In an attempt to revitalize its national commercial property market, the Commercial Real Estate Finance Council in Japan has announced plans to create a new standard for commercial mortgage-backed securities (CMBS).
According to a Bloomberg report, the council will concentrate on upgrading the quality of Japanese CMBS by strengthening the transparency and structure of these securities. The new standard will also provide a clear definition on the process for recovering loan principal and interest in the event of a CMBS default.
‘In the past, there was no fixed standard for structuring CMBS – practice has differed from player to player,’ says Tokio Ueyama, head of commercial real estate at Deutsche Bank in Japan and co-chairman of the council. ‘For those investors who are not familiar with CMBS, a standard would be helpful for them to consider such an investment.’
The new standard is scheduled for release in late 2012.