Commercial Mortgage-Backed Securities As Legal Credit Union Investments


By Emily Moré Hollis, CFA Partner

What are Commercial Mortgage-Backed Securities (CMBS)?

Commercial mortgage-backed securities (CMBS) are bonds collateralized by mortgages on income-producing properties such as retail centers, office properties, health care facilities, industrial properties, multifamily dwellings and hotels. CMBS pools are diversified by geography, property sector, loan size, and tenants.

Commercial loans that were originated either to finance a commercial purchase or to refinance a prior mortgage obligation are the basic building blocks of the CMBS structure. The mortgage payments of these loans are dependent on the rental stream paid by the tenants to the property owners.  These payments back the CMBS. 

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