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The Best Gift: Time

Government programs are tweaked to help commercial real estate.

With Developers Diversified Realty making official its plans to raise up to $700 million in CMBS financing through the government-sponsored Term Asset-Backed Securities Loan Facility (TALF) program, it seems the Obama administration's efforts to help the commercial real estate industry might be beginning to pay off.

While TALF's initial deadline passed without any investors signing up for government loans to buy new CMBS bonds, today there are about a dozen deals in the works, according to participants in a July 21 webcast produced by the Commercial Mortgage Securities Associations (CMSA). Most of those deals reportedly involve retail REITs, including mall owners Westfield and the Macerich Co. What's more, the U.S. Treasury has already appointed nine fund managers for the Public-Private Investment Partnership (PPIP) program for legacy securities, with acquisitions expected to start approximately three months from now.

However, in mid-August, the Federal Reserve and Treasury approved extending TALF loans against legacy CMBS through March 31, 2010. Because new CMBS deals can take a significant amount of time to arrange, the Federal Reserve and Treasury also approved TALF lending against newly issued CMBS through June 30, 2010.

“It's going to take time for people to get everything in order and actually participate,” said Lisa Pendergast, managing director with Jeffries & Co., a New York City-based global investment bank. After 11 months of zero issuance, the U.S. CMBS market finally saw $600 million in issuance in June and $300 million in issuance in July.

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