Cadwalader attorneys highlighted considerations and trends within European commercial mortgage-backed securities ("CMBS") and U.S. CMBS and commercial real estate collateralized loan obligations ("CRE CLOs").

As described more fully in a Cadwalader memorandum and accompanying comparison chart, the activity levels in 2019 for these products continue at a strong pace, reflecting the global demand for commercial mortgage-backed securities. In 2018 alone:

  • U.S. CMBS issuance equaled approximately $171 billion;
  • European CMBS issuance equaled approximately €4 billion, representing a significant increase for the European market as compared to any other period since the financial crisis; and
  • U.S. CRE CLO issuance equaled approximately $14.5 billion.

Cadwalader attorneys noted that:

  • European CMBS is secured by properties in various jurisdictions and, therefore, the legal frameworks and requirements, in addition to the associated risks, may vary from transaction to transaction;
  • the size and consistency of the U.S. market, and the presence of significant loan sponsors (which often have growing European operations), mean that developments in U.S. CMBS will have a strong influence on the structural features that are incorporated into European CMBS; and
  • the growth of commercial mortgage direct lending and loan-on-loan finance in Europe (which will require additional sources of take-out financings) are strong indicators of the development of a CRE CLO market in Europe.