I blogged on this earlier last month but I thought I'd share it again for anyone who missed it.
"Berkadia Commercial Mortgage LLC, a newly formed entity owned by Berkshire Hathaway Inc. and Leucadia National Corp., completed the acquisition of Capmark Financial Group Inc.'s (Capmark) North American loan origination and servicing business.
Capmark, which in October voluntarily filed for reorganization under Chapter 11, received approval from the U.S. Bankruptcy Court for the District of Delaware to complete the sale.
The sale includes a servicing portfolio of more than $240 billion - the third largest in the United States - as well as leading Fannie Mae, Freddie Mac, FHA, life insurance company correspondent lending and asset management operations. As of June 30, Capmark was named special servicer on 8,618 loans in 113 CMBS transactions with an outstanding balance of $47.5 billion. Capmark was actively specially servicing 280 CMBS loans totaling $2.4 billion and managing 57 CMBS real estate owned properties valued at $342.9 million.
Berkadia has more than 20 origination and servicing locations in markets across the country and will be based in Horsham, PA.
Berkadia has indicated that it will retain all of Capmark's servicing management and staff and intends to keep current business plans in place. Additionally, the company will retain Capmark's systems, vendor relationships and policies and procedures. Berkadia is in the process of hiring more than a thousand of Capmark's approximately 1,500 current employees.
Fitch Ratings said it views the completion of this transaction favorably as it removes the risk associated with Capmark Financial Group's financial instability."
Thursday, December 17, 2009
Friday, December 11, 2009
CMBS: Back in Business?
Investors Showing an Appetite for Bonds Backed Even by the Weakest Real Estate Sector and No Government Support
Fullerton Metrocenter in Fullerton, CA, is benefitting from new CMBS issuance.
The commercial mortgage bond securitization window that has been closed for nearly two years during this recession has reopened for business in the last few weeks and investors have lined up encouragingly to take advantage of a new round of CMBS offerings.
Several investment banks have announced that they are firing up their conduit lending programs and will begin to originate and warehouse loans for multi-borrower securitizations, said Chris Moyer, an associate with Cushman & Wakefield Sonnenblick-Goldman in New York.
At least three have publicly announced, or are actively discussing, such programs, while others, have brought on senior managers who have experience building conduit-lending platforms. The active banks are Goldman Sachs, Bank of America and JPMorgan. Word on the street is that RBS and Deutsche Bank are also ramping up securitization activity.
As CoStar reported just before the Thanksgiving break, Developers Diversified Realty Corp. and Goldman Sachs Commercial Mortgage Capital got the ball rolling through a new $400 million securitization backed by bricks-and-mortar assets. That deal was driven in part by the availability of inexpensive funds from the federal government's Term Asset-Backed Securities Loan Facility (TALF), which the Federal Reserve initiated to help "jump-start" the securitization market.
The DDR deal was significant in that even though it was backed by retail, one of the weakest performing properties in this recession, it demonstrated strong investor demand and set a benchmark for potential issuers considering similar transactions. In fact, since then, two new deals have either come to market or will shortly, but importantly, neither is relying on government support.
Last Thursday, Bank of America priced a 7-year, $460 million CMBS offering for Flagler Development (controlled by Fortress Investment) without government / TALF support. The loan is secured by the borrowers' fee interest in 44 office and industrial properties in Florida, which collectively constitute 5.8 million square feet. The deal also includes easement interests along a 351-mile railway corridor, and fee interests in 23 parcels adjacent to the rail corridor.
"Obviously, the fact that a fully private CMBS deal got off the ground for the first time since mid-2008 is a positive for the market," said Charles Cecil, partner and CEO of Opin Partners in New York. "But the pricing -- a blended rate of 5.8% on the bonds -- was much wider than the TALF-supported DDR deal (which priced at a blended rate of 4.2% with a comparable 51% loan to value). The wider pricing can probably be attributed to a heavy geographic concentration in Florida and an unusual collateral mix that included cash flows from leases and usage rights from a railway and fiber-optic cables."
Next up is a new CMBS for the $500 million senior portion of a $625 million JP Morgan deal for Inland Western Retail Real Estate Trust Inc., which will also be issued without utilizing the TALF program and again is supported by retail property.
Inland Western Retail obtained the newly secured loan from JPMorgan Chase Bank on a portfolio of 55 retail properties in 23 states in a joint venture owned by Inland Western and principals of The Inland Real Estate Group Inc. The portfolio contains 22 grocery-anchored centers (32.3% by allocated loan amount).
"The closing of this non-recourse secured debt financing is a significant accomplishment, as we have now addressed virtually all of our 2009 maturing debt and a substantial portion of our debt maturing in 2010," said Steven Grimes, CEO of Inland Western.
