The surge of single-asset/single-borrower (SASB) issuance over the past decade has structurally transformed the CMBS market. Characterized by shorter duration profiles and more flexible structures than traditional conduit deals, SASB’s rise has expanded the CMBS toolkit to meet a broader range of duration and spread targets. The following explores the drivers of the SASB evolution, how it has changed the CMBS market, and what it means for portfolio allocators. While this asset class offers benefits to both borrowers and lenders, rigorous underwriting is critical when evaluating new SASB opportunities.
The CMBS market’s evolution has reshaped its role in investors’ portfolios. After being primarily viewed as a long-duration alternative to corporate debt, it is a sector that now offers a broader range of duration profiles along with attractive risk-adjusted spreads, making it a more strategic component in credit portfolio allocation than ever before.
The shift from long-duration CMBS conduit transactions to SASB structures accelerated during the post-COVID period, with outstanding SASB issues now comprising 40% of the total CMBS market (Figure 1). Notably, the post-COVID SASB growth coincided with the emergence of five-year conduit debt, a combination that is driving the structural transformation of the CMBS market towards shorter-duration assets.
Figure 1
The shift toward SASB has structurally reshaped CMBS
CMBS Outstanding by Sector
As of September 30, 2025. Source: PGIM and J.P. Morgan.
What's Driving the Rise of SASB?
From execution efficiency to borrowers’ increasingly bespoke needs, three key factors are driving the profound growth in SASB demand.
- Banking regulation: Since the financial crisis, the average conduit deal size has declined significantly from roughly $3 billion prior to 2009 to approximately $750 million today. Changes in bank capital rules have reduced their ability and willingness to contribute to conduit securitizations. Although borrowers have had some success splitting larger loans into equivalent pieces across different conduit deals, appetite for solutions to finance larger assets, either in single-property format or across large property portfolios continues to grow.
- Borrower preference: Unlike conduit-based financing, which is oriented towards a “one size fits all” approach, the SASB market enables borrowers to access tailored, customized financing solutions that align with the specific attributes of the underlying properties. Given the scale of borrowers’ large, often high-profile property portfolios, financing via the public SASB market also offers more efficient execution compared to a club-style, balance sheet or private credit syndication.
- Institutional ownership and the re-emergence of REITs: As the SASB market evolves, so too is the landscape of commercial real estate borrowers who are seeking financing solutions. Notably, the ownership landscape for commercial real estate has shifted with the rise of private REITs, which witnessed tremendous capital formation in the post-COVID environment. Historically, non-traded REITs tapped banks as a source of floating-rate financing, which offered flexible prepayment terms. The institutionalization of commercial real estate, particularly the industrial sector, created broader financing needs that exceed traditional bank balance sheet and syndication capacity.
These dynamics fueled the rapid expansion of the SASB market, with issuance rising from just $10 billion in 2012 to $70 billion in 2024 (Figure 2). SASB issuance now surpasses conduit issuance, and we expect SASB outstandings to exceed conduit outstandings in 2026.
Figure 2
SASB issuance has risen seven-fold since 2012
CMBS Issuance by Sector
As of September 30, 2025. PGIM and J.P. Morgan.
As it has grown, the SASB sector has financed a diverse range of property types, from data centers to retail (Figure 3). Strong investor demand has supported this expansion, driving continued improvements in execution and pricing, consequently enabling increasingly larger deal sizes.
Figure 3
SASB issuance has expanded across property types
As of September 30, 2025. PGIM and Intex.
Floating Rate & Shorter Duration: A Structural Transformation
SASB is characterized by its shorter duration, flexible structures that offer borrowers greater prepayment options. While most SASB debt is floating rate, a sizeable portion of the market (roughly 40%) is issued with fixed-rate coupons. Indeed, borrowers are seeking out more five-year loans, rather than the traditional 10-year loans, to preserve the option to refinance into a lower-rate environment. Since 2023, five-year loans have comprised roughly 69% of total conduit fixed-rate originations compared to 11% in the ten years prior.
