Lease expiry

It is important to consider the extent to which new or redeveloped properties may enter the market in the foreseeable future, increasing the level of competition. This will be particularly important when the term of the transaction exceeds a significant level of lease expiries, as this places increased reliance on successfully reletting. 

Where the majority of properties are tenanted via occupational leases, as is common in CMBS deals, it is useful to consider the profile of the expiry of those leases within the term of the transaction. Indeed, where investors rely on a refinance of certain loans in order to repay the principal, the lease profile after the loan maturity may also be important. 

The nature of the underlying leases, the expiry profile of the leases, and the level of borrower responsibility for items such as capital expenditure and insurance. 

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