CMBS SASB industrial volumes soar year-over-year

CHICAGO, Sept. 5, 2024 – Until Q4 2023, the Single-Asset Single-Borrower (SASB) financing market remained relatively muted for most of the year. However, it has now emerged as a dominant force driving large-scale commercial real estate deals.

In particular, industrial deals accounted for over 33% of the total deal volume from January to August of this year, marking a significant increase compared to 7% during the same period in 2023. This is a result of a combination of acquisitions, refinances and recapitalizations.

Unlike traditional conduit commercial mortgage-backed securities (CMBS), which lenders contribute multiple loans from different borrowers to a single securitization, SASB financing allows a borrower to secure financing for larger individual assets or portfolio, in their own securitization. This provides borrowers more flexibility and control of the financing structure and terms.

Borrowers are particularly drawn to SASB financing due to its ability to facilitate large-scale financings in a single loan, with loan amounts starting in size from $250-$300 million and going up to over $1-$2 billion. Properly structured and leveraged SASB financing allows borrowers to push leverage more effectively especially when being used to refinance existing debt.

"Right now, the SASB market is incredibly active and can be a very effective execution for large-scale financings," said Brian Torp, Senior Managing Director and JLL Capital Markets Industrial Co-Leader. "The flood of interest from borrowers seeking to capitalize on the current market is creating a very large pipeline of deals, and therefore, as always, borrowers need to be sure to evaluate all options when executing any financing."

Looking ahead, the SASB financing market is expected to remain robust, albeit with potential volatility due to increased deal flow along with continued fluidity with regard to the economy and the Fed’s interest rate policy. The current environment presents a wide window of opportunity, as borrowers rush to benefit from the efficient pricing and liquidity offered by SASB financing. As this financing trend continues to gain momentum, it is expected to continue to help facilitate large-scale trades, driving overall activity in the market.

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm's in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales and advisory, debt advisory, equity advisory or a recapitalization. The firm has more than 3,000 Capital Markets specialists worldwide with offices in nearly 50 countries.

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