Since the Global Financial Crisis, the European commercial mortgage-backed securities (CMBS) market has struggled to re-establish itself as a core component of the wider CRE debt landscape. Challenging regulatory treatment under Solvency II has no doubt contributed to low issuance volumes, which themselves limit demand.
Market activity appeared to strengthen in 2018-19, before the pandemic intervened; and again in 2021-22, before geopolitics and macro conditions took a dramatic turn for the worse. Our first securitisation-focused conference, initially planned for May 2020, eventually took place in May 2022 (members can access a note of the event here).
CMBS has provided a stream of advocacy opportunities over the years, and we have made numerous submission to (usually EU) policymakers about capital charges under Solvency II, the Securitisation Regulation and the missed opportunity of Capital Markets Union and the regulatory disclosure regime that the EU introduced for securitisations.
CMBS 2.0
CREFC Europe is convinced that Europe, its real estate markets and financial stability would be well served by a healthy and sustainable CMBS market. It was to that end that, in November 2012, we published Market Principles for Issuing European CMBS 2.0, a paper produced by a CREFC Europe committee chaired by Nassar Hussain, Brookland Partners. In large measure, the market adopted the approaches recommended in this paper in post-GFC issuance, leading to a better product than pre-GFC CMBS. It is unfortunate that a hostile EU regulatory environment has stymied higher issuance volumes.
European Investor Reporting Package (E-IRP)
In 2004, we formed this committee, mirroring the similar IRP committee in the US, to create a transparent and standardised bond, loan and property level reporting package for European CMBS transactions, the E-IRP. Following the release of version 1 of the E-IRP templates in 2005, the committee maintained and updated them for several years.
E-IRP version 2.0, released in 2011, was used by the Bank of England and the European Central Bank as a basis for developing their respective CMBS loan level reporting requirements for their ABS collateral programmes. It was also adapted to create the CMBS template used by the European Data Warehouse.
In August 2013 the committee released watchlist criteria as part of the E-IRP to promote consistent flagging by servicers of loans that may be running into difficulty.
We led some efforts to continue updating the E-IRP not only for recent market developments, but to align it with emerging regulatory reporting templates, but were overtaken by regulatory events and the ESMA disclosure templates discussed above.
Please contact Peter Cosmetatos for further information.
