CMBS Syndication Occurs When Multiple Lenders Pool Their Funds to Issue A Conduit Loan
In the world of CMBS financing, CMBS lenders sometimes pool their resources together, or “syndicate” a large conduit loan. This reduces the risk of having the entire loan on any one lender’s balance sheet prior to securitizing the loan and selling it on the secondary market. Since CMBS lenders must also keep at least 5% of a loan on their books due to risk-retention rules, this also reduces each lender’s balance sheet risk post-securitization.
One real-life example of CMBS syndication was the $1 billion CMBS loan issued to the Atlantis Hotel and Resort in 2014. Three lenders worked together to syndicate the loan, Deutsche Bank, Morgan Stanley, and Citigroup. When the same property was refinanced with a new, $1.2 billion CMBS loan in 2018, Citigroup and Goldman Sachs worked together to syndicate the new loan on the property.