Although CMBS issuance in third-quarter 2001 declined 16.5% from the second quarter, it increased 33% over third-quarter 2000, according to a report by Greenwich, Conn.-based Greenwich Capital Markets Inc. CMBS issuance totaled $19.63 billion in the third quarter.

"The year-over-year increase is due mainly to sharply lower financing costs for borrowers and a resurgence in the number of large single-asset and single-borrower transactions," the report stated. "The events of Sept. 11, 2001, undoubtedly played a significant role in the reduced quarter-over-quarter volume."

Only three CMBS transactions priced between Sept. 11 and month-end: the $241.2 million international issue (Framtiden Residential Housing Finance), the $178 million Freehold Raceway Mall and the large-loan $1.5 billion COMM 2001-J2. This caused a backlog of CMBS transactions with a pipeline through November month-end estimated at more than $18 billion.

Third-quarter rating agency actions

The events of Sept. 11 also triggered commentary and ratings actions from the agencies as a handful of CMBS transactions were affected directly by the terrorist attacks. These transactions include the $563 million GMAC 2001-WTC, the $383 million BACM 2001-7WTC and the $429 million GS Mortgage Securities Corp. II, 2001-LIB, as well as the $765 million World Financial Properties 1996-WFP-B and $434 million World Financial Properties 1996-WFP-D.

To date, the deals have not experienced an interruption in bond payments and have made their October debt service. In each case above, insurance coverage was reported to not exclude "acts of terrorism." Standard and Poor’s noted in "CMBS Quarterly Insights: The Shape of CMBS Since Sept. 11" that "despite the enormity of the tragedy, no defaults due directly to the World Trade Center events are expected."