CMBS.com Pro comes from the same team that revolutionized the commercial real estate lending industry with Backshop enterprise software. Backshop enables major players to run their entire CRE businesses in a holistic, flexible and secure Web-based environment by integrating direct cap and DCF lease-by-lease underwriting tools into a pipeline management and report writing application.

CMBS.com Pro is powered by Backshop and offers three packages to serve all commercial real estate players. Services range from $20 per month to $80 per month and deliver powerful capabilities including:

• Never again rely on spreadsheets and other desktop software.
• Access CMBS data at never-before-seen prices.
• Manage your deal pipeline and maximize productivity.
• Value collateral using direct capitalization and discounted cash flow methods.
• Model debt and equity returns.
• Compare your deal to properties that have CMBS debt.
• Quickly write and publish reports.
• Store and manage documents and contacts easily and securely.
• Standardize your deals in the industry-accepted format.
• Serve up to 10 users at any of your locations.

Bringing power to everyone
“We are excited to bring CMBS.com Pro to the commercial real estate community at large,” said CMBS.com and Backshop CEO Jim Flaherty. “The existing deal modeling tools and data services available to the small companies and individual users are based on old technology and priced to support old business models. Having solved these same problems for enterprise clients for years, we are proud to offer commercial real estate players of all types and sizes the same power used by the big guys at never-before-seen pricing.”

Flaherty says a CMBS.com Pro account is perfect for a wide range of CRE players:

• CRE professionals who need a pipeline/document system or work with any types of deals, debt or equity
• Owners, brokers and appraisers who need to model and present valuation scenarios or want info on CMBS comps
• Existing CMBS borrowers who need to manage reporting or want loan comps for their CMBS debt
• Anyone who currently uses Excel or Argus™ to model deals. CMBS.com delivers more power, costs less and eliminates the hassles of spreadsheets and desktop software.

To learn more about a CMBS.com Pro account, visit http://www.CMBS.com

The launch marks a milestone for the company and its mission to provide open, affordable and accessible underwriting tools and data to CRE professionals. Personally, I am proud to be offering a path for users to experience the benefits of technology and standardization at a reasonable price. Commercial real estate in general has been slow to adopt software and standards, and one of the reasons is they have been way too expensive. We plan to provide a service the way the Internet is supposed to — just about free.

Well, not exactly free. It does cost money to provide these services but, with monthly user fees starting at $20 per month and topping out at $80 per month (with 12.5% discounts if you pay in advance), I hope you find there is great value in our offering. Despite the fact that the blog has been quiet the last few months, you will see when you sign up that we have been working hard on getting this ready. We hope you like it — and we are excited to continue improving it.

We are off to exhibit at the International Council of Shopping Centers conference in Las Vegas and the MBA Commercial/Multifamily Servicing and Technology Conference in Dallas as we begin the marketing and PR for the launch. I will check in from the shows.

Attention existing CMBS Leads customers: The CMBS.com service has been significantly upgraded and now costs even less. We will provide a free CMBS.com Pro Platinum account – which includes national Leads data — for the rest of the term of your agreement. Account information will be emailed to you. Log in at http://leads.cmbs.com.

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

That makes CMBS more attractive vs. other loan products and supports positive momentum for a successful year. The market is on pace to reach $35 billion — and there is more and more talk of doing substantially better than that.

MBA CREF Conference
Market optimism was evident at the MBA CREF conference in Atlanta in early February. Attendance was still only about half of pre-crash peak levels, but it was up from last year.

All of the originators hosted nice parties, and the professional mood was way better than in Miami. The networking was good, but there were grumblings about the location, and folks were looking forward to returning to San Diego next year. I personally liked downtown Atlanta more than I thought I would.

MISMO Update
We had the first MISMO Governance call since the MBA took over management of MISMO from MERS this week. Three seats on the Commercial MISMO Board of Governance were open, and an election took place in January. Representatives of Midland Loan Services and North Shore Systems were elected to two-year terms on Governance. The third seat (for a secondary market participant) remains unfilled as no one ran for that seat.

MBA staff recommended MISMO focus on advocacy and education as our immediate strategy. Keep MISMO in the conversation with the regulators in Washington as the new REG AB Rules get set. They did not think we should focus on making new standards until there is a regulatory mandate. Nothing was finalized, but if MISMO follows this path there will be very little to actually do until the new regulations are released. This release keeps slipping and is now expected in the third quarter of 2012.