All three new issues have involved single borrower entities, which have not made up the bulk of CMBS deals in the past. And single-borrower deals likely will be the case going forward, according to analysis by Standard & Poor's.
"In the near term, we expect to see single-borrower transactions as the first ones to be securitized," S&P wrote in a recent report. "The underlying loans will likely be to REITs and institutional owners/operators with unencumbered assets or assets with low leverage. Other potential issuers include finance and insurance companies with real estate holdings and seasoned loan pools on their balance sheets, or the ability to leverage their balance sheets to originate new loans."
"We expect the loans to be smaller than in the recent single-borrower transactions, with lower all-in leverage, little or no additional debt held outside the trust, five-year loan terms with 25- or 30-year amortization schedules, and terms and conditions that are more lender-friendly. The properties are likely to be underwritten more conservatively, with higher vacancy assumptions and in-place rents (without the projected upside that may have been factored into recent-vintage loans). In fact, it is possible that property values will reflect a downward trend or an expectation that rents and occupancies may fall further," S&P wrote.
Only time will tell whether these welcomed new transactions will mark a return to more normal levels of availability of credit for commercial real estate, the real estate finance and distressed asset teams of the California law firm Luce Forward commented to its clients. However, the firm wrote: "The timing could not be better with billions of dollars of CMBS maturing next year and beyond."
Fullerton Metrocenter in Fullerton, CA, is benefitting from new CMBS issuance.
The commercial mortgage bond securitization window that has been closed for nearly two years during this recession has reopened for business in the last few weeks and investors have lined up encouragingly to take advantage of a new round of CMBS offerings.
Several investment banks have announced that they are firing up their conduit lending programs and will begin to originate and warehouse loans for multi-borrower securitizations, said Chris Moyer, an associate with Cushman & Wakefield Sonnenblick-Goldman in New York.
At least three have publicly announced, or are actively discussing, such programs, while others, have brought on senior managers who have experience building conduit-lending platforms. The active banks are Goldman Sachs, Bank of America and JPMorgan. Word on the street is that RBS and Deutsche Bank are also ramping up securitization activity.
As CoStar reported just before the Thanksgiving break, Developers Diversified Realty Corp. and Goldman Sachs Commercial Mortgage Capital got the ball rolling through a new $400 million securitization backed by bricks-and-mortar assets. That deal was driven in part by the availability of inexpensive funds from the federal government's Term Asset-Backed Securities Loan Facility (TALF), which the Federal Reserve initiated to help "jump-start" the securitization market.
The DDR deal was significant in that even though it was backed by retail, one of the weakest performing properties in this recession, it demonstrated strong investor demand and set a benchmark for potential issuers considering similar transactions. In fact, since then, two new deals have either come to market or will shortly, but importantly, neither is relying on government support.
Last Thursday, Bank of America priced a 7-year, $460 million CMBS offering for Flagler Development (controlled by Fortress Investment) without government / TALF support. The loan is secured by the borrowers' fee interest in 44 office and industrial properties in Florida, which collectively constitute 5.8 million square feet. The deal also includes easement interests along a 351-mile railway corridor, and fee interests in 23 parcels adjacent to the rail corridor.
"Obviously, the fact that a fully private CMBS deal got off the ground for the first time since mid-2008 is a positive for the market," said Charles Cecil, partner and CEO of Opin Partners in New York. "But the pricing -- a blended rate of 5.8% on the bonds -- was much wider than the TALF-supported DDR deal (which priced at a blended rate of 4.2% with a comparable 51% loan to value). The wider pricing can probably be attributed to a heavy geographic concentration in Florida and an unusual collateral mix that included cash flows from leases and usage rights from a railway and fiber-optic cables."
Next up is a new CMBS for the $500 million senior portion of a $625 million JP Morgan deal for Inland Western Retail Real Estate Trust Inc., which will also be issued without utilizing the TALF program and again is supported by retail property.
Inland Western Retail obtained the newly secured loan from JPMorgan Chase Bank on a portfolio of 55 retail properties in 23 states in a joint venture owned by Inland Western and principals of The Inland Real Estate Group Inc. The portfolio contains 22 grocery-anchored centers (32.3% by allocated loan amount).
"The closing of this non-recourse secured debt financing is a significant accomplishment, as we have now addressed virtually all of our 2009 maturing debt and a substantial portion of our debt maturing in 2010," said Steven Grimes, CEO of Inland Western.
All three new issues have involved single borrower entities, which have not made up the bulk of CMBS deals in the past. And single-borrower deals likely will be the case going forward, according to analysis by Standard & Poor's.
