What a difference a couple of years can make. In December 2010, the capital markets were reeling in the post-recession environment. Financial headlines were dominated by phrases like "credit crisis," "auto-industry bailouts," "bankruptcies," "foreclosures," "credit card defaults" and "sovereign debt."
Fast forward to present day. Although we have macroeconomic risks (e.g., the fiscal cliff), the capital markets have returned to health, partially as a result of the stability in the commercial mortgage-backed securities (CMBS) market during 2012. All signs point to a strong 2013.
After inching back to life in 2010 and an up-and-down 2011, the CMBS market appears to be in full recovery. Based on the volume of CMBS issuance over the trailing 13-month period (ending September 2012, volume has clearly been steady since March 2012. Total estimated CMBS origination for 2012 was $47 billion, up from roughly $35 billion in 2011, and is estimated to be $50 billion to $75 billion in 2013.
The market continues to expand as competition for deals increases. With more than 20 originators competing, we have seen loan-to value (LTV) increase, debt yields drop, minimum loan size decrease, and the list of eligible metropolitan statistical areas (MSAs) increase—all positive news for self-storage owners, as more operators are eligible for CMBS financing.