From the category archives:

CMBS

Record CMBS Loss Severities Expose Major Flaw in Securitization, Compensation Models

February 18, 2010

I love zerohedge. Last week, they posted a story Chris Germain San Francisco whose headline blared “Kanjorski Admits There Is A Growing Bubble In Commercial Real Estate As S&P Observes CRE Losses Could Wipe Out Banking System.” You’re forgiven if you didn’t know, but Kanjorski is a Congressman from the 11th District of Pennsylvania, and […]

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Commercial Real Estate Loans, Jamcrackers, Pike Poles and Dynamite

January 5, 2009

Many commercial real estate loans are heading inexorably toward their 2009 maturities, and straight into a titanic log jam in the capital markets. In the old days of commercial logging, this uncertain situation called for a Jamcracker. The job was extremely dangerous and required the Jamcracker to walk over the log jam and break it […]

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The Coming Bust In Commercial Real Estate: Why Developers Are Desperate For the Dole

December 23, 2008

Both Bloomberg and the Wall Street Journal published stories on Monday warning of increasing trouble in the land of commercial real estate. It’s going to be pretty bad, there’s no doubt about it. But why is it bad and who is it really going to hurt? The Bloomberg headline claimed defaults could triple, but how […]

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TARP Torpor Torpedoes REITs

November 22, 2008

No wonder the original plan what plan? was only three pages long. It turns out that there was no plan. When I heard the news that Treasury had reversed course on the Troubled Asset Recovery component of the Troubled Asset Recovery Plan, that and writing an article with the above title were the first things […]

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Big CMBS Loans Near Default; CMBX Soars, REITs Tank

November 18, 2008

The BBB-5 CMBX is above 3250, do you know where your money is? These are record levels for the index, and they are seemingly indicative of even greater trouble in the CMBS market. If one were to use the stock price of many Mortgage REITs however, it would seem that the soaring Markit index is […]

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Controlling Class Smack Down For Mortgage REITs?

October 7, 2008

I went for a ride on my mountain bike last week. Is it any wonder that all I could think of during the long, steep, uphill grades was REITs? The analogy is apt, as making money in this sector is almost as strenuous. This afternoon, however, after I wiped the vomit from my shirt luckily […]

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Mortgage REITs Bearing CMBS "Tail" Risk

August 29, 2008

The Mortage Bankers Association today reported a 98% year-over-year decline in CMBS new issuance, which has continued to leave Morgtage REIT portfolios at the mercy of the thinly traded CMBX in terms of valuations. Pricing pressure on CMBS (as evidenced by the CMBX) has abated recently, but the index is still indicating levels of distress […]

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What is a Securitization?

August 23, 2008

Securitization is the process of taking groups of loans and splitting them into different classes of securities, and then selling the different classes of securities to third party investors. The brief video below does a great job of explaining how it all works. Many Mortgage REITs buy Commercial Mortgage Backed Securities (CMBS), which are commercial […]

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Earlier Vintage CMBS "Grossly" Mispriced

August 23, 2008

In an earlier article (“Mortgage REIT Yields Still Look Safe, But Stick to the Seasoned Veterans”), I wrote that high yield Mortgage REITs with relatively “seasoned” portfolios offered much better safety and value than those with portfolios stuffed full of more recent vintage CMBS. Now, analysts at Barclays Capital also say that the pricing on […]

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Anthracite Gets Hot Again!!

August 18, 2008

“The Taliban used to hang the victim’s body in public for four days. We will only hang the body for a short time, say 15 minutes. Adulterers will still be stoned to death, but we will use only small stones.” Afghan judge Ahamat Ullha Zarif on a kindler, gentler Afghanistan ….And a taxable loss, dear […]

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