The U.S. government shutdown did little if anything to cool the red-hot CMBS market, where issuers priced $2.94 billion of deals in the past week while also marketing nearly $5 billion of fresh offerings.
Amid expectations of additional rate cuts by the Federal Reserve, investor demand remains robust, with several recent deals being well oversubscribed. Still, there are signs that weeks of heavy new issuance may have halted a spread-tightening trend that began in May. The latest conduit deal to price, for instance, saw the spread on the benchmark bonds widen marginally from initial price talk.
“The speed [of issuance] is really picking up,” one investor said. “No one is having trouble getting deals done, but now people have to prioritize what to look at. Candidly, a lot of us have a lot of stuff on our desk.”
Issuers are testing investor appetite for the office sector with two $1 billion-plus single-borrower offerings, each backed by the debt on trophy Manhattan offices.
Deutsche Bank and Wells Fargo are marketing a $1.10 billion deal backed by a floating-rate loan to a Related Cos. partnership on the Deutsche Bank Center, on Columbus Circle in Manhattan (DBC 2025-DBC). A tranche rated AA-/AA(high) by Fitch and Morningstar DBRS was eight times oversubscribed. Initial price talk for that tranche was 165 bp over one-month SOFR. The deal is expected to price next week.
Meanwhile, Citigroup, Barclays, ING, Bank of America and Santander launched marketing for a $1.21 billion deal backed by a floating-rate mortgage to Brookfield on 660 Fifth Avenue in Manhattan (BFLD 2025-660F).
JPMorgan Chase, Deutsche Bank and Wells Fargo already were in the market with a $507 million single-borrower deal backed by a floating-rate mortgage on 11 Times Square in Manhattan (NYC 2025-11X). The borrower is a partnership among PGIM Real Estate, SJP Properties and Norges Bank Investment Management.
In the conduit field, Goldman Sachs, Deutsche, Citi, Bank of Montreal and Barclays are marketing a $1.32 billion deal backed by a pool of five-year loans (BMARK 2025-V18). The initial talk for the longest-duration, super-senior bonds was 83 bp to 84 bp over Treasurys, a bit wider than comparable conduit deals that have priced recently. The lowest investment-grade notes were initially offered at 400 bp. By property type, the highest concentrations of loans are on multifamily (34.7%), office (24.9%), hotel (16.1%), mixed-used (11.4%) and retail (9.3%) properties.
“A deal of this size is a little harder to price. It’s a lot of bonds,” an investor said. Still, some of the tranches were oversubscribed at midweek.
On Oct. 3, a Wells-led group priced a $688.9 million conduit offering backed by 10-year loans (WFCM 2025-C65). The spread on the benchmark class widened 3 bp from initial talk to price at 83 bp over Treasurys. The lowest investment-grade tranche, rated BBB/BBB- by Fitch and KBRA, priced where it was offered at 370 bp.
The two largest property types in the loan pool were retail (42.2%) and office (19.7%). In addition to Wells, the loan contributors were Argentic, JPMorgan, Goldman, Societe Generale and Benefit Street Partners.
In the single-borrower sector, the latest mall securitization crossed the finish line on Oct. 9. Wells, Goldman and JPMorgan priced a $475 million deal, backed by most of a $575 million fixed-rate loan to Taubman Realty and Nuveen on the International Plaza mall near Tampa International Airport (INT 2025-PLAZA). The spread on the AAA bonds tightened 5 bp from initial talk to price at 125 bp over Treasurys. The only other offered class, rated AA, narrowed 10 bp from guidance to price at 155 bp.
Investors said the bonds flew off the shelf due to the low leverage of the collateral mortgage, which has a loan-to-value ratio of 42.7%.
That deal came on the heels of another single-borrower transaction in the retail sector. On Oct. 7, Wells securitized a $300 million fixed-rate loan on the North Star Mall in San Antonio (BPR 2025-STAR). Brookfield was the borrower.
The spread on the AAA bonds tightened 5 bp to 135 bp over Treasurys. The spread on the lowest-rated tranche that wasn’t presold, rated single-A, tightened 10 bp to 230 bp.