This just crossed my desk. Pretty funny.

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

Going into 2012, there is very little momentum. Originations are starting at a standstill as opposed to a running start. However, it was still a fun few days, and the return to Miami Beach from Washington, DC was a welcomed change.

Let’s take a moment to appreciate this view — and the weather. This year’s sun was way better than last year’s snow.

Headwinds

More than one panel talked about the headwinds facing the industry in 2012. In addition to things we cannot control (like the world markets and interest rates), one of the most interesting headwinds our industry is facing is a wave of loan maturities from 2007.

Without a doubt, 2007 was the peak of the market with lax underwriting and excessive leverage. There are about $20 billion worth of loans originated in 2007 that mature in 2012 and the losses on these loans might reach 50 percent. The headlines that these defaults make will not help investor sentiment.

No one at the conference thought the underlying economy will grow much in 2012, nor did they believe that the jobs picture will improve much. This will lead stable (or only slightly improved) fundamentals that will be insufficient to generate much positive momentum.

Recovery Year

While the market is greatly improved from 2008 and 2009, and lenders are willing to lend for the right deals, most people believe 2012 will be a lot like 2011 in terms of volume (about $32 billion) and mark — by historical levels another modest origination year.

Some folks were predicting volumes could reach $50 billion while others thought we could end up as low as $20 billion. Personally, I think we will end 2012 with $35 billion of U.S. CMBS originations.

Regulatory Update

There were no big updates on the regulatory front.

The CREFC folks said to expect a resolution on risk retention in the first quarter of 2012 and a resolution on Reg AB changes by the end of the second quarter.

But those dates could easily change — and I’ll believe it when I see it.

I’m attending the MBA CREF conference in Atlanta in early February. I’ll check in then with a MISMO / MBA update.

Check out my report on the 2011 CREFC conference: Upbeat mood at CREFC conference

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

See all responses : See my response

It’s the rent roll stupid

My two page response focused on CMBS data disclosure and the value of XML.

I repeated my refrain that the in place contractual rent information found on rent rolls is currently missing in CMBS reporting. I reminded the commission that the law per Dodd-Frank says in order to securitize an asset the issuer must disclose enough information for both the investors and rating agencies to value the underlying collateral.

In my opinion, current CMBS reporting and the Commission’s proposed schedule L and LD fall short of providing the data required to comply with this law. If rent rolls are added to both schedule L and LD (and a handful of other capital stack related fields), the required transparency will be achieved.

See my entire response.

CREFC and MBA stay put

Both the CREFC and the MBA submitted responses, but they did not change their positions since their original submissions in August 2010.

The most recent CREFC submission was most disappointing. It still opposes XML based reporting and any additional mandatory disclosures.

The MBA was a bit better, but it basically stated the CREFC IRP is and should be the standard for CMBS reporting. However, the MBA was more positive in its support for XML and did say that, if the regulators require XML reporting, they should use voluntary consensus XML standards (i.e. MISMO). The Board of Governors of C-MISMO were vocal during the drafting process, and it was good to see the MBA’s final letter was supportive of XML and was a break from the CREFC position.

What next

My prediction is the regulators will stand firm on requiring XML, but I have no idea on where they will come out on asset level disclosures. It does seem clear that without their mandate, the industry seems incapable of changing on its own. Stay tuned. …

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

www.cmbs.com

MISMO has always been a wholly owned, not-for-profit subsidiary of the MBA but, back in February 2009 during the depths of the financial crisis, the MBA transferred management of MISMO to MERS as a cost-cutting effort (see MERS takes over management of MISMO from the MBA, Feb. 2009).

MERS has successfully managed MISMO, especially as it relates to adoption in the residential mortgage world. Now the MBA wants management back.

According to the MBA, the decision to take back MISMO management was driven largely by the success of MISMO in the residential business and the belief that MISMO standards will (or at least could) form the foundation of the anticipated new regulatory reporting requirements. Since the MBA has a strong government lobbying group, it felt it could do a better job convincing regulators to adopt MISMO standards, as opposed to having the government create new standards.

