A CMBS loan (commercial mortgage-backed securities) is a type of commercial real estate loan that is pooled with other loans and sold to investors as securities. CMBS financing is common for larger or credit-tenant NNN assets and carries distinct assumption and prepayment rules.
CMBS loans are underwritten around the property and the lease, and they often offer competitive fixed rates and non-recourse terms for qualifying assets. The trade-off is rigidity. Once the loan is securitized it is serviced by a third party, prepayment usually involves defeasance or yield maintenance, and changes or assumptions require approval. A buyer planning a 1031 exchange or a shorter hold should compare these constraints against the loan's rate before choosing CMBS financing.