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.