Wednesday, July 25, 2007

Finance Thursday
So many articles in today's Wall Street Journal about finance. An interesting article about Blackstone and how it has flipped 60% of the square feet it acquired from Equity Office Properties earlier this year. Some properties have sold on 2.5% cap rates and many transactions are well north of $500 per square foot. This paragraph buried deep in the article is worth noting, especially in light of TIC financing:

Concerns over the financing of office-building sales, including some of the EOP transactions, forced bankers to raise yields on bonds offered in the commercial mortgage backed securities market over the past two months to make them more attractive to investors. That has delayed the closing of at least one deal.

This builds upon an article last week about rating agencies' tougher stance on the securities that hold syndicated commercial mortgage backed loans. The skittishness of the debt market and its impact on TIC deals will be the TIC industry's most important trend for the second half of 2007.

More interesting debt articles here, here and here. Other publications also have articles on the new credit environment. A smarter lending environment is good for the economy. I hope the banks do not go too far in their restraint, but that is not a banker's nature. Bankers and debt buyers are starting to scare themselves. I will not be surprised if credit drys up for a short period for all but the best corporate credits.

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