David Stevens, CEO of the MBA, stated in the press release (download press release here) that:

“Due to changes in the regulatory environment over the last two years, the benefit of implementing data standards across the real estate finance industry has never been greater. Significant new reporting requirements highlight the need for a common vocabulary and data exchange mechanism. The continued enhancement of data standards and transparency are critical to the return of investor confidence and liquidity in our marketplace. MBA will continue to encourage regulators to adopt MISMO standards for regulatory reporting.”

The move suggests the MBA is betting regulators will demand XML reporting — and they want to strongly influence how this is done. If the MBA really throws its full support behind MISMO adoption, and the regulators embrace those standards, the bet may pay off.

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

www.cmbs.com

Every year on September 11, I join most people in the nation and reflect on the terror attacks of that day. I was in New York Tuesday, Sept. 11, 2011 — and I witnessed the destruction firsthand. I was blessed that the meeting I had scheduled for 8:30 a.m. in Tower One at the Windows on the World restaurant, where no one survived, was changed to a 10:30 a.m. meeting in Suite 2243. Of course, that meeting never happened.

Never forget.

This year, I spent 9/11 at home with my family, and we spent most of the day watching all the remembrance shows. The 10th anniversary coverage was nonstop. I let my two kids (12 and 10) watch as much as they wanted, and they took me up on it.

We shared the day asking some pretty deep questions and talking about the important things in life. The stories that I most related to were the ones where the person survived through random luck.

There was the Boston flight attendant who was left off one of the hijacked planes because of a last minute scheduling mix up. A group of fire fighters was in a tower when it collapsed but survived because the stairwell they were in somehow didn’t get crushed. And countless random people like me who contemplated meetings or trips that would have put them directly in harm’s way and for whatever reason the plans changed.  Why?

One World Trade Center

The new New York skyline.

I traveled to New York on Monday the 12^th and had a chance to check on the construction progress of One World Trade Center. I couldn’t get close to the memorial because reservations are booked months ahead. But, the office building is huge and is already starting to dominate the skyline. It will be nice having the tallest building in the United States back in New York.

Rockin’

Wednesday night the 14^th, Metallica played at Yankee Stadium as part of a heavy metal show featuring the “Big 4” — An all day festival with sets by Slayer, Mega Death and Anthrax. with Metallica headlining the last set.

Sold out Yankee Stadium.

Lars Ulrich (the drummer who was great on Howard Stern this week if you heard it) is a friend from Marin, and he set me up with the whole VIP package (as usual – thanks Lars!).

We watched the show from all sorts of different angles: from Luxury Suite 1, from front row seats in section 29, and from the front of the floor next to the stage. They were all great, but my favorite place was the sound booth. It was set about 150 feet back from the center of the stage in an elevated, tented, fenced off area. They set up some seats behind the technicians where the friends of the band could hang and watch the show. The computers and screens looked like a space ship and it was cool to hear, feel and “see” the music.

As always, an epic show with an unbelievable set list and a crowd full of energy. One of the lessons of  9/11 was you only go around once, and the trip may be shorter than you like, so you better rock!

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

www.cmbs.com

This is a big deal. Most people agree that for the CMBS market to truly recover, we have to issue public bonds — because so many potential investors are limited to only buying publically registered bonds.

The Deutsche-UBS deal issued public bonds for the top 70% of the deal and private 144A bonds for the bottom 30%. While the deal reportedly found good demand for both the public and private bonds, the structure of the deal highlighted the fact asset-level disclosures were different for the public bonds versus the private bonds.

Since the crash and because all deals were 144A, the investors have been allowed to see and review sufficient asset level data to re-underwrite the underlying loans. This data has included appraisals, rent rolls, historical financial information, and issuers’ underwriting models. However, since the investors were typically operating under a confidentiality provision that is typical in private deals, the issuers were not worried about disclosing the information and conducting specific Q&A sessions with potential investors to answer asset-specific questions.

Issuing public bonds carries a much higher liability standard for issuers when it comes to disclosures. Information must be disclosed uniformly to all investors at the same time, and there is no ability for one investor to learn more about the assets than other investors. Also, if any information the issuer supplies to investors in a public deal turns out to be wrong or misleading, even if the information came from sources other than the issuer, the issuer can be held liable.

