My guest today is Brian Pascus, finance reporter at Commercial Observer. Brian wrote a detailed article comparing CMBS (commercial mortgage backed securities) with collateralized loan obligations (CLO) as ways to finance real estate and so I asked him if he would talk about the differences between these two financial instruments, and what has been the impact on them of interest rate increases and other market forces over the last couple of years.

You’re going to learn about the difference between CLO and CMBS, how both are being hit with significant defaults, and that the market for both has pretty much collapsed, creating a liquidity crisis for CRE.

Brian provides a detailed explanation of both types of finance, explaining their structures, risk profiles, and how they differ in the commercial real estate market. He explains the impact that economic factors, particularly the rise in interest rates, have had on the attractiveness and issuance of these securities and how this has led to changes in borrowing costs and influenced the overall dynamics of the commercial real estate market.

This episode is an advanced discussion about real estate finance where you’re going to gain a thorough understanding of the complexities and challenges associated with these financial products, as well as discovering who invests in CMBS and CLOs, including pension funds and high-net-worth individuals.

Plus, you’ll also learn what is the single most important thing in commercial real estate finance that will bring the market back to some semblance of normality.

This is an important episode for anyone tracking opportunities in the market and who wants a deep dive into how we have got to where we are today, and where we are headed in the coming months.