. Heavy issuance weeks see wider spreads.
• Quarter-end positioning can affect demand.
• Major macro events (Fed meetings, economic data) create volatility windows.