Tranche Warfare; Evaluations of TALF; Banks Adopt New Rules (Wednesday's News & Notes)

Here are some recent news and notes about retail and retail real estate.

  • Ready for tranche warfare? FinCriAdviser takes a good look at the brewing tensions building between senior and junior bondholders of CMBS debt. The story predicts we'll see a fair number of lawsuits stemming from conflicts over how to restructure and resolve troubled commercial mortgages. Senior holders may not want to go along with restructuring these loans because they stand to get paid back regardless.
  • PREIT shed some light on its refinancing efforts. Citybiz showcased the relevant details in a recent SEC filing from the REIT.
  • The latest locale for an Apple Store? Underneath the Louvre. We've heard some of their stores referred to as great pieces of retail architecture. So why not?
  • Sam Zell spoke out against the idea that commercial real estate is facing an armageddon. He's not brushing off the troubles the sector faces. But he does think the crisis facing the sector has been "greatly exaggerated."
  • The CRE Review raised some interesting criticisms of the Fed's TALF program in part sparked by a post on the Anonymous Banker blog. CRE Review points out that to date all the action in regards to TALF has been in the Legacy CMBS program. It has done little to actually get new lending going and both posts wonder if it will be effective in getting securitization markets working again.
  • Both posts were partly in response to the recent deal involving Developers Diversified Realty and TALF. There are a lot of details about that at FT Alphaville. DDR's success or failure could set the stage for more REITs to try and line up financing this way.
  • Meanwhile, a piece in the Wall Street Journal looks at how banks are rushing to adopt new rules allowing them to reclassify nonperforming loans as something else, which would mean banks would have to absorb fewer losses on bad mortgages. Mike Shedlock, at Mish's Global Economic Trend Analysis had some choice comments about the new rules. Shedlock wrote, "These kind of reporting games do not really help anyone. All the pretending does is prolong the agony. Banks know the true score even if investors don't. Thus, such measures to free up capital for banks to lend will not work here anymore than the same shell games encouraged lending in Japan."
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