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Outlook on Commercial Mortgage-backed Securities (CMBS) and Term Asset-Backed Securities Loan Facility (TALF) – 3 of 3
In summary…
Term Asset-Backed Securities Loan Facility (TALF)
- TALF was expanded in May to include highly rated commercial mortgage-backed securities (CMBS). Spreads on AAA-rated CMBS have since narrowed dramatically.
- At its first subscription date in July, the legacy CMBS component of TALF received requests for $670 million in loans. All but one of the bonds submitted were accepted as collateral for TALF loans.
- Two REITs are expected to soon test the new CMBS component of TALF, with each projected to borrow up to $600 million against assets in their portfolios. A substantial amount of the capital raised will likely be utilized to pay down maturing debt.
- As a result of the lengthy ramp-up time for this program, TALF has been extended through March 31, 2010, for existing CMBS and through June 30, 2010, for newly issued CMBS.
A growing number of large property owners, investors and lenders will take advantage of the program by year end.
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Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.
Commercial Mortgage-backed Securities, Commercial Real Estate Outlook Reports, Investment Opportunities, Term Asset-Backed Securities Loan Facility, U.S. Economy
Capital, CMBS, Commercial Buildings, Commercial Mortgage-backed Securities, Commercial Office Building, Commercial Real Estate Investment, Commercial Real Estate Investment Advisory, Commercial Real Estate Investment Strategy, Government Programs, Investment Opportunities, Outlook Reports, TALF, Term Asset-Backed Securities Loan Facility
how can I, as an investor take advantage of this?
I’ve been talking about this since last year. The next big bomb to drop is going to be commercial real estate and it has the possibility to make the residential fallout look like a day at the park. All the companies going out of business and not renewing leases at office complexes in addition to solid companies not being able to refinance is going to create all kinds of issues.
To R:
People have been talking about the commercial bubble for more than the last year. I remember seeing articles in WSJ nearly 3 years ago–so what we are seeing is nothing new or unexpected.
Many large lenders have already written down their book. GS, for example, has written off nearly 50%; while many regionals might find themselves worse off.
Be careful about overstating the case or trying to play the role of siren when most major financial publications have been talking about it for years and we’ve already witnessed the largest CR bankruptcy that will happen (GGP–unless you think Simon is going under).
With CR there is a broad spectrum. Many developers tend to have a local focus and particular business model (e.g. hotels, strip malls, etc….) so be wary of painting with too broad a brush. As always, careful thinking is better than wild speculation.