Commercial mortgage-backed securities loans, also know as CMBS loans, are loans that are secured by the loan on a commercial property, such as an office building, a shopping center, or a hotel. These loans are then put into a trust, pooled together and sold to investors as bonds, which are called commercial mortgage-backed securities (CMBS). The investors receive the principal and interest payments from the underlying loans, but they also bear the risk of default or delinquency.

CMBS can provide liquidity to real estate investors and to commercial lenders, as they can access the capital markets to finance their projects or free up their balance sheets.

However, CMBS also have some challenges and complexities, such as:

• The loans that form a CMBS can have different terms, values, and property types, which makes it difficult to value and analyze the bonds.
• The bonds are divided into tranches according to their credit risk and priority of payment, which means that some investors may face higher losses or lower returns than others.
• The loans are typically non-recourse, which means that the borrowers are not personally liable for the debt and can walk away from the property in case of default.