FBF #509: Understanding and Successfully Navigating the World of Cmbs Loans – With Ann Hambly

Today’s Flash Back Friday Episode is from Episode #80, which originally aired on July 27, 2015.

This week we’re going to be speaking to industry expert, Ann Hambly, who is the founder and CEO of 1st Service Solutions, a national service provider and consultancy firm to the commercial real estate industry that provides advice and solutions for anything ranging from the addition or removal of collateral on an existing CMBS loan to the most complex loan restructure for all loan types.

And for those of you who might not know what a CMBS loan is here’s a quick definition. A CMBS loan, also known as a commercial mortgage-backed security, is a type of fixed-income security that is collateralized by commercial real estate loans. Typically these loans are for commercial properties such as office buildings, hotels, malls, apartment buildings, factories, etc., but not single-family homes. CMBS make up about 2% of the total U.S. fixed income market.

In essence, CMBS are created when a bank takes a group of loans on its books, bundles them together, and sells them in securitized form as a series of bonds. Each series will typically be organized in “tranches” from the senior – or highest-rated, lowest-risk issue – to the highest-risk, lowest-rated issue. The senior issue is first in line to receive principal and interest payments, while the most junior issues will be the first to take a loss if a borrower defaults. Investors choose which issue they invest in based on their desired yield and capacity for risk.

Today we’re going to speak about how Ann’s company can help investors navigate the tricky and often times complex CMBS loan process as well as discuss some of the opportunities that might exist from maturing CMBS loans that were created back during the 2005-2008 real estate run-up and how her company can help you capitalize on some of these “soon-to-be” distressed opportunities.

Here are a few things you’ll learn in our interview with Ann today:

  • What a CMBS loan is
  • What role 1st service solutions play in the CMBS market and the services they provide to real estate investors
  • How Ann was able to grow her company during one of the worst real estate markets in history
  • The opportunity that exists with the $100+ billion of maturing CMBS loans and how you can go about uncovering those that might be distressed
  • What defeasance means when it comes to CMBS loans
  • The benefits of a CMBS loan and how they typically offer much more attractive terms than conventional commercial loans which can include longer amortization, lower rates, non-recourse vs. recourse bank loans, and 10-year balloons instead of 5 or 7 that you have with commercial loans.
  • The number one marketing strategy that she feels is responsible for the great success her company has experienced and how you can apply this same strategy to your real estate business.
  • How to get a free 1-hour phone consultation with Ann.
  • And much more

Recommended Resources: 

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  • Looking for the ultimate guide to passive investing? Grab a copy of my latest book, The Cash Flow Investor at KevinBupp.com
  • Tap into a wealth of free information on Commercial Real Estate Investing by listening to past podcast episodes at KevinBupp.com/Podcast.
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