The Pulse of the Debt Markets — with Orest Mandzy, CRE Direct
Capital market confidence is cautiously returning, but undercurrents of risk remain. In my wide-ranging conversation with Orest Mandzy, Managing Editor of Commercial Real Estate Direct, we discuss what recent CMBS issuance tells us about liquidity, why delinquency headlines may be misleading, and how sponsors can position themselves amid policy shocks and structural market shifts.
Liquidity Is Back — But Driven by Giants
CMBS issuance jumped 110% in Q1 2025, totaling nearly $37 billion. While that headline suggests a resurgence of confidence, Orest clarifies that most of that growth comes from SASB (Single Asset, Single Borrower) deals – large trophy assets being financed and securitized by institutional players. These are not indicative of broad-based confidence in middle-market real estate.
To gauge true liquidity, he says, focus on conduit deals – pools of smaller $10M–$25M loans originated by banks and institutional lenders and repackaged into +/- $1B bond offerings. Robust conduit activity reflects a healthier market for everyday sponsors.
“If you’ve got solid conduit issuance,” says Orest, “that tells you there’s liquidity in the market – not just for trophy deals.”
Rising Delinquencies: Real or a Red Herring?
Recent headlines warned that CMBS delinquency rates exceeded 7%, the highest since 2021. But Orest has looked deeper into the data and sees it is far from being systemic. A handful of large, troubled multifamily loans, such as the $1.5B Park Merced in San Francisco and a floating-rate New York portfolio, together make up nearly 60% of those delinquencies.
The common thread? These loans were made pre-COVID or in 2021 with floating-rate debt and now can’t refinance in today’s rate environment. But they’re outliers, not bellwethers.
Fannie and Freddie multifamily delinquencies remain under 1%, and even in CMBS, the average LTVs have been conservative.
“Multifamily looks worse than it is. Strip out the outliers and the market’s still performing.”
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