Friday, October 7, 2011

CMBS News

Vol. 6 Issue 40 Bank, the first of its kind since 2007. Among the loans in the deal is at least a piece of a $425 million mortgage that the bank had provided for the recapitalization of San Diegos Hotel del Coronado. Meanwhile, the strong demand that investors have had for AAA-rated bonds with 30 percent subordination has prompted at least a couple of issuers to hint that they might add deals
See CMBS, Page 3

$8.9Bln of U.S. CMBS Prices During 3Q

Seven private-label CMBS transactions with a balance of $8.9 billion priced during the third quarter, bringing full-year issuance to $24.8 billion. The issuance so far this year is 125 percent more than the $11 billion of deals that priced in all of last year, when the CMBS market was in the nascent stages of recovery. But the expectation is that the fourth quarter
Property News

will fall far short of the $8.3 billion average issuance for each of the years three quarters. Market volatility over the past couple of months has impacted conduit lenders ability and desire to originate loans. Nonetheless, four additional deals are expected to price before the end of the year. Up first is a $609 million floating-rate deal from Deutsche

3Q Investment-Sales in NYC Up 110% from 10

The investment-sales recovery in Manhattan continued during the third quarter. A total of $6.3 billion of deals were registered. Thats up 110 percent from the same time last year, according to Cushman & Wakefield, and represents a slight softening from the first half, when sales volumes jumped 152 percent from the year-ago period. The markets year-to-date volume of $19.4 billion is 41 percent greater than its total for all of 2010. Meanwhile, there are signs that a sales rebound nationwide may be losing momentum as well. Real Capital Analytics, which tracks investment sales of $2.5 million or greater, has projected that third-quarter sales nationwide will be up by just 20-25
Fund News

percent from the year-ago period, compared to first-half sales that more than doubled from the same time in 2010. The sales tally in Manhattan through the third quarter is more than double the markets $8.1 billion of activity through the first nine months of 2010, according to Cushman. The brokerage said the market is on pace for full-year volume that would
See CUSHMAN, Page 8

Henderson Fund Makes 2 Apartment Buys

INSIDE
Volume of CMBS Delinquencies Falls Sharply in August...Page 3 Taconic Raises $220Mln for Investment Fund...Page 4 Small-Cap Properties See Sales, Pricing Slowdown...Page 5 Synthetic CMBS Deal Planned When S&P Nixed Ratings...Page 7 Morningstar Rates Berkadia, C-III, Wells Fargo...Page 8

Henderson Global Investors, an investment manager focused on the multifamily sector, has made the first two acquisitions for its latest fund, which is slated to have an investment capacity of more than $1 billion. The fund, Casa Partners V, has paid $37.8 million, or $109,994/unit, for the 344-unit Waterford at the Lakes complex in Kent, Wash., and $22.5 million, or $65,029/unit, for the 346unit Innesbrook in Durham, N.C. A venture of property manager JB Matteson Inc. and investment manager Griffin Capital Corp. sold the Kent complex, while investment manager Sentinel Real Estate Corp. sold the Durham property. Henderson, which is based in

London and has offices in Chicago and Hartford, Conn., plans to raise $400 million of equity commitments for Casa V. It is aiming to leverage its investments by up to 65 percent. It has already raised $100 million of commitments from three institutional investors in the United States. Casa V is looking for properties with 200 units or more in urban or suburban areas across the U.S. Its main targets include properties that back or qualify for tax-exempt bond financing and those available from sellers under financial distress. It will look to venture with local market operators to carry out value-add
See HENDERSON, Page 2

