CMBS Market Strength for July 2024 Remains Robust
Steve Baumgartner, Aug 2024 - 4 min read 
Image source: S&P Global
Non-Agency CMBS Market Overview
In July 2024 U.S CMBS primary transaction volumes continued to maintain the momentum from previous months with an additional $11.5 billion in non-agency paper pricing during the month. The market continued to function well with supply being absorbed despite some modest spread widening as investor appetite remains strong.
July’s deals consisted of 4 conduit transactions and 10 SASB deals continuing the 2024 trend of the latter dominating deal flow and finding strong demand for high-quality sponsors.
Source: Commercial Mortgage Alert, Morningstar Credit
Year-to-date issuance stood at $57.4 billion at the end of July which is roughly $36 billion more than at the same time last year and already far surpassing total 2023 issuance of about $40 billion.
While the Fed did not make a rate cut during July their comments have the market feeling strongly that there is an impending cut coming with a high likelihood of that occurring as soon as the September meeting which is certainly helping to buoy the primary markets.
An interesting development of late is the resurgence of activity in the Single-Family rental market. While issuance of stand-alone rental properties had slowed significantly from 2022 through Q1 of this year the last 3 months saw 7 deals totaling over $3.5 billion coming to market which is more than 2023’s total volume. A large portion of this volume came from the resecuritization of earlier papers which shows that investors still believe in the future of this product on the right basis.
Summary
While August is typically a slower month as market participants tend to take advantage of the dog days of summer to enjoy some downtime, the forward-looking pipeline is robust and there is a good deal of optimism about how the rest of 2024 will shake out. The overall belief seems to be that while there are cyclical and property-type specific issues that will take time to move through the system the opportunities in the market today represent good risk-adjusted returns and it is time to invest.
