Commercial Real Estate Finance

Posts Tagged ‘CMBS’

Commercial Real Estate Week In Review for the Week of August 21-27

- The Dodd-Frank overhaul will impact private equity, real estate and hedge funds.

- Apartment buildings are leading delinquency rates in New York.

- Investors seem very eager about distressed retail opportunities.

- Wells Fargo is jumping back into CMBS.

- Believe it or not, commercial real estate actually made gains in the second quarter of 2010.
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After plunging more than 40% from its peak in 2007, commercial real estate prices are beginning to stabilize bringing a return to Commercial Mortgage Backed Securities.  This revitalized interest in CMBS from yield hungry investors stems from the fact that lower property values limit lenders’ risks, and unlike during the boom years investors can expect banks to be lending to a higher caliber borrower.

While some banks remain unsure of jumping back into the CMBS game Wells Fargo & Co. (WFC: US), the top US commercial real estate lender, is not one of them.  According to an article in Bloomberg, Wells has hired more than 20 bankers and support staff to its team over the past three months to up its loan originations and bundle them into securities.  Of course Wells Fargo is just one example of banks revving up to take on new demand for CMBS, as we are seeing Citi Group, Deutsche Bank, Goldman Sachs, JP Morgan, Bank of America and a few new comers (Macquarie Group Ltd, Cantor Fitzgerald, etc.) stepping back up to the plate.

Making sure banks maintain their integrity when it comes to lending will be paramount for the long term success of the CMBS market, and I’m not sure they necessarily have the discipline.  At the moment it seems like banks are more cautious in their lending practices, but is this due diligence really happening to the degree to the degree we think it is, and what will happen when things bounce back and banks are tempted to once again throw caution to the wind?  If new protocol is actually in place I would like to see banks put their money where their mouth is.  The best way to do this would be to have CMBS originators obligated to keep a portion of the loans on their books, and have them not permitted to hedge that risk through a CDO transaction with a counter party.

Commercial Real Estate Week In Review for the Week of August 7-13

- Bank of America is seeing very few requests from investors and insurers to repurchase sour loans.

- Could teaming up with REITs be a way for pension funds to boost their returns?

- Industrial Income REIT has been busy, buying 16 assets for $43.5 M.

- How does the Volcker rule change the game for private equity investments?

- Grant Thornton is predicting there will not be a recovery in commercial real estate until 2011.
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Commercial Real Estate Week In Review for the Week of July 31-August 6

- Could CMBS loan defaults really reach 15% by year’s end?

- REIT ETF’s might be volatile, but they are still performing well.

- According to IMF, commercial real estate is still a big threat to the economy.

- Screw inflation fears….are we headed for deflation?  Some fund managers think so.

- The once vibrant industrial market of Exit 7A in NJ now has a 48% vacancy rate.
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Buried somewhere deep in the borrowed notes of an undergrad class I didn’t attend, was written the name John Rawls. Frequent readers of this blog already know I haven’t the intellectual horse power to remember anything Rawls wrote, let alone actually understand it. In this instance, however, the notes briefly described a concept using a metaphor I could appreciate: a chocolate cake.

Put simply, if you want to ensure a cake is cut up evenly, make the person who does the cutting get the last piece. According to Rawls this all to do with “Original Position” or something philosophical. To me, it was a clever way to make sure I wasn’t fucked out of my share of cake. Read the rest of this entry »

Commercial Real Estate Week In Review for the Week of July 24-30

- Despite Financial Regulation passing last week, is the financial industry trying to influence policy?

- Tim Geithner thinks the government should retain a mortgage guarantee.

- Would fair-value changes affect private equity and venture capital?

- A CMBS fund has filed a foreclosure lawsuit against a Florida building owner

- Starwood is planning to expand its presence in NYC.
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How shall I put this delicately? I have heard that sometimes, when the owner of an asset hires an expert to evaluate said asset, a potential conflict of interest can arise. The expert evaluator might, possibly be tempted to inflate the value of the asset to satisfy it’s client. I could even imagine a more aggressive owner putting a little pressure on the “expert” to inflate the value of the subject asset. While I’m not suggesting any specific person or company has ever done this, we should always be cognizant of where incentives lie. Read the rest of this entry »

Ever since Pacific Investment Management Co. (PIMCO) assessed the insurance industry’s home-loan investments, insurance regulators have been looking for a firm to review Commercial Mortgage Backed Securities (CMBS).  Analysis of CMBS investments will help determine how much capital insurers must set aside to circumvent any losses at the expense of the consumers. Read the rest of this entry »

Commercial Real Estate Week In Review for the Week of July 17-23

- Is Tim Geithner the biggest winner of  financial regulation reform passing this week?

- Meanwhile, Barney Frank is aiming to tackle Fannie and Freddie.

- GGP is finally ready to emerge from bankruptcy…and on strong financial footing.

- Innkeepers USA Trust is readying for bankruptcy.

- Private Equity still seems to be shying away from real estate int he second quarter.
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Commercial Real Estate Week In Review for the week of July 10-16.

- The Senate approved sweeping legislation to revamp financial regulation.

- Blackstone was appointed manager of Bank of America’s Asian real estate fund.

- Financial reform could affect GE’s real estate assets.

- Firms that sold MBS to Fannie and Freddie are being subpoenaed.  Uh oh.

- Will apartment REITs soon be facing headwinds? Credit Suisse thinks so.
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