Finance

The federal government’s takeover of Fannie Mae and Freddie Mac is a necessary step to stabilize the U.S. housing market, according to industry experts who are still examining the ramifications of the announcement. The takeover will go a long way toward solving what Stuart Saft, partner in the law firm of Dewey & LeBoeuf called a “catch 22” that has been bedeviling a critical part of the economy, housing. Real estate, being an illiquid asset, needs a steady stream of capital inflows. The credit freeze-up has meant that home prices have fallen, thus causing lenders to be much more cautious…

Buzz about a possible sale of Lehman Brothers escalated today after a top official at state-owned Korea Development Bank confirmed that KDB was trying to form a consortium with private banks to buy a stake in the troubled investment banking firm. Several news reports out of Seoul quoted Min Euoo-sung, CEO of KDB, as saying talks about Lehman Brothers were ongoing but were running into problems over prices. Min, who had been head of Lehman’s operations in Seoul until joining KDB in June, did not indicate how much of a stake a the consortium would seek. But Britain’s Sunday Telegraph…

As a second summer of discontent for the capital markets draws to a close, finance experts are eyeing a new category of player that is helping fill the void. “The hedge funds are here to stay for the foreseeable future until the capital markets fix themselves,” declared Cliff Mendelson (pictured), a senior managing director for Transwestern’s structured finance group. Strictly speaking, of course, hedge funds are hardly newcomers to commercial real estate; the real novelty is their higher profile. It is no secret that hedge funds have taken a stepped-up role in providing mezzanine debt, preferred equity, and other products…

Net-lease sales may be down from those easy-credit days before the summer of 2007, but Howard Sands, founding principle of Los Angeles-based Corporate Partners Capital Group Inc., thinks that the lower deal volume still includes a good many relatively healthy net-lease transactions. As both sellers’ and buyers’ expectations come closer together, the market is approaching a new equilibrium, he says. Sands’ own company, which engages in both single-asset and portfolio net-lease transactions, has been an active participant in the market itself recently, typically buying one-off net-lease properties ranging from $5 million to $100 million and portfolios of up to $300…

Lehman Brothers Holdings Inc., in an effort to both staunch its massive losses and tap into a burgeoning market for commercial real estate debt, is reportedly exploring a strategy that would have it set up a company to acquire some of its mortgage assets. The company would be capitalized by other investors. The plan, which Lehman has not confirmed for CPN or any other media outlet, comes in the wake of a $2.8 billion loss for the company ($5.14 per share) in its second fiscal quarter of 2008, compared with net income of $1.3 billion for the second quarter of…

Lehman Brothers Holdings Inc.’s sale of its commercial real estate assets may entice opportunity funds with the patience to wait for a positive turn in the real estate cycle, according to two real estate professionals. According to media reports, Lehman is looking to peddle about $14 billion of its $40 billion in commercial property and securities. A group that includes BlackRock Inc. is negotiating with Lehman to buy the assets, according to a report last week from Bloomberg. “Lehman has an awful lot of real estate that is clogging up their balance sheet, and they have to get rid of…

In business parlance, doom usually comes paired with gloom, and the current state of the real estate market – even commercial sectors whose fundamentals aren’t that bad – inspires people to haul out that set of words. But not everyone sees things that way, least of all in the net lease business.Andrew Sandquist, senior vice president in the Oak Brook, Ill., office of CB Richard Ellis Inc., and a net lease investment specialist with the company’s investment properties group, points out that the pace of net lease investment sales may be slower than it once was, but that deals are…

There’s little doubt that debt, besides being the raw material of the real estate crunch, is also a pretty hot commodity in some ways, as property values decline and loan-to-value ratios shift. In recent weeks, as reported by CPN, such investors as the new Investcorp Real Estate Credit Fund L.P. and Inland American Real Estate Trust have been eager to snap up real estate debt. New York-based Apollo Real Estate Advisors has also stepped up its interest in real estate debt recently, raising additional capital for its debt investment fund, Apollo Real Estate Finance Corp. (AREFIN). All together, the firm…

Led by the retail and multi-family sectors, a measure of CMBS investment risk has edged upward for the first time in four years, a study by Fitch Ratings has concluded. The analysis of five major property sectors in 379 markets shows that the average cash-flow volatility of properties nationwide score reached 2.98 in 2007, a slight increase from the 2.94 score tallied in 2008. The 306 secondary markets studied showed more volatility than did the 73 primary markets. According to Fitch, the results jibe with expectations generated by a slowing economy. “I think you’re starting to see the effect of…