CMBS Savior? Developers Diversified Deal Is Nearer

CMBS Savior? Developers Diversified Deal Is Nearer –

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A closely watched deal that may help uncork the commercial-property debt market is picking up steam after being threatened by some queasiness by the Federal Reserve, according to people familiar with the matter.

The Fed is sending signals that its concerns over the deal are easing, paving the way for the first sale of commercial-mortgage-backed securities, or CMBS, through a major rescue program called the Term Asset-Backed Securities Loan Facility, or TALF. The credit-starved real-estate industry has been hoping that the debt sale by shopping-center giant Developers Diversified Realty Corp. would lead to other CMBS sales. (see link above to read the entire story)

BLOGGER COMMENT: I recently attended the Crittenden Commercial Real Estate Finance Conference. The commercial real estate world is abuzz talking about TALF. If DDR can pull off this transaction the thinking is that there will be CMBS securitizations in 2010. While not to the level of 2007 CMBS getting some traction should encourage commercial real estate lenders to begin lending again.  This will also break the ice for CMBS 2.0 with non-recourse rates between 7-8% fixed for 10 years on a 30 year amortization schedule. Leverage is not expected to be 80% as in the last cycle, but 70% LTV sure beats 0%.