DDR CMBS Offering

Investcap Advisors LLC

After a very long dry spell, the CMBS new issue market has finally come to life with its first offering since early 2008. In a deal led by Goldman Sachs and co-managed by Citigroup, Developers Diversified Realty Corporation is the borrower on one loan collateralized by 28 retail properties located in 19 separate states. This is the extent of the deal’s collateral, but what the deal lacks in diversity is made up for in the loan’s very conservative underwriting. One of the most crucial aspects of this deal that made is possible is the federal governments willingness to provide financing for the purchase of the bonds under its Term Asset-Backed Securities Lending Facility (TALF). This deal is clearly not a sign of lenders originating and warehousing debt for the securitization market, but it is a positive step and will certainly aid market participants in the price discovery process that will hopefully limit losses in CMBS.