THEINSIDER
Fitch: CMBS Investors Wary of Servicer Conflicts Fitch Ratings has highlighted that some investors are becoming concerned over potential conflicts of interest facing special servicers, including those that have decided to liquidate loans on their own, without the use of third-party advisers. The rating agency, in its weekly research bulletin, said it expected CMBS servicers to protect the interests of all bondholders, regardless of their interests. It pointed out that the largest special servicers, LNR Partners, CWCapital Asset Management and C-III Asset Management, have each undergone ownership changes. LNR, for instance, last year was recapitalized with equity from Vornado Realty Trust, iStar Financial, and affiliates of Cerberus Capital Management and Oaktree Capital Management; CWCapital was acquired by Fortress Investment Group, and C-III was purchased by Island Capital. Besides changes in ownership, some servicers have added business lines. Among them are loan-sales services and other fee-generating businesses. Both LNR and C-III have launched loan-sales arms and C-III owns a title company, Zodiac Title Services, which some investors say C-III asset managers are urged to use. That, particularly, has some investors concerned. Investors are becoming increasingly skittish over potential conflicts between existing CMBS borrowers and the ownership interest in the special servicers, said Stephanie Petosa, managing director of Fitch. Ballard Spahr Forms Real Estate Recovery Unit Law firm Ballard Spahr has formed a commercial real estate recovery group that will advise clients on a variety of financing and investment matters. The practice group is an outgrowth of the Philadelphia law firms distressed real estate initiative, through which it focused on helping clients restructure troubled loans, as well as buy or sell loans. The commercial real estate recovery group advises clients on lining up debt, both senior and mezzanine, and property investments. It also advises CMBS lending programs, clients on distressed loan transactions and what it calls rescue capital transactions. Because of our national platform, our lawyers experienced the economic downturn early and launched the Distressed Real Estate Initiative, explained Michael Sklaroff, chair of the law firms real estate department. Once again, we are moving forward to marshal our forces to serve clients in the changing real estate economy. The commercial real estate recovery group is led by partners David A. Barksdale in Los Angeles, Dominic J. De Simone in Philadelphia, Jeffrey S. Pitcher in Phoenix and Kelly M. Wrenn in Washington, D.C.

HENDERSON...From Page 1

and repositioning strategies on some properties it buys. Its plans for the Durham complex include renaming it Southpoint Glen to capitalize on the established name recognition of the nearby Southpoint Mall retail property. It is looking for about $25 million of financing for the property. Meanwhile, it has assumed debt on the Kent property. Casa V began looking for properties last month, after Henderson wrapped up acquisitions activity for its Casa Partners IV fund. The predecessor fund acquired 13 properties for about $600 million. It had raised $205 million through a marketing effort that ended in 2007. Its final acquisition was the Rittenhouse, a 204-unit apartment property in Washington, D.C., that Peter NG Schwartz Management Co. sold for $30.75 million.

Fund Raises $350Mln of Equity

IMT Capital of Los Angeles has raised $350 million of equity commitments for a value-add fund that will invest in multifamily properties in major markets nationwide. The vehicle, IMT Capital Fund II, will target properties whose value could be improved with more intensive leasing, management and possibly repositioning or redevelopment. IMTs property-management unit handles 70 apartment communities with 16,000 units primarily in California, Florida and Texas. The fund is designed to buy individual assets or portfolios and is open to providing equity or debt financing to recapitalize properties. Its investors include pension funds, foundations and college endowment funds. It is a follow-up to IMTs only other fund, which raised $355 million in 2007.

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The Weekly, Copyright 2011, is published every Friday, 52 times a year, by Commercial Real Estate Direct. The publication is a supplement to the Commercial Real Estate Direct Web site and contains a sampling of the latest weeks major news stories. *** It is a violation of federal law to photocopy or otherwise reproduce any part of this publication without the permission of Commercial Real Estate Direct. For information on advertising or group rates, email sales@crenews.com, or call 800-556-7461.
Orest Mandzy managing editor orest.mandzy@crenews.com Bob Ferguson executive vice president bob.ferguson@crenews.com John Covaleski staff writer john.covaleski@crenews.com Anita Nolan staff writer anita.nolan@crenews.com Felicia Daniel customer service felicia.daniel@crenews.com Daniel P. Moynihan copy editor daniel.moynihan@crenews.com

