Developers Diversified Sells CMBS
Here is a Reuters article on Developers Diversified's (DDR) sale of three tranches of CMBS. The largest tranche, a $323 million AAA-rated CMBS, was priced to yield 3.8%, which was a lower yield than expected due to high demand. DDR used the government sponsored TALF (Term Asset-Backed Securities Loan Facility). The two smaller tranches, $42.5 million and $3 million, did not use TALF and were priced at 5.75% and 6.25% yields, and came with ratings of AA and A, respectively.

This was the first CMBS deal since June 2008. The level of demand was encouraging. DDR bought one of the Inland REITs a few years ago and if I remember correctly, investors received approximately $12 per share in cash and $2 in DDR stock. The original investment was $10 per share. A large portion of that $12 per share in cash rolled in to Inland's American REIT, and was a primary reason Inland American raised so much money. DDR has also done business with Dividend Capital.

Article on Impending Doom in Commercial Real Estate
Here is a Bloomberg article on the "huge," pending commercial real estate crash. Really? Thanks for letting us know - three years too late. The commercial real estate crisis in now in its second year, and about a year ago cap rates jumped over one whole percentage point almost over night due to the credit crisis. Commercial mortgage backed securities are expected to approach record high default rates above 6% in 2010. The doom is already upon commercial real estate. In talking to various real estate professionals, I am hearing that cap rates have stabilized and are no longer increasing, which may lead stabilized values. Decreasing rents and higher lease expenses will put pressure on net operating income, which despite level cap rates will lower valuations.