A commercial mortgage-backed security (CMBS) is classified as a fixed-income debt security, meaning it gives returns of fixed interest payments and repayments of the original principal when it reaches maturity.
When a bank bundles up a group of loans on its books and sells them as bonds, a CMBS is created. Each CMBS gets organized from the highest-rated, lowest-risk (“Senior”) to highest-risk, lowest-rated (“Junior).
Commercial Mortgage-Backed Securities equip institutional investors with a higher-yielding alternative to government bonds and make it easier for commercial borrowers to get funding. They also offer investors an alternative to real estate investment trusts (REITs): CMBS offer a guaranteed return rate.
CMBS usually possess much lower prepayment risk (where decreasing interest rates cause borrowers to refinance and pay their old mortgages back faster) than residential mortgage-backed securities.
Mizar experts are experienced in all CMBS financing and will be able to help you secure financing through this option if it best meets your needs and you meet the qualifications.