Saturday, November 24, 2012

Commercial Mortgages Getting Frothy?

The WSJ reported last week that it's getting frothy out there again, and I agree. They highlight the Retail Fashion Outlets of Las Vegas deal which went from a 58% senior mortgage to a 58% Senior mortgage plus a 26% junior mortgage (which could be mezzanine debt, it's not clear because the author of the article believes junior mortgages and mezzanine debt are the same thing...).

The article goes on:
Some owners are taking cash out of their properties. For example, the owners of Extended Stay—Centerbridge Partners, Paulson & Co. and Blackstone Group BX +1.01% —plan to borrow $3.5 billion by selling a combination of commercial-mortgage securities and mezzanine debt. They would put about $700 million of the proceeds in their pocket and use the rest to replace existing debt.
You'll recall that just two years ago ESH was mired in bankruptcy, in-fighting amongst special servicers, and a year-ago attempting a $2 billion takeout financing to buyout Centerbridge and Paulson. Today, nearly twice that is apparently available from the market and at much lower costs to the borrower.


crabsofsteel said...

you know the world is a wonderful place when you can borrow money at

maz007 said...

i don't think commercial mortgages getting frothy, I just read an article about how much its going good. I don't understand :/

John said...

May be that article published before..

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