Originations

TIAA-CREF, the New York-based pension fund institutional investor, and Developers Diversified Realty Corp., a Cleveland-based retail real estate investment trust, have embarked on a joint venture to buy a portfolio of 67 community retail centers for about $3 billion.The properties that are going into the joint venture are a part of the portfolio of Inland Retail Real Estate Trust, a REIT that DDR is in the process of acquiring, DDR reported. An affiliate of TIAA is contributing 85% of the equity in the joint venture, and an affiliate of DDR is contributing 15% of the equity. DDR said it expects that leverage will not exceed 60% of the aggregate value of the properties. The purchase by the joint venture of these properties, which are predominantly located in the Southeast, is conditional on the closing of the merger. "We have been looking to strategically increase our retail exposure, and we believe this purchase represents a unique opportunity to do so while focusing on opportunities for attractive rates of return for our investors," said Tom Garbutt, head of TIAA-CREF's global real estate unit. The companies can be found online at http://www.tiaa-cref.org and http://www.ddr.com.

Mortgage lenders added 2,600 full-time employees to their payrolls in September, according to a government report, despite a slowdown in lending in the third quarter.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector increased from a seasonally adjusted annual rate of 501,900 in August to 504,500 in September. Preliminary results from a National Mortgage News survey show that some top lenders experienced loan production declines of 30% or more, compared with loan volumes of a year earlier. Refinancing activity has remained fairly strong, at 40% of mortgage applications, according to a Mortgage Bankers Association survey. But home sales have been declining, and Friday's jobs report shows a sharp drop in construction jobs. While the homebuilders have been holding on to their core employees, the BLS reported that concrete contractors, plumbers, and other specialty trades cut 17,300 employees in September and another 30,700 employees in October. The BLS can be found online at http://stats.bls.gov.

Deerfield Triarc Capital Corp., Chicago, has closed a $45 million offering of 30-year trust preferred securities issued by Deerfield Triarc Capital Trust III.The securities have a floating interest rate equal to 225 basis points over the three-month London interbank offered rate, resetting quarterly, Deerfield said. The company, which invests in real-estate-related securities and various other asset classes, can be found online at http://www.deerfieldtriarc.com.

Medical Properties Trust Inc., a Birmingham, Ala.-based real estate investment trust, has announced the pricing of $125 million of exchangeable senior notes by its operating partnership, MPR Operating Partnership LP.The offering, made to qualified institutional buyers, had an initial exchange rate of 60.3346 common shares per $1,000 principal amount of the notes, representing an exchange price of approximately $16.57 per common share, the REIT reported. The initial purchasers have been granted an option to buy up to $13 million in additional notes to cover any overallotments. The REIT can be found online at http://www.medicalpropertiestrust.com.

Total pay for chief executive and chief financial officers at real estate investment trusts is rising at twice the rate of the total pay for CEOs and CFOs in general industry, according to a joint study by Steven Hall & Partners and Equinox Partners.The study found that median total remuneration of CEOs in 117 public REITs rose 24% in 2005, compared with 10% among CEOs at Fortune 1000 companies. For CFOs, total pay rose 32% at the REITs and only 9.7% in general industry, the study says. The median total pay for CEOs amounted to approximately $1.92 million, of which $912,500 was in cash, including $495,000 in salaries, the companies reported. "These increases are on top of double-digit increases in the prior year, reflecting the combination of a bull REIT market with intense competition among public and private companies for seasoned executives," said Anthony LoPinto, CEO of Equinox, an executive search firm. "The dramatic rise in CFO compensation also reflects the severe shortage of financial professionals equipped to effectively manage in today's public reporting environment." The companies can be found online at http://www.shallpartners.com and http://www.equinoxsearch.com.

A group of Reckson Associates shareholders, Arnhold and S. Bleichroeder Advisers, is proposing to vote against the sale of the New York real estate investment trust to SL Green Realty, another New York office REIT.The group, which reportedly holds 835,000 shares of Reckson Associates common stock, said in a written release that they would only support the merger, which was announced earlier this year, if the board of Reckson "takes the necessary steps to achieve maximum value" for a "noncore" office portfolio that is being sold to a group led by Reckson management. The current sale price for the noncore office assets is $2.1 billion. The group maintained that Reckson did not market the noncore portfolio adequately, although they said they are satisfied with the marketing of the rest of the portfolio, which is being sold to SL Green for about $4 billion.

