Properties
Property Bond Sales May Resume With $3 Billion
(Bloomberg) — Commercial property companies may sell about $3 billion of mortgage-backed bonds starting in September as part of the U.S. program to revive lending for shopping malls, skyscrapers and hotels.
More than a dozen real estate investment trusts are likely to participate in the Federal Reserve’s Term Asset-Backed Securities Loan Facility, or TALF, said Steven Wechsler, chief executive officer of the National Association of Real Estate Investment Trusts. Vornado Realty Trust may raise as much as $600 million, a person familiar with the matter said yesterday.
The transactions would be the first new issues in the $700 billion U.S. market for commercial mortgage-backed securities since it shut down in 2008 as credit markets froze. Commercial property values tumbled and defaults accelerated. REITs turned to the stock market to raise capital to pay debt.
“If the first deals are successful, we think we can get $10 to $25 billion done in the next six months,” said Kenneth Rosen, who runs a $310 million hedge fund in real estate securities and heads the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley. “The current pipeline is about $3 billion.”
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