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Subject: [doc-jp 73971] Bull & Bear - Commercial R.E.
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Commercial real estate is a topic I will be focusing on in the next couple=
 of emails=2E  This is really the next big shoe to drop and it is right ar=
ound the corner=2E  The banks, particularly the regional (smaller banks), =
are heavily exposed to this sector and their will be a heavy price to pay=2E=
  Expect more bailouts and money printing in 2010=2E


Business Week=20

When Goldman Sachs sold complex bonds backed by the Arizona Grand Resort a=
nd other commercial properties in 2006, it suggested the returns would be =
strong=2E The 164-acre luxury Arizona Grand, set against the Sonoran Deser=
t in Phoenix, boasted an award-winning golf course, deluxe spa, and severa=
l swank restaurants=2E The on-site water park was named one of the best in=
 the country by the Travel Channel=2E With the resort's new owners plannin=
g to refurbish hotel rooms and common areas, Goldman told investors that t=
he renovations would help boost cash flow=2E As was so often the case duri=
ng the real estate boom, the lofty projections didn't pan out=2E When the =
economy softened and business travel slumped, Arizona Grand's bookings sli=
pped to 67%, from 80%=2E The resort defaulted on the $190 million underlyi=
ng loan in 2009=97a hit that alone could largely wipe out investors who bo=
ught the riskier pieces of the Goldman mortgage-backed securities deal=2E =
 It would be easy to write off this blowup as just another casualty in the=
 regular boom-and-bust cycle of the $6=2E4 trillion commercial real estate=
 market=2E But the Goldman deal, with its unrealistic assumptions, multipl=
e layers of investors, and stratospheric prices, helps illustrate why this=
 downturn is more complicated than previous ones=97and will turn out to be=
 far costlier=2E=20


Bloomberg

Tishman Speyer Properties LP and BlackRock Realty, the owners of Manhattan=
=92s Stuyvesant Town- Peter Cooper Village, moved closer to restructuring =
$3 billion in debt on the apartment complex as the property verges on defa=
ult, Fitch Ratings said=2E The companies turned the loan over to mortgage =
servicer CW Capital on Nov=2E 6, Fitch said in a statement=2E Fitch said t=
he property doesn=92t produce enough income to pay the debt and a reserve =
fund probably will be depleted by year-end=2E A sale is more likely than a=
 restructuring because the complex has lost so much value, said Kevin O=92=
Shea, managing partner and head of the real estate practice at the law fir=
m Allen & Overy=2E=20

The biggest holders of the securitized mortgage are Fannie Mae and Freddie=
 Mac, the government-owned home-loan finance companies=2E Freddie Mac has =
said it doesn=92t expect to lose money on the bonds backed by the property=
=2E Tishman Speyer and BlackRock paid $5=2E4 billion for Stuyvesant Town i=
n November 2006, near the top of the market, in the biggest deal in New Yo=
rk residential real estate history=2E They counted on increasing rents but=
 were blocked by a tenant lawsuit and rising costs=2E Since 2007, U=2ES=2E=
 commercial property values have fallen about 40 percent and apartment ren=
ts declined nationwide=2E The drop in prices and the credit freeze have ma=
de refinancing many loans impossible=2E=20




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