Originations

Standard & Poor's has announced that Agree Realty Corp. and Strategic Hotels & Resorts Inc. will replace two other real estate investment trusts in its S&P REIT Composite Index.Agree will replace CentraCore Properties Trust, which is being acquired by The Geo Group, after the close of trading on Jan. 24, S&P said. Strategic Hotels will replace Reckson Associates Realty Corp., which is being acquired by SL Green Realty Corp. (a constituent of the index), after the close of trading on Jan. 25. Agree, based in Farmington Hills, Mich., is a retail REIT, and Strategic Hotels, based in Chicago, is a lodging REIT. S&P can be found online at http://www.standardandpoors.com.

About 40% of borrowers holding home equity lines of credit have not used their line in the past year, according to a recent study by Synergistics Research Corp., Atlanta.Entitled the Home Equity Lending Monitor 2006, the national telephone survey found that seven in 10 of the inactive group do have an outstanding balance, but that the proportion indicating no balance, 20%, is twice that of HELOC holders overall. Only about four in 10 of the inactive holders said they would be more likely to use their line in the next year if they received some incentive, compared with about six in 10 overall, the survey reported. "The size of the inactive [HELOC] holder segment is alarming," said William H. McCracken, chief executive officer of Synergistics. ".... Although it would be most desirable to move these holders back into the 'active sphere,' providers may have to give consideration to the implementation of inactivity or other punitive fees to maintain some level of profitability among these customers." The survey was conducted in July and August of 2006 with 1,200 homeowners age 18 or older. The company can be found online at http://www.synergisticsresearch.com.

National City Corp., Cleveland, has reported that it took a $622 million after-tax gain ($1.00 per share) in the fourth quarter because of the sale of First Franklin's mortgage origination and servicing platforms.On the other hand, because of credit losses on the First Franklin runoff portfolio, realized losses on the sales of former First Franklin portfolio loans, and the fair-value writedowns on such loans held for sale, National City recorded an after-tax charge of $172 million ($0.28 per share) for the quarter. "The fourth quarter benefited from the large gain on the sale of First Franklin, partially offset by losses incurred on the sale and writedown of certain loans associated with this unit," said National City chairman and chief executive David A. Daberko. "Approximately $7.3 billion of such loans remain on our balance sheet in runoff mode." The sale of First Franklin to Merrill Lynch for $1.3 billion was completed on Dec. 30, 2006. National City reported net income of $842 million ($1.36 per share) for the fourth quarter, compared with $398 million ($0.64 per share) a year earlier. Full-year income for 2006 totaled $2.3 billion ($3.72 per share), vs. $2.0 billion ($3.09 per share) in 2005. The company can be found on the Web at http://www.nationalcity.com.

Greenlight Financial Services, a direct-to-consumer mortgage lender based in Irvine, Calif., has announced the introduction of the Green Loan Discount on loan fees for qualifying consumers who practice "green principles."Consumers will be asked to fill out a questionnaire on Greenlight's website to determine whether they qualify for the discount, the company said. Questions pertain to the use of energy-efficient appliances, solar heating, and composting, the type of car one drives, and other criteria relating to LOHAS (lifestyles of heath and sustainability) standards, Greenlight said. The company can be found on the Web at http://www.greenlightloans.com.

Two real estate finance industry players have teamed up to form Beekman Helix India Partners LLC, an advisory and investment management company focused on commercial real estate in India.Shekar Narasimhan, managing partner of Beekman Advisors, is chief executive officer of Beekman Helix India Partners, and Manish Parwani, managing partner of Helix Financial Group, is president and chief operating officer of the new company. The companies can be found on the Web at http://www.beekmanadvisors.com and http://www.helixfinancial.com.

Lodgian Inc., an Atlanta-based hotel investor and manager, has reported that the company is exploring "strategic alternatives" in a prelude to a possible sale of the company.The company has retained Goldman, Sachs & Co. to help with the review. Lodgian manages a portfolio of 69 hotels with 12,540 rooms in the United States and Canada. All but three of the properties are branded. Lodgian can be found online at http://www.lodgian.com.

Dynex Capital Inc., a real estate investment trust based in Glen Allen, Va., has announced the retention of the Sandler O'Neill + Partners LP investment banking firm to assist the REIT in finding investment opportunities.Dynex said the investment opportunities could take the form of primary- or secondary-market purchases, equity investments, joint ventures, or the acquisition of an operating business. The company said it has more than $67 million in capital available for reinvestment and approximately $150 million in tax net operating losses from prior years. Dynex can be found on the Web at http://www.dynexcapital.com.

