Commercial Mortgage News

Standard & Poor's has announced that Under Armour Inc. will replace mortgage lender Indymac Bancorp Inc. in the S&P MidCap 400 after the close of trading on May 15. S&P said Indymac ranked 400th in the index as of May 13, with a market capitalization of approximately $188 million. Indymac is the Pasadena, Calif.-based holding company for IndyMac Bank FSB. S&P can be found online at http://www.standardandpoors.com.

Hersha Hospitality Trust, a Philadelphia-based real estate investment trust, has priced a public offering of 6 million shares of common stock at $9.90 per share. The hotel REIT said the estimated net proceeds of $56.4 million are expected to be used to repay debt. UBS Investment Bank and Raymond James & Associates are the joint book-running managers of the offering. The company said it has granted the underwriters an option to buy up to 900,000 additional shares to cover any overallotments. Hersha can be found on the Web at http://www.hersha.com.

Simon Property Group Inc., Indianapolis, has announced that it will sell $1.5 billion of senior notes of its majority-owned partnership subsidiary, Simon Property Group LP, at a yield of 235 basis points above their U.S. Treasury benchmarks. The offering consists of $700 million of 5.3% notes due 2013 and $800 million of 6.125% notes due 2018. The joint book-running managers of the offering are Banc of America Securities LLC, Citi Markets & Banking, Deutsche Bank Securities, and Goldman, Sachs & Co. Simon can be found online at http://www.simon.com.

The Senate has passed a flood insurance reform bill in a 92-6 vote that phases out subsidized premiums for certain commercial properties and vacation/second homes and requires properties protected by dams and levees to have flood insurance for the first time. The bill (S. 2284) also requires lenders to escrow flood insurance premiums and increases penalties on lenders that don't insure homebuyers in flood-prone areas. A House-passed bill expands the National Flood Insurance Program to offer dual coverage for flood and wind damage. The Senate overwhelmingly rejected such an expansion by a 73-19 vote. The Senate bill also forgives $17 billion in debt that the Federal Emergency Management Agency borrowed from the U.S. Treasury to pay flood claims after hurricanes Katrina and Rita in 2005.

Classes E and F of Mortgage Capital Funding Inc. multifamily/commercial mortgage pass-through certificates, series 1998-MC3, have been placed on review for possible downgrade by Moody's Investors Service. The actions were attributed to interest shortfalls related to the Comfort Inn--Marietta Loan that are expected to begin with the May 2008 payment date. The loan has been in special servicing since October 2001. "The master servicer, Capmark Finance Inc., has advanced approximately $2.0 million on this loan and intends to begin recovering its advances commencing with the May 2008 payment date," Moody's reported.

The credit crunch is causing the volume of apartment property sales to slow "sharply" and making it harder for apartment firms to access the debt and equity markets, according to the National Multi Housing Council's multifamily industry survey. The trade association reported that its Market Tightness Index, which measures changes in occupancy rates and rents, rose significantly, from 33 in January to 44 in April, as more respondents reported tighter conditions. The availability of debt funding for multifamily properties declined significantly, according to the NMHC's Debt Financing Index, which dropped from 45 in January to 22 in April. "The bursting of the for-sale housing bubble has greatly slowed the outflow of renters into ownership"," said Mark Obrinsky, the association's chief economist. "More than 80% of the survey respondents reported a decrease in the number of renters leaving to become homeowners." The survey's respondent pool consists of 87 chief executive officers and other senior executives in the multifamily industry who also serve on the NMHC's board of directors or advisory committee. The council can be found online at http://www.nmhc.org.

ALPS Holdings Inc., Denver, and Cohen & Steers, New York, have announced the launch of a global real estate exchange-traded fund. The fund, Cohen & Steers Global Realty Majors ETF, is advised by ALPS Advisers Inc. It will seek investment results that correspond to the performance of the Cohen & Steers Global Realty Majors Index, which comprises securities of companies that have been evaluated on management strength and track record, market position, the composition and quality of their real estate portfolios, and other factors, the companies said. The fund targets "75 industry-leading real estate companies from an initial universe of 500 that are located in developed markets across North America, Asia Pacific, and Europe," they said. The companies can be found on the Web at http://www.alpsetfs.com and http://www.cohenandsteers.com.

Six classes of Mezz Cap commercial mortgage pass-through certificates have been downgraded by Fitch Ratings. The downgrades were as follows: series 2005-C3, class F, from BBB-minus to BB-plus, class G, from BB to B-plus, class H, from B to CCC/DR1, and class J, from B-minus to CCC/DR5; and series 2004-C1, class H, from B to B-minus/DR1, and class J, from B-minus to CCC/DR5. Fitch also affirmed the ratings on 14 classes in the two transactions. The downgrades were based on expected losses in specially serviced assets, the rating agency said. The mortgage loans collateralizing the deal consist of two notes: an A note, or senior component (which is not included in the trust's mortgage assets), and a B note, which consists of subordinate interests in the first-mortgage loans, according to Fitch.

The Issuer Default Rating of Sovran Self Storage, a real estate investment trust based in Buffalo, N.Y., has been placed on Rating Watch Negative by Fitch Ratings. Sovran's IDR, and that of its affiliate Sovran Acquisition LP, stand at BBB-minus, Fitch said. The rating agency attributed the rating watch placement to a decrease in liquidity and near-term debt maturities.

Municipal Mortgage & Equity LLC, Baltimore, has announced the closing of $175 million of capital commitments and participating debt to the South Africa Workforce Housing Fund of MuniMae's International Housing Solutions affiliate. The fund invests in rental and for-sale housing for low- and moderate-income families in South Africa. MuniMae said IHS expects the fund to total $240 million within several months. "We began IHS in order to bring our expertise in financing affordable housing projects to countries around the world," said Michael L. Falcone, MuniMae's chief executive officer. MuniMae can be found on the Web at http://www.munimae.com.