New-York based REIT Cypress Sharpridge Investments plans to raise up to $142.8 million in an IPO of 18 million shares. In a filing with the Securities and Exchange Commission, Cypress said it expects the offering to price between $7 and $8 per share. The proceeds will be used to repay roughly $120 million of outstanding debt under Cypress' repurchase agreements. Cypress Sharpridge, which focuses on agency RMBS and subordinated ABS and CDOs, stated that its investment strategy will allow it to generate returns in a variety of interest rate scenarios, as well as capitalize on the rapid growth in the number of CDO securities in the secondary market.
Sallie Mae and its would-be private equity buyers may settle their differences in court, after the Reston, Va.-based student loan provider filed a lawsuit in the Delaware Chancery. At issue is whether steep lender subsidy cuts contained in the College Cost Reduction and Access Act constitute a materially adverse change (MAC), thereby negating the buyout group's obligation to finish the deal under its original terms.
J.C. Flowers & Co. led the consortium that agreed to acquire the company for $25 billion in April. The revised offer is worth approximately $21 billion, with provisions to be increased should Sallie Mae meet certain performance standards. Market observers say the two sides have more reasons to proceed with the deal than they do to enter a potentially protracted court battle. "Both sides are pretty dug in but I'm not sure that either side wants to roll the dice on a judge's interpretation of materiality," said John Fenn, a research strategist with Citigroup.
Mercury Partners, a real estate alternative investment manager, appointed Lawrence Sperling as its head of Asia private equity, effective immediately. Sperling has more than 20 years of experience in real estate principal investing, lending and securitization. Sperling was managing director and head of the real estate strategic transactions group for Credit Suisse for the Tokyo-based Asia Pacific Region. Sperling was at Credit Suisse for 14 years, where he was involved in more than $7.5 billion of real estate-related principal investments, loans and securitizations, and more than $15 billion of principal investments, loans and securitizations in the U.S. Before Credit Suisse, Sperling was a vice president of Eastdil Realty, which he joined in 1987.
Wilmington Trust made several additions to its Corporate Client Services (CCS) business in New York last week. The new team will be led by Daniel R. Fisher, division manager within CCS' Capital Markets group. Fisher will manage the company's bankruptcy, loan administration, project finance, and equipment finance teams. He established a U.S.-based trust, agency, and escrow group and serving in sales, account management, and product management for large, multinational service providers. Fisher will be joined by Patrick J. Healy, who will market and administer global corporate trust accounts for CCS. Healy specializes in serving default and bankruptcy transactions and European high yield investment vehicles. Adam K. Berman, Boris Treyger, and Elizabeth Wilms also join the group. In his new position, Berman will assist in expanding CCS' trust and agency services for clients involved with project finance. Treyger will also work to grow CCS' trust and agency services, with a concentration on new markets. Wilms will provide trust administration services for the team's accounts.
Thornburg Mortgage, a single-family super-prime residential mortgage lender that focuses on jumbo and super-jumbo ARMs, announced a series of revisions to its third quarter estimates last week. The company now estimates that it has sold approximately $22 billion of high quality ARM assets since Aug. 10, slightly above the previously announced estimate of $20.4 billion in asset sales as of Aug. 17. The company also increased its loss estimate to $1.1 billion from selling bonds backed by ARM loans, up from the $863 million in anticipated losses that it announced in August. The revised loss estimate is mainly due to the receipt of actual sale price documentation for asset liquidations conducted by third-party financing counter-parties instead of sales conducted by the company. The increased loss estimate is also due to additional asset sales that occurred after Aug. 17, as well as a $6 million impairment charge on one MBS backed by pay option ARMs. However, Thornburg said the current credit reserves on its balance sheet will be adequate to cover expected and potential future credit losses on its loan portfolio. The company estimated that seriously delinquent loans will represent 0.27% of the loan portfolio as of Sept. 30, 2007. The Santa Fe-based firm has lost more than half its value on the New York Stock Exchange this year, according to published reports.
