CDOs, MBSs, CMBS, CMOs

Commercial Real Estate Status

Posted on Monday, April 27, 2009

US Commercial real estate $6.5 trillion industry
• 4 billion SF office
• 13 billion SF industrial
• 9.5 billion SF shopping
• 4.4 million hotel rooms
• 33 million SF rental apts
Shopping centers are $2.25 trillion in sales and $125 billion in state sales tax
40% of local government taxes come from commercial real estate
Threatened mostly by credit crunch, reduced consumer confidence/spending/GDP, and vacancies. Well known recent case is General Growth Properties= bankruptcy
CMBS market is $900 billion industry. Securitized or conduit debt is 60% of commercial mortgage market
Most commercial mortgage loan have 5 to 10 year maturity dates
Through 2009 $400 billion will mature. $1.4 trillion 2010 to 2012
No credit available to refi it: $230 CMBS issued in 2007. Under $20 billion in 2008.
Pension fund exposure is $200 billion. REIT exposure is $300 billion.
========the following also applies to residential MBS========
REMIC (Real Estate Mortgage Investment Conduit) is an IRS section 860A and 860G Special Purpose Vehicle (SPV)
• IRS REMIC modification procedures are in 2007-72, 2008 47 and 2008-28 (expanded)
• “significant modification” per Treasury Reg 1.1001-3 results in “prohibited transfer tax”


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