RAIT Financial Trust, Philadelphia, has priced a public offering of 10 million common shares of beneficial interest at $34 per share.The real estate investment trust said the net proceeds are expected to be approximately $317.6 million. The joint book-running managers of the offering were Friedman, Billings, Ramsey & Co. and Bear Stearns & Co. The underwriters have been granted an option to buy up to 1.5 million additional shares to cover any overallotments. The REIT can be found on the Web at http://www.raitft.com.

Medical Properties Trust Inc., a real estate investment trust based in Birmingham, Ala., will replace Open Solutions Inc. in the S&P SmallCap 600 Index after the close of trading on a date to be announced, according to Standard & Poor's.S&P said the reason for the change is that Open Solutions is being acquired by The Carlyle Group and Providence Equity Partners. Medical Properties acquires, develops, and makes investments in health care facilities. S&P can be found online at http://www.standardandpoors.com, and the REIT can be found at http://www.medicalpropertiestrust.com.

The ongoing decline in home sales will not bottom out until the third and fourth quarters of this year, according to a committee of chief economists from major U.S. banks.The Economic Advisory Committee of the American Bankers Association is forecasting a 6.5% decline in existing- and new-home sales, compared with last year's totals. "The committee expects that home sales will bottom out toward the end of 2007," says the EAC's regional economic outlook report. "The commercial real estate sector is expected to stay strong, which should help to offset the drag of the residential real estate sector and support the growth of the overall economy." The report notes that existing-home sales in California dropped by 25% last year but sales have remained steady since mid-2006. "There are signs that the California market may have reached a soft landing," the EAC report says. The ABA can be found online at http://www.aba.com.

CNL Hotels & Resorts, an Orlando, Fla-based nonlisted hotel real estate investment trust, is being acquired in two parts by Ashford Hospitality Trust and Morgan Stanley Real Estate for a total of $6.6 billion.Morgan Stanley Real Estate is acquiring CNL for $20.50 per share in cash and also assuming the REIT's debt, CNL reported. CNL is also selling 51 properties (for about $2.4 billion) to Ashford, a Dallas-based REIT, prior to the closing of the Morgan Stanley deal. Ashford said it sees the CNL portfolio as a "well-located and strong-performing" one with "one of the best hotel collections." And Michael Franco, a managing director at Morgan Stanley Real Estate, said he sees the deal as an opportunity to "acquire eight top-quality resort properties diversified across key U.S. travel destinations." The companies can be found online at http://www.cnlhotels.com, http://www.ahtreit.com, and http://www.morganstanley.com/realestate.

Transnational Financial Network Inc., a San Francisco-based wholesale and retail mortgage banking firm, has announced the signing of a letter of intent to acquire AMC Mortgage, Austin, Texas.The purchase price would total up to 1 million shares of TFN's common stock when an earn-out provision is achieved, the company said. AMC would continue to be managed by its principal owner, Darryl Crawford. Joseph Kristul, TFN's chief executive officer, said the transaction would further the company's expansion in the Central Texas region. "Our recent acquisition of Texas Capital Bank's mortgage division doubled the size of our company while reducing our exposure to California and Arizona to less than half of our now total volume," Mr. Kristul said. "Our goal is to continue diversifying our business geographically as we build a multibillion-dollar origination franchise." The company can be found on the Internet at http://www.transnational.com.

Barclays Bank PLC, London, has announced an agreement to purchase EquiFirst Corp., the nonprime wholesale mortgage origination business of Regions Financial Corp., for approximately $225 million (£115 million).Barclays said it will finance the transaction out of existing cash resources and expects to achieve an annual after-tax return of more than 20% on the investment. EquiFirst, which originates its loans through more than 9,000 brokers in 47 states, will be combined with Barclays' mortgage servicing and capital markets capabilities to form a vertically integrated mortgage franchise, Barclays said. Dowd Ritter, president and chief executive of the Birmingham, Ala.-based Regions Financial, said the sale reflects a "tighter focus" on core businesses in the company's 16-state footprint in the South, the Midwest, and Texas. The companies can be found online at http://www.barclays.com and http://www.regions.com.

Mortgage Lenders Network USA, the troubled subprime lender based in Middletown, Conn., has been hit with a temporary cease-and-desist order from the Connecticut Department of Banking that prohibits it from funding new loans.Company president Mitch Heffernan explained that the order is part of "an overall process" between the lender and regulators and eventually will allow the company to "move forward with its business." A spokesman for MLN said the order was not unexpected. He also told MortgageWire that Lehman has funded at least 500 loans that were in progress when MLN closed its wholesale division in late December. (Wholesale accounts for 90% of its production.) Early reports had Lehman funding close to 900 loans. One loan agent told MW that a mortgage she worked on had closed, but did not fund, just days before the wholesale shutdown. The agent, who did not want to be identified, said MLN has yet to contact her about the loan. MLN's spokesman said the company is working on a plan to fund some of the mortgages that Lehman did not pick up. MLN is also working on a plan to restart part of its shuttered wholesale network, but there is skepticism in the industry that it will ever happen.