Since the Deutsche–UBS deal had both public and private bonds, the question came up whether an investor could buy both the public and private bonds. The answer was no. The reason is the investor who bought the 144A private bonds would have had more access to deal information than the public bond buyers. The concern is they could “use” that private 144A information to make a better decision on the public bonds. Since other investors who were buying only public bonds could not see the 144A information, that information advantage is illegal and is effectively insider trading.

Presumably this did not occur on the subject deal, and it is up to the investors and the issuers to police themselves to make sure the rules are followed. However, with this potentially serious conflict relating to disclosures, it seems like the structure used in the Deutsche–UBS should be improved on. Since at least some investors are demanding full disclosure, and we need the investor depth that the public markets can provide, something has to give.

Hopefully, the new Reg AB II rules that the SEC is working on will require the right disclosures for investors of all bonds but also protect the issuers against lawsuits regarding unreasonable disclosure liability. Also, there should be a few more public deals this year, so it will be interesting to see how other issuers address this potential conflict.

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

www.cmbs.com

The SEC initially proposed these changes back in April 2010. The two major trade groups (the MBA and CREFC) spent the summer of 2010 preparing a regulatory response that was submitted on August 2, 2010 (read CMBS.com’s response).

Since that time, the SEC has stayed basically silent on this issue. The only reports I heard were they wanted to wait until after the risk retention rules are finalized to implement the rest of the securitization changes.  In the “re-proposal” the SEC made it clear it was sticking with asset-level disclosures, but they also stated  no final decision has been made regarding the specific data elements that will be disclosed.

Responses to the “re-proposed” rules are due to the SEC by October 4, 2011. Both the MBA and CREFC plan to submit responses. However, since the “re-proposal” does not specifically ask many new questions regarding CMBS, both trade groups are basically just re-submitting what they stated last August.

It looks like the risk retention issues will be finalized this fall, and the SEC wants to be ready to release the remaining securitization changes shortly thereafter. The fact that they have “re-proposed” their rules suggests that we may finally get clarity on the SEC’s vision of CMBS 2.0.

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

www.cmbs.com ]]> http://cmbs2point0.com/reg-ab-ii-movement/feed/ http://cmbs2point0.com/c-mismo-survives-coup-attempt/ http://cmbs2point0.com/c-mismo-survives-coup-attempt/#comments Thu, 28 Jul 2011 04:23:22 +0000 jimflaherty http://cmbs2point0.com/?p=553 The leadership at C-MISMO (which I am a part of) has been trying to decide the next steps to promote standards adoption. Toward that end, we hosted a “MISMO Summit” in May to seek support. At the meeting, it was clear a group of people wanted to put the entire effort into a hibernation mode.

These people argue C-MISMO should be shut down because there is no interest in implementing common, industry-wide standards. Most of the existing industry players (especially mortgage bankers) are satisfied with the status quo. I’ve known they don’t want standardization, but I was surprised when they actually tried to kill it.

Coup Attempt

In late June there were both formal and informal efforts by certain members of the MBA to kill C-MISMO by shutting it down. A proposal letter was drafted and circulated through the MBA that stated “it is not a good use of resources at this time to continue to create new standards.” The letter recommended “the development of new standards by Commercial MISMO be halted.” The effort to kill C-MISMO was pursued all the way to the Board of Directors of the MBA, where it was formally discussed.

Fortunately, the recommendation to hibernate C-MISMO was rejected by MBA leadership. We have been given the green light to keep going and, from what I understand, the firms pushing for the C-MISMO shut-down have backed down.

Origination Standard

When the governance of C-MISMO found out about the proposal to kill our efforts, we initially laughed because we felt like we were being fired from volunteer jobs. But then we started to get annoyed. It is offensive that people would actively oppose open standards. So instead of shutting down shop, we are going on the offensive.

Yesterday, C-MISMO leadership voted to create a new standard we are calling the Origination Standard. This data standard will contain all the information needed to re-underwrite and make a commercial real estate loan. We are purposefully focused on the front end data package needed to make a loan versus the back end investor reporting package. While the goal is big, the existing C-MISMO data schema is complete enough that this should be a manageable effort. We are going to get started in September.

We also agreed to create a GSE MISMO Adoption Task Force, and we are going to pursue a Rating Agency Data Standard.

So much for going into hibernation.

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

www.cmbs.com

www.backshop.com