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October 7, 2011

CMBSNEWS
Volume of Delinquencies Falls Sharply in Aug.
The volume of delinquent CMBS loans fell sharply in August, to $58.92 billion, from $62.15 billion a month earlier, according to Morningstar. It is now at its lowest level since May 2010, when $57.3 billion of CMBS loans were more than 30-days late. The sharp drop-off in volume was attributed to the continued steady pace of loan liquidations by CMBS special servicers as well as the heavy volume of modifications. Nearly $7 billion of loans that previously were classified as delinquent were returned to the rolls of the performing. Those include a $305 million mortgage, securitized through Banc of America Commercial Mortgage Inc., 2006-6, against the Riverchase Galleria retail mall in Birmingham, Ala. While the loan is no longer considered delinquent - its interest payments have been brought current - a number of other obligations against the property remain outstanding. Also among the modified loans is $448.3 million of debt, securitized through three LB-UBS deals, against 82 seniors-housing properties owned by Extendicare REIT. That debt was taken out with fresh financing provided through a U.S. Department of Housing and Urban Development program. If you count only private-label loans that have seasoned for a year, the delinquency rate slipped to 9.25 percent in August from 9.62 percent in July. Morningstar tracks $636.35 billion of private-label CMBS loans that are at least a year old. Morningstar, a Horsham, Pa., rating agency, said 165 loans with a balance of $1.3 billion were liquidated last month. Thats the second highest monthly volume of liquidations, after Marchs $1.5 billion, and was skewed in part by the resolution of two additional loans on the Red Roof Inn hotel portfolio. Those liquidations were part of a recapitalization of the hotel chain, which was acquired in 2007 for $1.3 billion. LNR Partners was the most active among special servicers last month, liquidating a total of 58 loans with a balance of $404.7 million.

Loan on L.A.-Area Office Nears Maturity

A $130.3 million securitized piece of a $294.8 million debt package against 10 Universal City Plaza, a 771,277square-foot office building in Universal City, Calif., has been transferred to special servicing as its maturity nears. The property was taken over by a venture of Normandy Real Estate Partners and Five Mile Capital Partners two years ago. The venture foreclosed against mezzanine debt it held. The buzz at the time was that the team acquired the 35-story building for $304.8 million. It previously had been owned by Broadway Partners, which had placed a total of $723.8 million of mezzaCMBS...From Page 1

nine debt - in addition to the $294.8 million of senior and subordinate debt - against the property. The Normandy/ Five Mile team had bought up chunks of the mezzanine debt at steep discounts. And when Broadway was unable to refinance it when it came due, the team foreclosed. Broadway had purchased the building in 2006 as part of a large portfolio from Beacon Capital Partners. Beacon, in turn, had purchased it in 2003 for $190 million from Vivendi Universal. The non-securitized portion of the remaining debt is comprised of the CMBS loan, which was securitized through Lehman Brothers Floatingattracting investors to deals mezzanine bond classes. After a lengthy marketing campaign, the GS 2011-GC5 deal saw a class rated BBB+ by Morningstar, Baa3 by Moodys and BBB- by Fitch price at a spread of 750 bp over swaps. Thats substantially wider than the level at which the class was first marketed, but is comparable to that of a similar bond from the deal before it, JPMorgan Chase Commercial Mortgage Securities Trust, 2011-C5. That deals mezzanine classes also took time to price. Spreads in the secondary market have

Rate Commercial Mortgage Trust, 2007-LLF C5, and $164.46 million of subordinate debt divided into eight tranches. All of the debt matures on Jan. 1, which prompted the transfer to special servicing. While the CMBS debt could be extended for an additional year, certain conditions must be met for that to happen, according to Morningstar. The venture must buy an interest-rate cap, pay a fee, negotiate the extension of all subordinate debt and fund a debt-service reserve account. Evidently, the Normandy/Five Mile team has requested the extension. But at the same time, it has started its hunt, with the help of Eastdil Secured, for replacement financing. also widened sharply. They ended last week at a median of 320 bp over swaps for super-senior AAA bonds. That compares with 146 bp over swaps in May, according to the Commercial Real Estate Direct CMBS Pricing Matrix. JPMorgan Securities was the most active bookrunner of private-label CMBS during the third quarter, handling the books on two deals totaling $1.5 billion. Deutsche Bank was second. It participated in two deals, but received credit for 0.83. Those totaled $1.2 billion. And Wells Fargo got credit for $1.1 billion of transactions.

