What are CMBS loans and why are they considered public info?
I am learning the ropes to the industry, and was hoping someone could explain like im 5 what CMBS loans are, how they are different than normal financing, etc.
[{"id": "csq2qz2", "text": "You want to start a lemonade stand but your dad is a real dick and requires you buy the edge of the driveway you want to do business on.  He wants $100 for it.  You don't have $100.  \n\nYou have a few options though, you can go to your neighbor Jimmy who does have $100, and he will loan it to and let you pay him interest.  He will either just take your payments, or he might let someone else pay him some amount to buy that debt from him.  He is like 'normal' financing.  \n\nYour other neighbor Annie hears about this and offers you another deal.  She has 100 friends who all want to invest $1 in something, and has pooled them together.  She will take their 100, give it to you, and distribute the interest payments you make back to them.  She is in the CMBS business.", "replies": [{"id": "csq5ikp", "text": "I though the CMBS loans were packaged *then* sold to the investors? Do CMBS banks collect all the money first *then* go looking for properties to finance?", "replies": [{"id": "csq6226", "text": "They are but there are a few mortgage broker, investment bank etc steps in there.  I was eli5.  They don't make the loans then hope they can securitize and sell it.  They have specific criteria they can sell", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "csq2wt0", "text": "[Here's the page](http://www.crefc.org/CMSA_Resources/Borrowers_Page/Borrower_s_Page/) that includes the borrower's guide to CMBS. It's not at ELI5 level, more like ELI am a college graduate.  \n\nMy ELI12 version:  \n\nA CMBS loan is one that is going to be packaged with other loans that will be used as collateral for bonds. The loan payments are used as the source of cash flow to repay the bonds.  \n\nBy packaging loans of different asset classes and locations, investors are able to spread out their risk. If I have $1million and I want to invest in commercial real estate, I can buy a AAA rated bond instead of trying to buy a property and hoping that it ends up making money (real estate investing is pretty risky, while an AAA rated bond is considerably less risky).  \n\nCMBS lenders are able to offer lower interest rates due to the pooled risk structure to the investors. But the lower rate does not come without costs - there are a lot of provisions on CMBS loans that tie the hands of the property owner. You'll have to read the guide to get a better idea.  \n\nIn general, CMBS loans are targeted for stabilized income producing properties in primary and secondary markets for borrowers who want to have the lowest interest rate possible.  \n\nRegular real estate loans are more flexible, but they are going to come with more covenants and a higher interest rate.   \n\nHope this helps!", "replies": [{"id": "csq54vc", "text": "you cheated", "replies": [{"id": "csq6xl1", "text": "thank God for the internet!", "replies": [], "depth": 3}], "depth": 2}, {"id": "csq5p7a", "text": "All makes sense, thank you. So why would a borrow opt for a conventional loan? I'm guessing they are easier to attain, but you also said they are more flexible. Could you elaborate on how they are more flexible?", "replies": [{"id": "csq6x3d", "text": "Check out all of the restrictions for CMBS loans in the guide - most if not all of those will not apply.  \n\nYou also have a whole lot of borrowers and properties that won't qualify for CMBS because of size, quality, market etc and those properties still get loans.  \n\nEdit: Oh yeah, they are public for a certain period of time because the bonds are regulated by the SEC. You can find a lot of detailed information on EDGAR. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "csy7wxf", "text": "Late to the party I guess, but basically its public info because Joe non-accredited investor (worth under $1mil or makes less than 200k /yr) has rights to know what he's buying. The bonds backed by these cmbs pools are traded to joe non accredited and he has the right to know whats up.", "replies": [], "depth": 1}]