"In the near term, we expect to see single-borrower transactions as the first ones to be securitized," S&P wrote in a recent report. "The underlying loans will likely be to REITs and institutional owners/operators with unencumbered assets or assets with low leverage. Other potential issuers include finance and insurance companies with real estate holdings and seasoned loan pools on their balance sheets, or the ability to leverage their balance sheets to originate new loans."
"We expect the loans to be smaller than in the recent single-borrower transactions, with lower all-in leverage, little or no additional debt held outside the trust, five-year loan terms with 25- or 30-year amortization schedules, and terms and conditions that are more lender-friendly. The properties are likely to be underwritten more conservatively, with higher vacancy assumptions and in-place rents (without the projected upside that may have been factored into recent-vintage loans). In fact, it is possible that property values will reflect a downward trend or an expectation that rents and occupancies may fall further," S&P wrote.
Only time will tell whether these welcomed new transactions will mark a return to more normal levels of availability of credit for commercial real estate, the real estate finance and distressed asset teams of the California law firm Luce Forward commented to its clients. However, the firm wrote: "The timing could not be better with billions of dollars of CMBS maturing next year and beyond."
North American S. Broad has sewn up four leases
The North American building off South Broad Street in Philadelphia has sewn up four leases that brings its occupancy up to about 91 percent.
The building at 121 S. Broad completed the deals, all of which were renewals, with:
• DMi Partners, an Internet marketing company that expanded its headquarters into 8,219 square feet in a five-year deal. The company was in 4,983 square feet. DMi plans to hire additional employees.
• The Philadelphia Trial Lawyers, which extended its lease for 10 years on 6,610 square feet.
• Gerolamo McNulty Divis and Lewbart, a law firm that renewed on 6,610 square feet — a full floor — for another four years.
• And Mitchell & Ness, a sports nostalgia product company.
Meanwhile, Alstin Communications relocated from 1401 Walnut St. The firm took a full floor.
Market Street between 34th and 41st streets in University City is undergoing a seven-month makeover. The streetscape improvements are being funded by property owners and landlords along the targeted area of Market Street and a $2 million grant from the City of Philadelphia’s ReStore Philadelphia Corridors program. University City District came up with the project and the Science Center is overseeing it. Once completed, it is expected to change the look and feel of that area along Market Street in University City with new pedestrian lighting, sidewalks and plantings ...
U.S. Realty Capital arranged a $2.5 million construction loan for the acquisition and conversion of an historic elementary school at 137 Grape St. in the Manayunk section of Philadelphia. The 24,000-square-foot building will be turned into 22 apartments ... A five-unit apartment building at 2114 Pine St. in Philadelphia traded for $1.02 million, or $204,00 a unit. An undisclosed buyer from New York picked up the building. Marcus & Millichap arranged the sale.
The building at 121 S. Broad completed the deals, all of which were renewals, with:
• DMi Partners, an Internet marketing company that expanded its headquarters into 8,219 square feet in a five-year deal. The company was in 4,983 square feet. DMi plans to hire additional employees.
• The Philadelphia Trial Lawyers, which extended its lease for 10 years on 6,610 square feet.
• Gerolamo McNulty Divis and Lewbart, a law firm that renewed on 6,610 square feet — a full floor — for another four years.
• And Mitchell & Ness, a sports nostalgia product company.
Meanwhile, Alstin Communications relocated from 1401 Walnut St. The firm took a full floor.
Market Street between 34th and 41st streets in University City is undergoing a seven-month makeover. The streetscape improvements are being funded by property owners and landlords along the targeted area of Market Street and a $2 million grant from the City of Philadelphia’s ReStore Philadelphia Corridors program. University City District came up with the project and the Science Center is overseeing it. Once completed, it is expected to change the look and feel of that area along Market Street in University City with new pedestrian lighting, sidewalks and plantings ...
U.S. Realty Capital arranged a $2.5 million construction loan for the acquisition and conversion of an historic elementary school at 137 Grape St. in the Manayunk section of Philadelphia. The 24,000-square-foot building will be turned into 22 apartments ... A five-unit apartment building at 2114 Pine St. in Philadelphia traded for $1.02 million, or $204,00 a unit. An undisclosed buyer from New York picked up the building. Marcus & Millichap arranged the sale.
Orleans Homebuilders gets NYSE Amex delisting notice
Orleans Homebuilders Inc. got word from NYSE Amex exchange that the company’s shares will be delisted since it’s not in compliance with certain continued listing criteria. The Bensalem homebuilder said that it received the letter from the exchange on Dec. 1.
