European CMBS issuers are considering the creation of prepayment strips. Although most fixed-rate U.S. CMBS deals have set prepayment locks outs, European deals typically don't have this written into loan documents, making prepayment risk a big factor for the market.

In most European deals, fees associated with prepayments are held outside of transactions. These could be structured as a prepayment class, similar to an interest-only class of bonds. At the same time, issuers could also structure deals to reduce the amount of prepayments via lockouts, which are common in the U.S., or through yield maintenance. "There has been a lot of talk about structuring deals to mitigate the impact of prepayments," said Donald Belanger, managing director and head of European real estate finance and securitization at Credit Suisse.

Ron Thompson, head of ABS, structured finance research at the Royal Bank of Scotland, said the market likely will see these structures introduced in the coming months. "Prepayment penalties are an important part of profits to the lender," he said, noting that prepayment strips are likely to emerge. "We will see more aggressive stripping over time."