The first new offering of commercial mortgage-backed securities with attractive financing under the U.S. government's Term Asset-Backed Securities Loan Facility program appears to be headed for a warm reception on the public debt markets. Goldman Sachs is the lead underwriter for $400 million of CMBS debt secured by 28 shopping centers owned by retail REIT Developers Diversified Realty. Investors looking into buying the bonds said market interest allowed the underwriters to bring the unleveraged yield on the top tier of the bonds down to 4%. "If other real estate investors can borrow money at that rate, it would be a real game changer for the commercial real estate market that has been so devoid of financing," said Scott Simon, a managing director at Pimco.
Shoppers are demanding deals this year, and retailers are employing a combination of strategies including early discounting of key items, keeping inventories leaner to avoid deep post-holiday price slashing, and stocking more practical products. Consumers focused on finding specific items may do well to shop early for those, experts say.
Foreclosures, tight financing and high office vacancy rates haven't slowed the recovery of the share prices of publicly traded REITs. REITs' stock prices have nearly doubled since March. REITs are the healthiest part of the commercial real estate market in part because of their access to capital, said NAREIT Vice President of Research and Industry Information Brad Case.
The USAA Real Estate Co. has taken an 80% share in a portfolio of eight shopping centers owned by Regency Centers. Regency said it would generate $104 million in net proceeds from the deal. The grocery-anchored centers -- located in the markets of Los Angeles; San Francisco; Houston; Dallas; Atlanta; Orlando, Fla.; and Raleigh, N.C. -- have 153 tenants and are 94% leased.