Moody's Investors Service said that five of the seven commercial property types measured in its Red-Yellow-Green report scored in green territory for the third quarter, indicating that real estate markets that support CMBS remain strong. The two property types that show some ongoing weakness are the suburban office sector, which scored 47 in the third quarter, and the full-service hotel sector, which scored 64. Both these scores are in the yellow range, Moody's said. The multifamily sector gained three points, pushing it even further into green territory with a score of 83. Currently, the five best markets in the U.S. are: Los Angeles which scored 84; New York, which scored 80; Richmond, Va. also 80; Long Island, N.Y. at 79; and Honolulu at 78. The five worst markets in the U.S. are: Jacksonville, Fla. at 39; Trenton, N.J. at 43; Wilmington, Del. at 44; West Palm Beach, Fla. at 44; and Las Vegas at 45. Moody's Red-Yellow-Green report scores markets on a scale of 0 (weak) to 100 (strong) and describes them in traffic light colors, with scores of zero to 33 represented by red, yellow ranging from 34 to 66, and 67 to 100 being green.
The Mortgage Bankers Association last week added the Foreclosure Prevention Resource Center to its popular consumer education site, HomeLoanLearningCenter.com. The Foreclosure Prevention site is designed to advise homeowners who might have difficulty making their loan payments on how to contact their loan servicer or the company to whom they make payments each month. The idea is to determine alternatives to foreclosure based on the borrower's financial and employment status. The bi-lingual site has a listing of major loan servicers with their contact information as well as a guide to the "Things to Know When You Contact Your Lender".
Fitch Ratings lowered the ratings on two Asian CDOs last week, citing increased default risk. The rating agency lowered a $50.9 million synthetic CDO being managed by DBS Group Holdings by a notch to AA+', while it also cut a $12.6 million synthetic CDO arranged by Lehman Brothers by two notches levels to A'.
ING Real Estate is expanding its U.S. commercial mortgage-backed securities business in order to take advantage of the market dislocation, according to published reports. Indeed, earlier this month Morgan Stanley cut approximately 600 jobs from its mortgage unit and consolidated its three existing lenders into one subsidiary.
Mortgage issues have also hit Europe with two large European issues of commercial mortgage-backed securities postponed, including an HSBC securitization of the GBP800 ($1.6 billion) million that it loaned Spanish property group Metrovacesa to buy the bank's London headquarters in Canary Wharf. Lehman Brothers' also postponed a 1.5 billion ($1.1 billion) issue backed by the Coeur Defense building in Paris. But despite the troubles, ING is also pushing ahead across seas, announcing that it has acquired three office buildings in Germany for 90 million including the Westend-Ottensen office building in Hamburg, the Ernst-August-Carre in Hannover and Office Park Rheinlanddamm in Dortmund. All three properties will be added to the portfolio of the ING Real Estate European Office Fund, which was launched as a semi closed-end fund at the beginning of 2006.
The fund, which is almost fully committed ING said in a release, has increased its targeted size from 700 million to 1 billion and has recently changed its structure to admit more investors, also adding Germany to the group of investment countries, ING said.
ING Real Estate runs approximately $2.5 billion in U.S. commercial mortgage-backed securities.
First American LoanPerfor-mance, a residential mortgage data and analytics provider, announced enhancements to TrueStandings Securities, its Web-based business intelligence platform that provides loan- level access to First American LoanPerformances database. The database contains over $2 trillion worth of mortgage transactions or 85% of active nonagency securitized mortgages.
Recent enhancements include an in-progress period reporting function to provide users an earlier view of performance and prepayment information up to twelve business days earlier than previously able. Bulk export capability will enable faster, more detailed analysis of up to two gigabytes of loan-level data which is posted to a file transfer protocol Web site, LoanPerformance said. The company added that bulk export can be used for performing a more detailed analysis at the loan level on large data sets which facilitates the transfer of loan-level data as an input into proprietary modeling systems and the LoanPerformance RiskModel. Finally the new updates will include a search tool for finding securities that match a specific CUSIP number for analysis, benchmarking and modeling purposes, the company said.
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