Emerging Deal Structures Add CMBS Complexity.(Commercial Mortgage Backed Securities )

San Diego -- The evolution of commercial mortgage securitization now enables lenders to split up loans into many parts while pricing them to reflect the risk involved.

This is likely to cause some complexity down the road, according to some participants at a panel session on "tailored structures" at the Mortgage Bankers Association's Commercial Real Estate Finance/Multi-Family Conference here.

Although it is a borrower's market today, markets tend to ebb and flow and what we're experiencing today isn't forever, according to Charles Spetka, vice president, CW Capital.

In this environment of a lot of money chasing less product, credit standards erode and cap rates come down, he added. Noting that there is no free lunch, Mr. Spetka said that he expects all the pari passu and A/B/C structures that have been set up to create complexity in future.

Daniel Rubock, senior credit officer, Moody's Investors Service, also commented on the "frothiness" of the current market, which is eroding standards.

For borrowers, this is a good time to borrow since reserves are declining and leverage levels have been higher on the loans that Moody's has rated, he noted.

If this state of affairs continues, he expects that Moody's will have to start increasing subordination levels to reflect the new situation.