to the pipeline, despite the general pessimism among some conduit lenders. The latest deal to price, for instance, GS Mortgage Securities Corp., 2011GC5, saw its long-AAA class, with 30 percent subordination, print at a spread of 170 basis points more than swaps. That compares with a spread of 200 bp over swaps for a deal that priced in early August. Long-AAA bonds on new issues priced as tight as 115 bp over swaps in May. Evidently, issuers have had difficulties

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INVESTMENTNEWS
Taconic Raises $220Mln for Investment Fund
Taconic Investment Partners has raised $220 million of equity commitments for its Taconic New York City Investment Fund LP. The New York investment manager, led by Charles Bendit and Paul Pariser, raised the capital from a number of public pension funds, including the Teachers Retirement System of the City of New York and the New York City Police Pension Fund. Taconic is also an investor. The fund is the second for Taconic, but the first through which it has raised capital from pension funds. Taconic is perhaps best known for selling 111 Eighth Ave., a 2.9 millionsquare-foot office building in Manhattan, to Google Inc. for a whopping $1.8 billion in the largest single-property deal of last year. That transaction helped goose the return the New York State Common Retirement Fund recorded from its real estate portfolio last year to 26.7 percent. It had acquired a 25 percent stake in the building in 1999. When the fund bought into the building, it was owned by a venture between Taconic and Blackacre Capital Management. The fund will pursue value-add and opportunistic investments in the apartment, office and retail sectors in New York City. It is aiming for a net return of 15-17 percent from its investments, relying on its in-house asset management, development, leasing and capitalmarkets capabilities. The shifting real estate landscape and capital markets disruption are likely to provide opportunities for significant long-term upside potential, Pariser said.

Cole Forms Venture to Pursue Value-Add Investments

Cole Real Estate Investments has formed a venture with RED Development of Phoenix that will pursue value-add investments in retail properties. Those investments might involve recapitalizing troubled centers or the acquisition of notes. Cole, which is also based in Phoenix, sponsors a series of non-traded REITs that invest primarily in net-leased real estate. Its venture with RED would allow it to enhance our access to core-plus and value-added retail opportunities that continue to meet our disciplined acquisition criteria, according to Charles Vogel, senior vice president of real estate joint ventures for Cole. The venture would pursue opportunities in multi-tenant retail centers, such as power centers and groceryanchored shopping centers that could be repositioned with intensive asset management and capital investments. It will shoot to make investments of $15 million to $100 million apiece on properties in the Midwest and western United States. Besides developing properties, RED provides a variety of services to other owners of retail properties, including repositioning.

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$53 MILLION
Past-due mortgage loan on a luxury hotel located in the Riviera Maya, Mexico Bid Date: November 3, 2011

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October 7, 2011

PROPERTYNEWS
Merging Companies to Make Hotel Buys
Hotel owner-operators Thompson Hotels and Joie de Vivre Hospitality are merging, and the resulting company is expected to be active in acquisitions. Thompsons 12 luxury hotels in major markets across the country, including five in New York City, will be combined with Joie de Vivres 33 properties, which are primarily on the West Coast, under a new brand, JT Hospitality. The resulting company will be co-chaired by Jason Pomeranc, a co-owner of Thompson, and John Pritzker, whose Geola Capital had acquired a majority stake in Joie de Vivre in 2010. JT plans to acquire additional hotels by tapping into a $150 million acquisition fund that Geolo established for Joie de Vivre when it bought into the company. The fund aims to leverage that into a greater acquisition capacity. Fifteen months ago, we said we would leverage our hospitality platform to nearly double Joie de Vivres annual revenues and number of hotels, Pritzker said. By merging with Thompson Hotels, we are on track to reach that goal well ahead of schedule Joie de Vivre said it tapped into the fund to buy two hotels and a development site in New York. JT, meanwhile, is slated to grow in the U.S. and internationally by making acquisitions and investing through ventures. East 58th St., which has 125 units and 4,000 square feet of retail space. The portfolio also includes full ownership of both 762 Madison Ave., a five-story building with 6,000 sf of office, retail and gallery space, as well as 44 West 55th St. A previous report indicated that Jeff Sutton, a partner in several other deals with SL Green, was a partner in the venture, but he is not. index, which recorded a 0.9 percent value increase in the countrys top-10 and -20 markets. But that increase was more than offset by value declines in the remaining 100 markets it covers. Boxwood Means, which tracks roughly 3,000 to 5,000 transactions on a monthly basis, previously had found a strong correlation between the performance of the residential housing market and the small-cap commercial property market. Meanwhile, property fundamentals are frail, according to Boxwood Means. The properties it tracks generally have less than 50,000 square feet each. It has updated its rental data to reflect August rents and found that rents at industrial properties fell by 0.22 percent since July to an average of $6.62/sf. Rents at retail properties, which encompass free-standing buildings, street retail and other retail properties, fell by 0.25 percent to an average of $16.54/sf. And office rents were down 0.32 percent to $16.40/sf. The fact is, national rents are still carving out new cyclical lows, the company said.