Orleans (AMEX:OHB), like just about all homebuilders, has been struggling during the last four years as the housing boom went bust. The company failed to file its annual report in a timely manner for its fiscal year that ended June 30, which is a violation of the listing criteria. The company did submit a plan on Nov. 16 letting Amex know what it intended to do to bring the company back into compliance by this coming Feb. 10. However, Orleans didn’t file its fiscal first-quarter report either, another violation of the listing criteria.
The company said it didn’t file the annual and quarterly report because it would have required unreasonable effort and expense. It might submit a new plan to the exchange by Dec. 15 and hopes to file both reports early next year. The company’s stock is trading at around $2 a share.
Orleans (AMEX:OHB), like just about all homebuilders, has been struggling during the last four years as the housing boom went bust. The company failed to file its annual report in a timely manner for its fiscal year that ended June 30, which is a violation of the listing criteria. The company did submit a plan on Nov. 16 letting Amex know what it intended to do to bring the company back into compliance by this coming Feb. 10. However, Orleans didn’t file its fiscal first-quarter report either, another violation of the listing criteria.
The company said it didn’t file the annual and quarterly report because it would have required unreasonable effort and expense. It might submit a new plan to the exchange by Dec. 15 and hopes to file both reports early next year. The company’s stock is trading at around $2 a share.
Creative Child Care Leases in Plymouth Meeting
Creative Child Care Centers signed a long-term lease at 3037 Walton Road in Plymouth Meeting, PA, for 7,580 square feet.
The building was previously occupied by Chesterbrook Academy and was built in 1985. Creative Child Care Centers will continue to use the property for childcare purposes.
The building was previously occupied by Chesterbrook Academy and was built in 1985. Creative Child Care Centers will continue to use the property for childcare purposes.
Philadelphia Multifamily Sells for $1M
Private investors acquired the multifamily building at 2114 Pine St. in Philadelphia for $1.02 million, or approximately $204,000 per unit.
The five-story building was built in 1900 and features two one-bedroom apartments, two two-bedroom apartments and a studio unit. The property is located in the Rittenhouse Square area and was fully occupied at the time of purchase. The reported net operating income of the property is $63,000 annually.
The five-story building was built in 1900 and features two one-bedroom apartments, two two-bedroom apartments and a studio unit. The property is located in the Rittenhouse Square area and was fully occupied at the time of purchase. The reported net operating income of the property is $63,000 annually.
Friday, December 4, 2009
Neshaminy Mall owner General Growth files reorganization plan
"General Growth Properties Inc. filed a bankruptcy reorganization plan today in hopes that it can work out its $9.7 billion in secured mortgage loans.
The Chicago real estate company locally owns the Neshaminy Mall in Bensalem and the Christiana Mall down the road in Newark, Del.
Neshaminy Mall totals 1 million square feet and has 120 stores. Among its anchors is Macy’s, Barnes & Noble, Boscov’s and Sears. The mall opened in 1968 and was renovated in 1995 and 1998. Christiana, a 1.08 million-square-foot mall, has 130 stores of which Lord & Taylor, JCPenney and Macy’s are anchors. That mall was constructed in 1978 and renovated in 1990.
The filing highlights two big issues converging at the same time on retail property owners. One is the difficult credit market, where borrowers are having a tough time renegotiating debt, and the other is the challenging retail climate. The $9.7 billion exceeds previously announced agreements in principal to restructure $8.9 billion of mortgage loans.
General Growth filed for bankruptcy in April. The reorganization plan is set to be confirmed on Dec. 15 and will allow the company to emerge from bankruptcy by the end of the year. The company has over 200 regional shopping malls in 44 states."
The Chicago real estate company locally owns the Neshaminy Mall in Bensalem and the Christiana Mall down the road in Newark, Del.
Neshaminy Mall totals 1 million square feet and has 120 stores. Among its anchors is Macy’s, Barnes & Noble, Boscov’s and Sears. The mall opened in 1968 and was renovated in 1995 and 1998. Christiana, a 1.08 million-square-foot mall, has 130 stores of which Lord & Taylor, JCPenney and Macy’s are anchors. That mall was constructed in 1978 and renovated in 1990.
The filing highlights two big issues converging at the same time on retail property owners. One is the difficult credit market, where borrowers are having a tough time renegotiating debt, and the other is the challenging retail climate. The $9.7 billion exceeds previously announced agreements in principal to restructure $8.9 billion of mortgage loans.
General Growth filed for bankruptcy in April. The reorganization plan is set to be confirmed on Dec. 15 and will allow the company to emerge from bankruptcy by the end of the year. The company has over 200 regional shopping malls in 44 states."
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