It stands for commercial mortgage backed security loan; a type of real estate loan that is collateralized by a first position mortgage (first priority mortgage) on a commercial property. CMBS loans are typically issued, by means of securitization, by commercial banks, investment banks, or conduit lenders for maturities ranging from 5-10 years, with amortizations of up to 25 and 30 years. The loan is used to finance purchases of commercial real estate such as multifamily housing facilities, warehouses, hotels, etc.

Such loans are sold and packaged with other commercial mortgage loans into a trust, i.e., a real estate mortgage investment conduit (REMIC), and then issued and sold to investors in the form of debt securities.

CMBS loans are typically structured as non-recourse loans—the lender cannot have access to personal assets of a borrower, of course other than the collateralized property (and/ or from cash flows generated by the property), in the event of a loan default or foreclosure. However, CMBS loans allow for full recourse liability for specific foul play or negligence (the so called bad boy acts) by a borrower, such as the case of intentional damage or less-than-standard management of the collateralized property.

Commercial mortgage-backed securities (CMBS) loans are also referred to as conduit loans.