Cadwalader attorneys reviewed the reemergence of the European commercial mortgage-backed securities ("CMBS") market (the "market") since the last financial crisis. The attorneys compared (i) 2011 to 2015 European CMBS transactions, (ii) 2017 to 2018 European CMBS, and (iii) more recently introduced innovative structures in the market.
As described more fully in a Cadwalader Memorandum, certain events since the last financial crisis significantly impacted the development of the market. In the aftermath of the financial crisis, the introduction of the CMBS 2.0 principles (i.e., to "improv[e] confidence in the European CMBS industry") in 2011 led to the reemergence of the market. In 2015, multiple factors, including the Chinese financial crisis and the possible exit of Greece from the European Union, halted public issuance. Toward the end of 2017 and into 2018, however, favorable pricing allowed the market to reemerge once again.
In addition, the attorneys touched on bond issues backed by real estate, a recent innovative structure that draws upon features from products outside the scope of traditional European CMBS. In one such transaction, the notes were backed by rental payments received from the State of Lower Austria in its capacity as a tenant. The lease related to the parliament building used by the State of Lower Austria, and security was granted in respect of the rental payments (not in respect of the parliament building). The rating of the notes depended on, among other things, the credit strength of the tenant.
This memorandum was authored by Michael Gambro, Stuart Goldstein, David Quirolo, Nick Shiren, Jeremiah Wagner, Robert Cannon, Joo Kim and Sabah Nawaz.
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