Managed commercial real estate collateralized loan obligations could emerge before year end, marking an evolution from the static structure that has been the norm since the crash. As the recovery continues, an increasing number of specialty finance companies are going to need a more efficient method of financing originations, market players told REFI.

The static CMBS construct used today is a ‘straight down the middle’ execution in which a group of loans is packaged into a trust and paid down sequentially. “The static CMBS execution is suboptimal. As our underlying loans pay off, we’re forced to sequentially pay down our cheapest debt—our financing is both shrinking and becoming more expensive,” explained Todd Sammann, principal at Colony Capital.

Sammann said....

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