Two classes of Asset-Backed Securities Corp. Long Beach Home Equity Trust mortgage pass-through certificates have been downgraded by Fitch Ratings.Class M2V of series 2000-LB1 group 2 was downgraded from BB-plus to BB, and class BV was downgraded from CC/DR4 to C/DR5. In addition, Fitch affirmed the ratings on five classes of group 1 in the transaction. The rating agency attributed the downgrades to continued deterioration in the relationship between credit enhancement and loss expectations. The subprime mortgage loans underlying the transaction were acquired by ABSC from Long Beach Mortgage. Fitch can be found online at http://www.fitchratings.com.

Health Care Property Investors, a Long Beach, Calif.-based real estate investment trust, has priced the sale of $500 million of 6.00% senior unsecured notes due 2017 at 99.323.The net proceeds will be used to repay the remaining debt under a term loan and partially pay down the company's borrowings under its revolving credit facilities, the REIT said. The joint book-running managers for the offering were UBS Investment Bank, Citigroup Corporate and Investment Banking, and Wachovia Securities. The REIT can be found on the Web at http://www.hcpi.com.

The average 30-year fixed mortgage rate rose from 6.21% to 6.23% over the seven-day period ended Jan. 18, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.96% to 5.98%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 6.03% to 6.04%, and the average rate for one-year Treasury-indexed ARMs increased from 5.44% to 5.51%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages and hybrid ARMs and 0.5 of a point for one-year ARMs. "Interest rates drifted slightly higher following the latest positive economic reports," said Frank Nothaft, Freddie Mac's chief economist. "Shoppers bustling through the holiday season boosted December's retail sales above consensus expectations. In the same month, industrial production reversed a three-month decline and rose faster than had been anticipated." A year ago, the average 30-year and 15-year fixed rates were 6.10% and 5.67%, respectively, and the average hybrid and one-year ARM rates were 5.75% and 5.18%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Countering Blackstone's proposal to acquire Equity Office Properties Trust, Chicago, at $48.50 per share (and the assumption of debt), a group that includes Vornado Realty has made an offer that values Equity Office shares at $52 per share.Vornado, a Paramus, N.J.-based office real estate investment trust, has formed a partnership with Starwood Capital and Walton Street. Vornado said in a release that the $52 would be payable 60% in cash and 40% in Vornado shares. After the deal closes, Vornado said it intends to retain about half of Equity Office's assets in major markets on the East and West Coasts. The other two partners would acquire the rest of Equity Office's assets. Equity Office, the largest REIT by market capitalization, said it will consider the proposal but that its board of trustees has not changed its previous recommendation on the Blackstone buyout for $36 billion. Equity Office's shareholders are slated to meet Feb. 5 to vote on the Blackstone acquisition. The REIT can be found online at http://www.equityoffice.com.

Housing markets continued to soften in December and demand for residential mortgages continued to weaken, according to a Federal Reserve report on current economic activity called the Beige Book."Nearly all [Federal Reserve Bank] districts reported a continued softening of housing markets, and high inventories of new homes have generally led to slowing in residential building," the Beige Book says. All of the 12 Federal Reserve Banks reported "slow" home sales except the Richmond district, which reported a modest increase. The Boston, New York, Atlanta, and Chicago district banks reported decreases in home prices. In the San Francisco district (where homes are still appreciating), Realtors "are offering significant incentives to sell properties," the Beige Book says. The Dallas bank stated that the "lower-priced home market was slower than the higher-priced segments."

The net income of Washington Mutual Inc.'s home loan segment plummeted by more than $1 billion last year, although profits exceeded $3.5 billion for the company overall, the Seattle-based thrift has reported.WaMu reported a net loss of $48 million in its Home Loans Group for 2006, compared with net income of $1.03 billion in 2005. For the fourth quarter, the thrift reported a net loss of $122 million in the Home Loans Group, compared with a $24 million loss in the previous quarter and net income of $57 million in the fourth quarter of 2005. Originations of home loans declined 6% in the fourth quarter and 22% for the year. WaMu attributed the nosedive in the mortgage segment's profits to "the continued slowing of the housing market and a significant weakening of overall subprime market conditions." The company said higher delinquencies on subprime home loans and weaker market conditions shaved $160 million from its pretax earnings in the fourth quarter. Overall, WaMu reported net income of $3.56 billion ($3.64 per share) for the year, up from $3.43 billion ($3.73 per share) for 2005. WaMu can be found online at http://www.wamu.com.