commercial mortgage-backed securities

Commercial mortgage-backed securities (CMBS) are financial products created when banks bundle multiple commercial real estate loans—like office buildings, hotels, or shopping centers—into a single pool. Investors buy shares of this pool, essentially lending money to the property owners indirectly. Regular payments from tenants on these properties generate income, which is then distributed to the investors. CMBS help lenders free up funds to offer more loans and provide investors with opportunities for steady returns. They are complex but are a common way to finance large commercial real estate projects and diversify investment portfolios.