Market Overview

KBRA Releases Monthly CMBS Trend Watch

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Kroll Bond Rating Agency (KBRA) releases July's CMBS Trend Watch.

In the July edition of Trend Watch, we spotlight the growing presence of
WeWork in CMBS transactions, which has been a hot topic in our ongoing
investor discussions. The coworking business, which is the leasing of
short-term shared and flexible office space, has grown from 8.1 million
to 51.2 million square feet between 2010 and 2017, accounting for over a
quarter of all U.S. office absorption during the 24-month period ending
December 2017.

WeWork has emerged as the clear front runner in coworking and is also a
top tenant in some of the largest loans securitized in CMBS deals. KBRA
has identified 30 office and mixed-use whole loans participated across
46 pari-passu notes in 41 transactions where WeWork is a tenant. Based
on our analysis, CMBS accounts for more than one-third of the space
WeWork leases in Manhattan, its largest CMBS market.

KBRA also includes the full exposure list in excel format as a link in
the report.

As we note in TW, it appears that the CMBS market is slowing down for
the summer. In August, we expect to see up to a half-dozen single
borrower deals and a couple of conduits come to market, which could make
it one of the slowest months all year. This may be short-lived, however,
as we already see activity picking up for September.

In addition to the spotlight section and anticipated CMBS volume, this
month's Trend Watch report also highlights new issuance and surveillance
activity, as well as trends in KBRA's Key Credit Metrics. The latter are
also available in our KBRA Comparative Analytical Tool, which allows
users to compare data among all KBRA rated conduits.

To view the report, please click here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus, is recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider, and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.

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