The Federal Reserve is set to purchase its final round of existing commercial mortgages today, according to Dow Jones, marking the end of this part of the Term Asset-Backed Securities Loan Facility, or TALF, and raising questions over whether the commercial market is strong enough to go it alone. Although by some experts’ accounts the Fed has played a relatively small role in this sector, Darrell Wheeler, head of commercial mortgages with Amherst Securities, said that the program lifted market morale. “TALF provided psychological support for the market,” Wheeler said. “It served its purpose at the time it was needed.”

As the fall of 2009 comes to a close, many of the commercial real estate lenders continue to limit their exposure to financing for real estate. The buzzword for 2009 is “extend and pretend,” whereby a bank extends the term of a loan to a later date. The legendary Samuel Zell, chairman of Equity Group Investments, the keynote speaker at the NYU Capital Markets conference Nov. 19, stated that “our government has become the bailout city. If a loan is kept current, banks will ‘pretend and extend.’” No one is surprised by the “pretend and extend concept,” especially if you had the opportunity to gain insight from the Federal Reserve’s October 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices and hear the comments made by Ben Bernanke, chairman of the Federal Reserve, in a speech at the Economic Club of New York Nov. 16. The Fed’s Opinion Survey addresses changes in the supply and demand of loans to businesses and households over the past three months. The results were based upon responses from 57 domestic banks and 23 U.S. branches and agencies of foreign banks. [more]

Richard LeFrak, president and chairman of the LeFrak Organization, and William Rudin, president of Rudin Management

Heads of two of the city’s leading real estate families said although the short-term commercial property landscape remains difficult, opportunities are fast approaching. Richard LeFrak, chairman and CEO of the LeFrak Organization, told an audience during a Real Estate Board of New York luncheon in Midtown this afternoon that signing a new lease with a tenant was similar to a famously difficult medical procedure. “It is like having a colonoscopy,” he said. “That is exactly what it is like.” He was joined on a panel by William Rudin, president of Rudin Management, and Jeffrey DeBoer, president of the national trade association, the Real Estate Roundtable, in a discussion moderated by Steven Liesman, senior economics reporter for CNBC. Rudin confirmed that striking lease deals was hard work, but there was more activity in the market. [more]

From left: Whitney Wilcox, Isaac Zion, Howard Nottingham, Jay Koster, Steven Koppel, at last night’s REBNY meeting

Lenders mulling which borrowers to chase into foreclosure will be considering not only the viability of the struggling real estate projects but also the relationship with the developers, finance experts said at a panel last night held at the Real Estate Board of New York. While most lenders do not want to take back distressed properties and are content to extend loan terms, in certain situations they will move against the owners. In those cases, aggressive efforts to take back properties will at times be made based on the level of business the borrower has with the lender, said panelist Steven Koppel, partner at law firm Jones Day. “A strong bank may have more of an appetite to force the issue, especially if the borrowing entity is not a client they want in the future or is in an asset class they are not really interested in,” Koppel said. Comments

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Ackman-Ziff’s Russell Schildkraut (left) and CBRE’s Enoch Lawrence

Despite the recent extension of the deadlines for the federal Term Asset-Backed Securities Loan Facility, or TALF, real estate finance experts are divided on whether the program will have any direct impact on New York City commercial real estate even after the program is expected to be up and running next month. Since the Federal Reserve created the TALF program, it has not been used to finance any new commercial mortgage-backed securities pools yet, and experts said that was in part because the credit markets have improved in recent months.  More

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CBRE’s Enoch Lawrence (left) and Sam Chandan of Real Estate Econometrics

In a sign of how troubled the market for bonds backed by commercial
real estate may be, and by extension, the future of some office
building owners, a key deadline for federal bailout money designed to
get money flowing again to landlords has come and gone without any
takers. Up until June 16, investors in those bonds, like insurance companies,
hedge funds and credit unions, had been invited to dip into the Term
Asset-Backed Securities Loan Facility, or TALF, to borrow some of the
$200 billion fund set by the Federal Reserve Bank of New York. The chief reason there’s been zero interest in TALF so far, according to industry analysts, economists and brokers, is that there hasn’t been enough time to put complicated deals together. Indeed, it was only in May that the Fed announced that commercial mortgages would be eligible for TALF money, and a month wasn’t long enough for lenders to market their assets to willing buyers, they say. [more]

The Federal Reserve may have few deals for the start of its program to
aid the commercial real estate market. Today is the first monthly
deadline for investors to apply for loans to buy new commercial
mortgage-backed securities through the Term Asset-Backed Securities
Loan Facility. Today’s application deadline applies to
securities issued this year, and in late July, the Fed will start
accepting investor requests for loans to purchase older CMBS. “I would
be very surprised” if there are any deals this month, said Kevin
Petrasic, a former official at the Office of Thrift Supervision.
“Unless the market really starts to pick up within the next couple
weeks, I think July is going to be a little challenging as well.” [more]

1. West 54th Street restaurant owner sues Joe Moinian and Mort Zuckerman [NYO]
2. Asbury Park, NJ, building where Springsteen performed going up for auction [Post, 4th item]
3. Lazard interviews real estate consultants in search of 300,000- to 400,000-square-foot space [NYO]
4. European cosmetics retailer Inglot leases store at 1592 Broadway [Post, 3rd item]
5. A roundup of recent Manhattan lease deals [NYO]
6. Federal Reserve expands TALF program [Bloomberg]
7. Profits fall 57 percent for home siding maker [Bloomberg]
8. Obama administration discusses giving federal agency power to regulate mortgages [WSJ]
9. Silverstein appears to have upper hand before next WTC negotiation [WSJ]
10. ING Clarion buys seven Midtown properties [NYO]

11. Activist Bruce Marks campaigns on behalf of homeowners [WSJ]
12. City Council will fast-track bill lifting residency requirements [NYDN]

13. Rhea prepared for Housing Authority job, editorial says [NYDN] [more]

 Left to right: Jorden Tepper, Jonathan Miller, Adelaide Polsinelli

Brokers, appraisers and other real estate professionals are not
expecting the Term Asset Backed Lending Facility to cure what ails New
York’s residential real estate market. TALF, as it’s called, is
designed to help banks get rid of bad assets and start making new
loans. While unfreezing credit would be a step in the right direction,
the experts that The Real Deal talked to also pointed to other problems
plaguing the market that are not addressed by the Treasury program.
Whether TALF can help their businesses remains to be seen. [This is the second in a two-part Web series on how the federal loan guarantee plan affects New York City real estate. The first part was on the commercial market.]
[more]

 Left to right: Robert Knakal, Patrick Hanlon, Barry Hersh

Brokerage and financial advisory firms are studying the recently
released federal Public-Private Investment Plan to see how they can
profit from the complex program. The two-part plan provides loan
guarantees for the purchase of troubled loans under the Legacy Loan
Program and securities under the Legacy Securities Program, including
those written on commercial real estate. The Legacy Securities Program
would tap into funds created through the Term Asset-Backed Securities
Loan Facility, known as TALF. The government hopes that credit will
free up as bad debt is removed from bank balance sheets. Experts say
that because the plan is still under development it is difficult to provide
specific examples to New York City, but The Real Deal spoke to three real estate pros to get their take on the local commercial real estate implications. [This is the first in a two-part series on how the federal loan guarantee plan affects New York City real estate. The second part will be on the residential market.] [more]