This Case is about FINANCIAL ANALYSIS
PUBLICATION DATE: June 19, 2013 PRODUCT #: KEL757-PDF-ENG
Return of the Loan Commercial Mortgage Investing after the 2008 Financial Crisis case solution
Zoe Greenwood, the vice president at Foundation Investment Advisors, was peeking through the offering memorandum for a fresh commercial mortgage-backed securities (CMBS) deal on April 1, 2010, a time when the chances for commercial mortgage investors were hopeless to the point of comical. This new CMBS deal represented the very first chance to purchase CMBS backed by loans to multiple borrowers since the securitization pipeline in June 2008 had closed. The offering gave a fresh investment opportunity to Greenwood to propose to the latest customer of her company. These new bonds seemed intriguing, although she’d intended to urge an expansion in her customer’s conventional commercial mortgage company. Could the new CMBS offer her customer a superior risk-return tradeoff compared with making individual mortgage loans?