Securitization: Year-end cheer as US CMBS market comes alive
Succession of deals in closing weeks; UK sentiment lags far behind
The CMBS market ended 2009 in undecided mood with some optimism in the US where three new deals were launched in less than a month (after an 18-month hiatus) and mounting concern in Europe, where CB Richard Ellis announced the disposal of the London-based portfolio backing the White Tower 2006-3 CMBS deal, which defaulted in June last year.
The mood in the US is doubly buoyant: the first new deal of the year, a $400 million five-year issue for US Reit Developers Diversified Realty (DDR) used the Fed’s Talf facility but the subsequent two deals did not. Fortress issued a $460 million deal through Bank of America in early December and Inland Real Estate Corp sold $500 million notes outside Tarp just before Christmas in a deal arranged by JPMorgan. This flurry of activity took many by surprise. Although all three transactions are ultra-safe single-borrower deals, it is a sign of resurgent investor appetite for this asset class – which is perhaps surprising given the scale of the problems US real estate still faces.
New CMBS issuance in Europe – particularly the UK – still looks a long way off, despite the pressing need to refinance many loans.