Crescent Sells 6 Properties to JPMorgan

Crescent Real Estate Holdings completed a transaction at the end of last month that didn't make many headlines but gave its stake in six Texas office properties to its partner, a unit of JPMorgan Chase & Co., according to a Fox Business News article. The properties are valued at about $2 billion and include The Crescent, a 1,134,826 square foot office and retail complex in Dallas, and Houston Center, a major mixed-use urban real estate development covering four buildings and almost 4.5 million square feet of Class A office space.

Crescent, owned in a joint venture between Barclays Capital and Goff Capital, originally bought into the portfolio in 2009 for an undisclosed sum. Details of the current sale were not disclosed, but it's reported that Crescent will continue to operate the properties for its former JPMorgan partners. The total value of the Texas properties in the deal is approximately $1.85 billion, which means the value of Crescent’s stake was about $444 million according to a Houston Business Journal article.

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Is the CMBS Recovery Faltering?

The Wall Street Journal thinks so. A new article from Al Yoon at the Journal observed that the recovery in the commercial mortage-backed securities market has stalled out even though before the summer all indicators showed a favorable return on the horizon post-recession. An excerpt from the article:

Investment banks have sold four issues of the bonds, valued at about $6 billion, since the market hit the brakes this past summer because of investor skittishness about the souring economy and an 11th-hour decision by rating firm Standard & Poor's to pull its rating from a deal.

But to sell these issues banks had to structure them differently, providing buyers of the safest bonds more protection than usual. Now, weak investor demand is hampering the sale of the riskier parts of the new issues.

For example, J.P. Morgan Chase & Co. has been trying to sell a quarter of its $1 billion issue for two weeks as investors have been balking at yields on lower-rated classes, according to two investors familiar with the deal. Sales have been slow even as J.P. Morgan raised the risk premiums—or the amount of yield above their interest-rate benchmark—at least twice for these riskier bonds, the investors said.

Meantime, the bank easily sold the senior, safest bonds within days of the deal's announcement. A spokesman for the bank declined to comment. Investors say J.P. Morgan has sold most of the high-risk bonds but took much longer than usual.

The difficulty means that banks may have to go even further to make commercial mortgage securities attractive to investors. "Everyone wants to be in a safe haven, but once you go down in the capital structure, it's not looking so good," said Julia Tcherkassova, a strategist at Barclays Capital in New York.

For more news and information visit Blumberg Capital Partners.

Dallas Office/Retail Crescent Complex Gets $205M Loan

Crescent Real Estate Equities LLC, a real estate company owned by Barclays Capital and Goff Capital based in Fort Worth, has secured a new $205 million mortgage loan for its office and retail complex in Dallas known as The Crescent, marking one of the largest real estate loans in Dallas in years according to a Dallas Morning News report. Metropolitan Life Insurance Co. provided the loan for The Crescent; Crescent Real Estate Equities also recently took out a loan from Northwest Mutual Life Insurance for $93 million for it's Trammell Crow Center in Dallas.

The Crescent, located on the edge of Dallas' Central Business District, totals 1,134,826 square feet of rentable space in 3 contiguous buildings with a 19-story center structure and two adjoining 18-story structures. Major tenants of the property include Goldman Sachs, Morgan Stanley, SmithBarney, Citibank, Credit Suisse, Deutsche Bank, Merrill Lynch and J.P. Morgan. The complex, originally built in 1986, also includes the Crescent Court Hotel, and reportedly cost an estimated $400 million to develop.

For more news and information visit Blumberg Capital Partners.