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OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®

Daily Real Estate News  |  April 1, 2010  |   Financing Gain: Year's First CMBS Deal Arrives
Royal Bank of Scotland Group (RBS) has announced plans to sell a $500 million security backed by commercial mortgages, the first deal of its type to come to market this year.

Analysts are viewing the offer as a sign of investors' willingness to tolerate risk, despite the deteriorating fundamentals of commercial real estate, provided that the deal is accompanied by conservative underwriting and sufficient protection.

The top slice of the deal will likely be offered in the range of 0.95 percentage points over swaps. That is roughly the same price range as the first post-crisis CMBS deal, which Developers Diversified Realty Corp. (DDR) brought to market late last year.

The new-issue market for commercial-mortgage bonds has been quiet since December, when offerings from Bank of America and J.P. Morgan Chase & Co. followed the DDR deal in quick succession. Thomas Zatko, managing director of the real-estate finance group at Babson Capital, observes, "The tap is opening, but not in full force. We will see issuance increase in frequency, but there are still lots of issues around CMBS."

Source: Wall Street Journal, Prabha Natarajan (03/31/10)

© Copyright 2010 Information Inc.

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