CRE CLOs also emerged as a significant part of the private label CMBS market right before the COVID pandemic. Despite a sharp contraction in 2023, issuance rebounded strongly in 2025. With floating-rate transitional collateral and flexible prepayment options for both the underlying borrowers and issuer, CRE CLOs have further contributed to the shortening duration of the CMBS sector.
Together, the rise of SASB, the shift towards shorter-duration conduit loans, and the resurgence of CRE CLOs has altered the duration and interest-rate profile of the CMBS market. What was once viewed as a long-duration alternative to investment-grade corporates has generally evolved into a shorter-duration sector that offers a wide spectrum of interest-rate and spread profiles to meet diverse investor needs (Figure 4). This shift is also apparent in the Aggregate Index, where corporate durations have remained steady at seven years over the past decade, while CMBS durations have compressed to slightly more than three years.
Figure 4
As SASB issuance expanded, CMBS duration profile became more diversified
As of September 30, 2025. PGIM and Intex.
Credit Risk and Valuation: A New Framework
With the shift towards greater SASB issuance, investors’ underwriting processes have evolved as well. Given the greater potential for concentration risk in SASB transactions, SASB underwriting requires deep capabilities in single-asset credit analysis—a meaningful shift away from evaluating diversified pooled risk. Whereas super senior conduit bonds can be analyzed and stress-tested at the aggregate level, even AAA SASB securities require granular underwriting to evaluate and appropriately price idiosyncratic risks. These risks have become increasingly evident in recent years, as the commercial real estate sector has been challenged by the post-pandemic impact on offices and the impact of higher rates. Several SASB transactions have already experienced writedowns (Figure 5), with additional losses expected as lengthy workout processes resolve. Navigating and resolving such exposures requires specialized commercial real estate expertise and a disciplined underwriting approach tailored to the unique characteristics of each asset.
Figure 5
Significant losses are expected for select SASB transactions
As of September 30, 2025. PGIM, Intex, and J.P. Morgan.
While SASB transactions highlight the importance of collateral analysis, structural analysis remains critical as well. The growing prevalence of prepayment flexibility within SASB and CRE CLO transactions has heightened the need for investor sophistication in assessing relative value. Evaluating deals solely based on quoted spread is insufficient, as prepayment features introduce embedded optionality that can materially affect investment performance. These prepayment options vary significantly from deal to deal, requiring investors to thoroughly understand each transaction’s specific prepayment structure. To make meaningful comparisons, both within the SASB market and across structured products, investors should employ option-adjusted spread analysis, a technique more commonly used in the residential mortgage-backed securities space. This approach enables a more accurate assessment of relative value by accounting for the impact of prepayment risk.
Portfolio Construction: Rethinking the CMBS Allocation
Over the past decade, the CMBS market has undergone a significant transformation. Once dominated by passive, fixed-rate, and highly standardized conduit structures, essentially serving as long-duration alternatives to investment-grade corporates, the asset class has evolved into a more dynamic and diversified space. The rise of the SASB market has expanded the CMBS toolkit, enabling allocations that meet a broader range of duration targets while offering wider spreads than traditional conduit deals.
Investors must consider the idiosyncratic risks presented by SASB deals when constructing portfolios. While the single-loan structure itself introduces a greater degree of exposure to individual borrower behavior— delinquencies, extension requests, property sales—deals backed by a portfolio of properties offer some degree of internal diversification when compared to a single-property transaction. Generally, portfolio SASB will be less impacted by individual leasing outcomes, submarket downturns, or insurance events. For this reason, investors may be more comfortable with larger allocations to portfolio deals, but individual property deals can offer more opportunities for credit outperformance. As CMBS structures shifted from pooled transactions to single-loan securitizations, investors adapted as well. The complexity of these deals demands a deeper level of credit analysis and a nuanced understanding of structural features. Today, the ability to underwrite SASB transactions—by evaluating both credit fundamentals and deal-specific structures—has become absolutely critical for CRE debt investors.
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