Big Banks Lead the Return of Key Funding Source for Commercial-Property Owners; Still, a Fraction of Precrash Levels

By: Lingling Wei in the Wall Street Journal

Even as woes mount in the commercial-real-estate market, a once-vital source of funding for commercial-property owners is showing signs of life.

Banks including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. are expected to launch in the coming weeks two offerings of commercial-mortgage-backed securities, or CMBS, totaling $1.4 billion, according to people familiar with the matter. Representatives at the banks declined to comment.

J.P. Morgan is leading a $650 million offering backed by properties owned by real-estate investment trust Vornado Realty Trust, the people with knowledge of the situation said. Vornado, of Paramus, N.J., will use the proceeds to repay existing debt, these people said. A spokeswoman for the company declined to comment.


[BLOGGER COMMENT: The launch of CMBS 2.0 is still reserved for best in breed Sponsors with clean, low leverage, solidly cash flowing deals.  It is encouraging to know that capital is once again starting to flow into commercial real estate.]

View complete article

Advertisements