Origination

Mortgage industry costs rose and profits fell last year, as lenders grappled with higher loan production costs and dwindling returns from warehouse operations and secondary market sales, according to an annual cost study, produced by the Mortgage Bankers Association. Mortgage companies lost an average of $560 per loan they originated in 2007, a widening from an average loss of just $50 in 2006. Overall, loan production operating expenses increased 7% last year to $3,663 per loan. Marina Walsh, associate vice president of research and economics at the MBA, said the drop in gross production operating expense last year did not keep pace with the decline in loan volume. Ms. Walsh told MortgageWire that cost cutting and staff reductions that began in 2007 would likely be more evident in data for this year. On average, participating firms posted pre-tax net financial income of $900,000 last year, down from $6.4 million in 2006. Ms. Walsh said subsidiaries of large financial companies performed better than independent and privately held firms. "It really helps to be part of a well-capitalized bank," she said. One surprise: servicing profits rose to $109 per loan and servicing productivity improved in 2007, though not enough to offset the weak loan production environment. The study largely excludes subprime lenders.

First Industrial Realty Trust Inc., Chicago, has announced a major downward revision of its guidance for earnings per share in 2008 from a range of $4.30 to $4.60 to a range of $2.05 to $2.35. The real estate investment trust attributed the revision primarily to the "rapid deterioration in the capital markets throughout September." The company also revised its 2008 guidance for funds from operations (an alternate financial measure favored by REITs), reducing it from a range of $4.70 to $5.00 per share to a range of $3.45 to $3.75 per share. First Industrial also offered EPS guidance of $1.25 to $1.75 for 2009. The industrial REIT can be found on the Web at http://www.firstindustrial.com.

Oaks Development Group, a Cary, N.C.-based developer of medical properties, has announced the formation of a new, Boston-based division focused on providing venture capital and partnership opportunities to private equity investors. Oaks' tenant ownership model creates a three-way partnership among medical tenants, private investors, and the developer, with 50% ownership residing with the medical tenants. Oaks said it is now focused on expanding its office ownership model nationwide. The company can be found online at http://www.oaksdevelopment.net.

Citigroup and Wells Fargo moved their arguments over who has a valid deal to acquire Wachovia into several courtrooms over the weekend. On Oct. 4, Justice Charles Ramos of the Supreme Court of the State of New York issued an order giving Citi emergency injunctive relief extending the exclusivity agreement with Wachovia until further order of the court. Under the order, Citi and Wachovia must appear before the judge on Oct. 10. In a statement, Citi said it is prepared to resume negotiating in good faith to complete the transaction. The next day, a New York State appellate court vacated the Oct. 4 order. A statement from Wells Fargo said it was "pleased that the unfounded order entered yesterday has been vacated. Wells Fargo will continue working toward the completion of its firm, binding merger agreement with Wachovia Corp." In its own statement, Wachovia said Citi "is always free to make a superior offer to Wachovia." Furthermore, two Wachovia shareholders, Mary Louise Guttmann and Leslie M. "Bud" Baker, say they have obtained a temporary restraining order from Mecklenburg County (N.C.) General Court of Justice, Superior Court Division, prohibiting Citi from taking legal action to enforce any provisions regarding the exclusivity limitations.

Radian Guaranty -- the nation's third-largest mortgage insurance company -- is changing its underwriting guidelines, effectively locking loan brokers out of the condominium market. Come Oct. 20, the mortgage insurer will only accept insurance applications on condo loans if they are funded through a lender's retail network. It's believed that Radian is the first of the nation's seven MIs to adopt such a policy on broker-sourced condo loans. The National Association of Mortgage Brokers is none too happy about the change. "They're singling out brokers," said NAMB chief Marc Savitt. "They're hurting consumers, because brokers still do a large portion of the nation's originations." Mr. Savitt said the NAMB has not yet talked to Radian about the new policy, but may soon. "I think we'll wait until the dust clears first," he said. At deadline time, Radian officials could not be reached for comment. The condo/broker language is not the only underwriting change being made by the MI. It also is tightening up some of its loan-to-value ratio guidelines. Radian can be found online at http://www.radianmi.com.

ProLogis, a Denver-based industrial real estate investment trust, has been added to the Dow Jones Sustainability Indexes. ProLogis said the Dow indices track the performance of companies that meet certain criteria for economic, environmental, and social sustainability. The company said it has qualified for the North American Index and the World Index. The first includes the top 20% of sustainability leaders from the largest 600 North American companies in the Dow Jones Global Index. The second consists of the top 10% of such leaders from the largest 2,500 companies worldwide. The company, which owns, manages, and develops distribution facilities, can be found on the Web at http://www.prologis.com.

Kite Realty Group Trust, an Indianapolis-based real estate investment trust, has priced a public offering of 4.75 million shares of common stock at $10.55 per share. The company said it plans to use the net proceeds to repay debt under its unsecured revolving credit facility. The joint book-running managers for the offering are Raymond James & Associates, Citigroup Global Markets, and Banc of America Securities. The shopping center REIT has granted the underwriters an option to buy up to 712,500 additional shares to cover any overallotments. Kite can be found on the Web at http://www.kiterealty.com.

Weingarten Realty Investors, Houston, has priced a pubic offering of 3 million shares of common shares of beneficial interest at $34.20 per share. The real estate investment trust said it will use the net proceeds to repay outstanding debt under its revolving debt facilities and for general corporate purposes. Weingarten has granted the underwriters an option to buy up to 450,000 additional shares to cover any overallotments. Merrill Lynch & Co. and Morgan Stanley are the joint book-running managers for the offering. The REIT can be found online at http://www.weingarten.com.

Liberty Property Trust, Malvern, Pa., has priced a public offering of 4.75 million shares of common stock at $33 per share. The real estate investment trust said it has granted the underwriters an option to buy up to 712,500 additional shares. The joint book-running managers for the offering are Banc of America Securities LLC, Citi, and J.P. Morgan Securities Inc. The REIT can be found online at http://www.libertyproperty.com.

Edmund Hoyt has been named interim chief financial officer of General Growth Properties Inc., a Chicago-based real estate investment trust. Mr. Hoyt, who has served as senior vice president and chief accounting officer of the company since 2000, succeeds Bernard Freibaum, who is no longer employed by the REIT. GGP announced that all continuing executive officers have informed the company that they have repaid in full all margin loans, and therefore "there will be no further sales of company stock by those executive officers to satisfy margin calls." Citing the uncertainty and volatility in the capital markets, the shopping center REIT said its board has decided to suspend the payment of common stock dividends.