Sifting Through the CMBS and Distressed Real Estate Rubble

***** Quick Reminder, Next IvyPlus Real Estate Forum is September 24th in midtown Manhattan.http://bit.ly/2T3D6z  *********

More news on the Distressed Real Estate front. Though most of the sub prime mortgage concern has passed, the Alt A reset in mortgages will be triggered over the next 4 years with $2.4 trillion hitting.  Charts are here, http://bit.ly/H2Dav

REITs have experienced a run up in recent times in their stock values, but could be subject to corrections.  The Wall Street Journal reports that CBL & Associates Property may have a correction on it’s 4 X stock increase this year. 

"second-quarter same-store sales in its malls fell 6% year on year and profits are plummeting. From $3.22 a share in 2008, analysts expect CBL’s funds from operations to shrink to $2.42 this year and $1.96 in 2010. In response, CBL has cut its dividend."

Other potential changes could happen with First Industrial and other REITs.  More info here, http://bit.ly/12Hmj2

Meanwhile 2 new REITs have filed for initial public offerings to take advantage of the severe dislocation in Real Estate.  Brookfield Realty Capital Corp, will originate, invest in, and manage, a portfolio of commercial mortgage loans and is seeking to raise up to $500 million.  Also, Marathon Real Estate Mortgage Trust, filed on Friday to raise up to $300 million to invest primarily in mortgage-backed securities, mortgage loans and other real estate-related loans and securities.  Marathon will be managed by Marathon Asset Management LP, which in July was among nine fund managers chosen by the U.S. Treasury to take part in its Public-Private Investment Program, or PPIP.  This brings to 8 the number of firms offering IPOs since early July.  More info here, http://bit.ly/XmVhu

REITs and PE firms are jostling for position distressed debt opportunities.  Costar.com says "Battles between junior and senior players in the commercial property mortgage capital stack are heating up as lenders try to avoid having their investments wiped out by the wave of troubled loans reaching maturities." .  Costar also mentions these troubled deals are coming across the transom,

Mezzanine loan foreclosure activity surveyed by CoStar in recent weeks includes the following:

• Fortress Investment Group bought Sheffield57, a condo project in New York City developed by Kent Swig, for $20 million in a mezzanine foreclosure auction last month. Credit Suisse First Boston filed a default on the $400 million first mortgage in April and Guggenheim Structured Real Estate Partners LLC followed suit on a $240 million mezz loan the following month.
• SL Green Realty Corp. (NYSE: SLG) said last week that 100 Church St., a 21-story office in Lower Manhattan, is on the market and slated for an Oct. 15 auction. The New York REIT alleged that owner The Sapir Organization failed to make payments on an $85 million mezzanine loan provided by SL Green and Gramercy Capital. SL Green has taken over management and leasing of the building.
• Wachovia Bank (now Wells Fargo) filed a foreclosure lawsuit Aug. 18 against BentleyForbes Holdings and BF Las Olas, developers of the Las Olas Center in Fort Lauderdale, FL, which consists of two Class A office towers totaling 415,000 square feet, 52,000 square feet of retail and parking space. BentleyForbes bought the property in 2007 for $230.9 million, a record South Florida price of nearly $500 per square foot. Wachovia, representing a group of lenders, provided a $166 million first mortgage and a $49.4 million mezz loan.
• Mezzanine lenders in Terranea Resort, a $480 million oceanfront project in Rancho Palos Verdes, CA, filed a notice of default Aug. 11 on a $110 million loan to Terranea owner Long Point Development Partners. the Building Union Investment and Local Development Fund of America Trust, of Detroit
• Detroit-based Building Union Investment and Local Development Fund of America Trust (Build) carried out a foreclosure sale of 104 acres in Cornelius, NC, where Cornelius Bromont LLC planned to build the $515 million Augustalee mixed-use project.
• Citigroup seized the luxury 400-room St. Regis Monarch Beach Resort in Dana Point, CA, after owners Farallon Capital Management LLC and Makar Properties fell into default on a $70 million mezzanine loan.
• In June, Bahrain-based Investcorp acquired a senior mortgage loan, a B-note for a senior mortgage and two mezzanine loans, all secured by U.S. commercial property assets, for a "discounted" $170.9 million. An office headquarters building in Washington, DC secured the senior mortgage loan. The two mezzanine loans, secured by office buildings in New York and Los Angeles, were acquired from a private investor. The B-note of a senior mortgage was secured by four self-storage facilities located in the boroughs of New York, and was purchased from a major commercial bank.

more info here, http://bit.ly/6rRtS

***** Quick Reminder, Next IvyPlus Real Estate Forum is September 24th in midtown Manhattan.http://bit.ly/2T3D6z  *********

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