What's the difference between a conduit CMBS and a single-borrower CMBS?

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AcadiFi · Accepted Answer

Three main CMBS formats dominate the market, each with distinct risk and liquidity profiles: 1. Conduit CMBS: A diversified pool of 50-80 loans from many borrowers, property types, and geographies. Example: GS Mortgage Securities Trust 2026-GC45 pools $1.1B across 67 loans on offices in Atlanta, retail in Denver, multifamily in Tampa, etc. Diversification is the key credit story. Rating agencies assume pool-level diversification benefits; subordination levels are lower than concentrated deals. 2. Single-Asset Single-Borrower (SASB): One large loan on one property (or portfolio owned by one sponsor). Example: a $900M loan on the Rosentree Tower office complex in Manhattan. Investors underwrite that one asset intensely: tenant roster, lease rollover, rent trends, sponsor track record. SASB deals are more volatile because there's no diversification — the deal either performs or it doesn't. 3. CRE CLO: A managed pool of transitional CRE loans (bridge financing for properties undergoing reposition, lease-up, or redevelopment). The manager can reinvest principal during a revolving period. Higher yields but higher credit risk. ```mermaid flowchart LR Conduit[Conduit
many loans] --> Div[Diversification
benefit] SASB[SASB
single loan] --> Conc[Concentration
risk] CLO[CRE CLO
managed pool] --> Mgr[Manager
selection] ``` For FRM analysis: conduit emphasizes pool statistics, SASB demands bottom-up real estate underwriting, CRE CLO requires manager quality assessment plus transitional loan analysis.

What's the difference between a conduit CMBS and a single-borrower CMBS?

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