Venture to Pay $416Mln for NYC Portfolio

A venture of SL Green Realty Corp. and Stonehenge Partners has agreed to pay $416 million for a portfolio of eight Manhattan buildings with multifamily, retail and gallery space. David Frankel Realty of New York agreed to sell the portfolio, whose retail component includes all of 724 Fifth Ave., a 12-story building that contains a Prada store and several floors of gallery space. Also included is a partial stake in 752 Madison Ave., a four-story building that is fully occupied by an Armani store under a sublease that expires in 2025. The multifamily component includes full ownership of a 260-unit building at 400 East 57th St., along with 400

Small-Cap Property Sales, Pricing Softening

Sales of small-capitalization commercial properties have begun to soften, according to Boxwood Means Inc. The Stamford, Conn., research company, which tracks rents, vacancies and sales prices of properties valued at $5 million or less, said $2.8 billion of transactions took place in July. While thats up 6.7 percent from roughly $2.6 billion a year earlier, it is far short of the $3.8 billion monthly average for the past three months. Whats more, prices for small-cap properties have begun to soften as well, with an index that Boxwood maintains, the Small-Cap Property Indices, or SCPI (pronounced Skippy), falling by 0.8 percent to a value of 86.5 last month. Thats the fourth straight month of pricing drops. The index is down 2.6 percent when compared to last year. It was set to 100 in July 2006. The softening mirrors the large-cap property market. Real Capital Analytics, which tracks the sale of properties in deals valued at $2.5 million or more, also has seen a sharp slowdown in deals. In July, for instance, it recorded $13 billion of transaction activity, an increase of only 13 percent from a year earlier, marking the smallest year-overyear increase in sales volume since December 2009. And it expects investment-sales volume for the third quarter to be up by 20-25 percent from the same period a year ago. That represents a substantial softening when compared to the first half s volume, which was up more than 100 percent from a year earlier. Continued economic malaise is to blame, according to Randy Fuchs, cofounder of Boxwood Means. Investors remain skittish, he said. The business climate is unclear, so business owners arent investing in plants and equipment. He noted that more than 50 percent of the properties his company tracks are owner-occupied. He noted, however, that the drop in values has not been consistent across all markets. A sub-index that tracks the countrys 20 largest markets saw a 1.2 percent increase in values. That mirrors the Case-Shiller housing-value

October 7, 2011

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October 7, 2011

MORTGAGENEWS
Banco Popular Sells $381Mln of Bad Loans
Banco Popular de Puerto Rico has sold a portfolio of construction and commercial real estate loans with a balance of $381 million for $172.59 million, or 45.3 percent of its balance. The San Juan, Puerto Rico, bank sold the portfolio, which is mostly nonperforming, to a venture of Goldman Sachs, Caribbean Property Group and East Rock Capital. The bank kept a 24.9 percent stake in the venture and provided $86 million of seller financing. It received $48 million in cash from its partners. In addition, the bank said it would provide the venture with a $68.5 million facility, allowing it to honor unfunded commitments under the acquired loans and to complete construction at some collateral properties. It also provided a $20 million working capital line to cover certain expenses. Those credit facilities are senior to any distributions, meaning Banco Populars credit facilities must be repaid before Goldman and its partners receive any proceeds. After that, proceeds will be split proportionally. The sales price is equal to the portfolios written-down book value, the bank said. It added it would not have to take any additional writedowns to reflect the portfolios sale. Roughly 62 percent of the portfolio is comprised of construction loans and 38 percent are commercial real estate loans. About 97 percent were classified as nonperformers by Banco Popular. Caribbean Property is a New York investment manager that operates an investment fund that it put together with Goldmans Whitehall Street Real Estate Fund and Perry Capital. It will service the loans in the portfolio and has tapped Archon Group, a Goldman affiliate, as subservicer.

