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The structure of CMBS can vary, but typically, the loans are divided into three parts, or tranches: senior, mezzanine, and equity. The different tranches are then sold to investors who are willing to take on different levels of risk.

Commercial mortgage-backed securities (CMBS) are a type of mortgage-backed security backed by commercial and multifamily mortgages rather than residential real estate.

Within CMBS, the bonds are organized into tranches ing to their levels of credit risk. The highest quality tranches receive interest and principal payments on loans and have the lowest associated risk. The lowest tranches in CMBS offer higher interest rates but will contain the riskiest loans in the portfolio.

A commercial mortgage-backed security (CMBS) is a type of security backed by a bundle of commercial real estate loans.As borrowers make payments, the money is used to repay investors of the CMBS.

Mezzanine tranches often have higher interest rates than senior tranches. Equity tranche. This is the most junior and risky part of the CMBS because it's last in line to be repaid if there's a default.

The CMBS securitization process involves a lender taking a variety of conduit loans and pooling them together to sell them as bonds. Each CMBS is broken into tranches, which give investors a variety of options when it comes to risk, rate of return, and payment priority.

CMBS loans have several advantages, including flexible underwriting guidelines, fixed-rate financing, full assumability, and the potential for lenders and bondholders to achieve a higher yield on investments. Investors can also choose which tranche to purchase, allowing them to work within their own risk profiles.