The salad days for CMBS are back!
Just a couple weeks after the first commercial mortgage-backed securities deal in a year went down, two more are on their way. It’s like 2007 all over again (and, in a related note, as if 2007 never happened).
Second to the market is Inland Western Retail Real Estate Trust won $625 million in fresh financing yesterday from JPMorgan Chase, which plans to turn the $500 million first-mortgage part into CMBS. Those who like to live on the wilder side can pick up some of the $125 million mezzanine debt in a private placement.
CMBS
The CMBS lawyers involved with the Extended Stay bankruptcy must be having a field day with the tightrope walking real estate investor David Lichtenstein is doing to save his skin. Under a proposed bankruptcy restructuring plan, Extended Stay would see $4.8 billion in debt wiped out and Lichtenstein would be indemnified from $100 million in bad boy payments. While the plan has gained support from senior CMBS bondholders including Cerberus and Centerbridge, junior bondholders such as Five Mile Capital Partners are having no part of this and suing.
CDOs may be vilified everywhere but the vastly different repackaging technology offered by re-REMICs is seeing a resurgence. Faced with potential widespread CMBS downgrades, issuers and investors are going back to the time honored tradition of repackaging decaying assets to create a new AAA-rated gem. If the CMBS TALF loans continue at their current rate of growth, namely zero, it’s only a matter of time before re-REMICs get an invite to the party.
Commercial Mortgage Debt Rallies Amid New Securities Sales [Bloomberg]