Goldman, Citi Planned Synthetic CMBS Deal

The buzz is that Goldman Sachs and Citigroup had offered to create a synthetic CMBS transaction that would have mimicked the performance of the GS Mortgage Securities Corp., 2011GC4, deal that was aborted after S&P discovered discrepancies with its rating methodology. When S&P alerted the issuers that it had discovered the discrepancies, it said it would not be able to provide final ratings until it reviewed its practices. The issuers scrambled to come up with plans that would have minimized the impact to investors, who had already agreed to buy bonds at specific prices and presumably had developed hedges for their positions. One scenario had Goldman and Citi developing a synthetic bond that would have provided investors with the same cash flows that bonds within the GC4 transaction would have paid. But, according to several individuals familiar with the plan, the synthetic deal floundered because S&P could not provide, with any certainty, a time frame for its review. They had to shelve the idea because they had no idea how long the review would last, said one person familiar with the plan. In the end, S&Ps review found that the inconsistencies in the criteria that its primary ratings and surveillance groups used would not impact its ratings. It made that determination six days after finding the inconsistencies and withdrawing its ratings on the GC4 deal.

TIAA-CREF Lends $127.1Mln for Manhattan Office

TIAA-CREF has provided $127.1 million of financing for 275 Madison Ave., a 305,849-square-foot office building in midtown Manhattan owned by RFR Holdings Inc. The investment manager provided $97.5 million of senior debt and $29.6 million of mezzanine financing that is backed by interests in the entity that owns the 80-year-old building, which sits at the corner of East 40th St. The financing allows RFR to retire $67.9 million of debt that was securitized through Credit Suisse First Boston Mortgage Securities Corp., 2004-C5. That loan was set to mature next month. The building also supported another $10 million of mezzanine debt that was provided by a Credit Suisse affiliate. Terms of the TIAA financing could not be learned. It was first highlighted by Barclays Capital in a research note. The building is 97 percent leased. According to servicer data compiled by Morningstar, the property generated $8.1 million of net cash flow last year and through the end of June, it had generated $3.8 million of cash flow.

MetLife Lends $250Mln for D.C. Office

MetLife has provided $250 million of financing for 1050 Connecticut Ave. NW, a 1 million-square-foot office building in Washington, D.C. The financing was used to take out maturing debt that had been provided in 2001 by TIAA-CREF and the New York State Teachers Retirement System. The collateral building is roughly 90 percent leased, but thats expected to drop to about 75 percent in 2013 when one of its tenants, the Arent Fox law firm, moves to a new building at nearby 1000 Connecticut Ave. Tenants at 1050 Connecticut, which is also known as Washington Square, include Gibson, Dunn & Crutcher, which earlier this year expanded its space to 205,000 sf, and Baker Hostetler, which occupies 100,000 sf under a 15-year lease it signed earlier this year. The 12-story building, at L Street NW, near the Farragut North Metro station, was developed in 1982.

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GENERALNEWS
Morningstar Rates Berkadia, C-III, Wells Fargo
Just six months after formally getting into the business of evaluating commercial mortgage servicers, Morningstar has rated three companies, Berkadia Commercial Mortgage, C-III Asset Management and Wells Fargo Commercial Mortgage Servicing. The Horsham, Pa., rating agency evaluates companies primary, master and special servicing capabilities. It ranks them on a scale of 1-4, with 1 being its highest rating. In addition to servicers, the company rates mortgage originators as well as other service providers. In evaluating Berkadia, to which it gave a MOR CS2 commercial primary
CUSHMAN...From Page 1

and master servicing rating, as well as a MOR CS1 special servicer rating, Morningstar said the company saw a high turnover of staff in the United States as it shifted some back-office operations to the Philippines and India in order to reduce costs. But it cited Berkadias very successful asset resolution activity and effective controls to manage potential conflicts of interest for its high special servicer ranking. Morningstar gave C-III a MOR CS1 special servicer ranking, citing its responsiveness to investor inquiries and high degree of accuracy in reporting to investors. It also noted that C-IIIs special servicing is affiliated with a bought a 25 percent stake, while SL Green Realty Corp. made a preferred equity investment in the 2.4 millionsquare-foot office tower thats controlled by Paramount Group. So, much of Manhattans deals were borne out of distress or pending mortgage maturities. The class-A office sector has, as usual, led Manhattans sales activity through the third quarter. It accounted for 32

controlling-class bondholder, which would open it up to potential conflicts of interest. But it said the company has a transparent process for disclosing potential conflicts. Wells Fargo, the most-active master servicer in the country, received a MOR CS2 rating for its primary, master and special servicing capabilities. Morningstar said Wells Fargo had not undergone a specific audit that it considers crucial for the highest ranked servicers. It also chided the company for the technology tools it uses for its special servicing operation, saying they are not the most extensive relative to some of its peers, but it said they were sufficient for its level of activity. percent of all deals, followed by the hotel sector, which accounted for 16 percent, and multifamily, 15 percent. Office sales remained strong while Manhattans office leasing market essentially flattened in the third quarter. The overall vacancy rate fell 10 basis points to 9.3 percent, although the 6.4 million sf of leasing activity in the quarter was down about 36 percent from the second quarter.

be its third highest tally ever, behind the $47.8 billion recorded in 2007 and $30 billion in 2006. Recapitalization deals, as opposed to outright property purchases, have been a bigger factor in this years activity, Cushman said. It cited the recapitalization of 1633 Broadway in August. In that deal, Beacon Capital Partners

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October 7, 2011

DATA
Loan Sales Calendar
Size $mln Description Seller Bank Bid Date Nov. 2 Adviser DebtX

38.0

Performing commercial real estate loans throughout the U.S. A pair of distressed loans, one of which is in forbearance, against retail and industrial condos in Miami. Nonperforming commercial real estate loan in CT. Mixed performing commercial real estate loans in WA.

12.3

Lender

Nov. 2

Mission Capital
Source: Morningstar

25.0

Other

Oct. 27

DebtX

48.1

Bank

Oct. 19

DebtX

48.3

CWCapital Oct. 13 Eight nonperforming loans against apartment properties in NY, OR, IN, CT and AL.

Mission Capital
Source: Moodys/Real Commercial Property Price Indices

17.8

Nonperforming commercial real estate loans in FL. Portfolio of nonperforming (60%) and performing commercial real estate and business loans in NY and CA.

Bank

Oct. 12

DebtX

100.0

Bank

Oct. 12

First Financial Network

Source: Morningstar

CMBS Pricing Matrix

Median Spreads (bp over swaps)

Bond
3-yr AAA 5-yr AAA 7-yr AAA SuperSr AAA 20%Sub AAA Junior AAA AA A

9/30
225 290 315 320 750 1,550 2,762.50 3,537.50

9/23
215 285 295 327 800 1,350 2,950 3,200

9/16
212.50 281 287.50 308.50 730 1,325 2,692.50 3,690

9/9
230 295 300 275 762.50 1,325 2,632.50 3,555

CMBS Pipeline (Upcoming Deals)

Seller/Borrower JPMorgan Chase Deutsche Bank CFCRE, 2011-C2 WF-RBS 2011-C5 Deal Type Floater Floater Conduit Conduit Total Size ($mln) 350.0 609.0 600.0 1,500.0 3,059.0 Underwriter JPM DB CF WF, RBS Launch 4Q Oct. 4Q 4Q

Note: Medians were compiled using spreads provided by several investment banks. Spreads are for generic conduit paper backed by newly-originated, callprotected, balloon mortgages. Reporting banks were quoting five-year swaps at a median spread of 28bp over Treasurys, while 10-year swaps priced at 18bp more than Treasurys.

For historical data points, please visit the Commercial Real Estate Direct Web site, at www.crenews.com.

October 7, 2011

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October 7, 2011