Over a third (36%) of homeowners with adjustable-rate mortgages say they are concerned that they won't be able to afford their mortgage payments if their rates increase, according to a new survey by AP/AOL Real Estate.At the same time, 35% of likely future homebuyers say they will seek an ARM. The survey found that younger people, those with less education and lower incomes, unmarried adults, and minorities are more likely to shop for an ARM. Anxieties about the affordability of mortgage payments were reported by 65% of those surveyed, while 58% expressed concern about their ability to make a downpayment, AP/AOL Real Estate reported. The poll of 2,001 adults included 289 recent homebuyers and 401 likely future homebuyers, the companies said. They can be found online at http://www.ap.org and http://www.aol.com/realestate.

Consumers tapping the equity in their homes choose closed-end second mortgages more often than home equity lines of credit, according to an annual Consumer Bankers Association survey.The 2006 Home Lending Survey shows that bookings for new HELOCs dropped 24% for the year ended June 30, compared with those of the same period in 2005, while bookings of second mortgages jumped 61%. Rising short-term interest rates also prompted more lenders to offer a "loan-in-line" feature that allows borrowers to draw against their line of credit at a fixed rate. "Fifty-one percent of survey respondents offered this feature, compared to 36% a year earlier," the CBA said. Survey participants also reported that the credit quality of their HEL customers held steady at an average credit score of 730, up slightly from 727 in 2005. The average household income increased 9% for new bookings, and the average appraised home value increased 22%. "Borrowers appear to be stronger than ever," the CBA said. The association can be found online at http://www.cbanet.org.

The average 30-year fixed mortgage rate fell from 6.40% to 6.31% over the seven-day period ended Nov. 2, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 6.10% to 6.02%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.14% to 6.05%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.60% to 5.53%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages, 0.5 of a point for hybrid ARMs, and 0.6 of a point for one-year ARMs. "Lower-than-expected third-quarter gross domestic product figures helped to put a damper on rising rates this week," said Frank Nothaft, Freddie Mac's chief economist. "With mortgage rates down this week, we may see a spurt of refinancing by those who want to get out of ARMs that are scheduled to reset in the next year while interest rates are still comparatively low." A year ago, the average 30-year and 15-year fixed rates were 6.31% and 5.85%, respectively, and the average hybrid and one-year ARM rates were 5.76% and 5.09%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Taylor, Bean & Whitaker Mortgage Corp., a privately held wholesale mortgage lender based in Ocala, Fla., has announced the formation of a nationwide correspondent lending group.Doug Miller, who formerly served as manager of correspondent programs at Washington Mutual, Citicorp, and HSBC, has been named executive vice president of the new division. TB&W can be found on the Web at http://www.taylorbean.com.

Sun American Bancorp, Boca Raton, Fla., has announced the launch of a new residential mortgage company, Sun American Financial LLC.The president and principal mortgage broker of Sun American Financial is Bernardo Reynoso, the founder of Iberia Mortgage Corp. Mr. Reynoso has more than 10 years of experience in residential lending, including Federal Housing Administration loans, Fannie Mae guidelines, and subprime lending, the company said. In addition, Cesar Jimenez was named vice president of the new mortgage company. The parent company can be found online at http://www.sunamericanbank.com.

Class M-3 of Ace Securities Corp. mortgage-backed securities, series 2003-HE3, has been downgraded from BBB to BB by Fitch Ratings, and three classes from two Ace subprime transactions have been placed on Rating Watch Negative.The securities placed on rating watch were class M-2 of series 2003-HE3 and classes M-5 and M-6 of series 2003-FM1. In addition, the rating agency affirmed the ratings on six other classes from the two transactions. Fitch said the negative rating actions were taken because monthly losses exceeded the available excess spread in recent months, causing a deterioration in the amount of overcollateralization. The rating agency can be found on the Web at http://www.fitchratings.com.

Winthrop Realty Trust, a real estate investment trust headquartered in Boston, has announced the pricing of a public offering of 17 million common shares of beneficial interest at $6 per share.Winthrop said it has granted the underwriters an option to buy up to 2.55 million additional shares to cover any overallotments. Bear, Stearns & Co. was the sole book-running manager of the offering. The REIT can be found on the Web at http://www.winthropreit.com.

Merrill Lynch Community Development Co., Washington, D.C., has announced that it will use a new ratings tool to place $93 million with community development financial institutions (and mission-related community development entities) across the United States.The tool -- the CDFI Assessment and Ratings System, or CARS -- is a rating system developed by Opportunity Finance Network to aid investors and donors in their investment decision-making. "We believe CARS will reduce the due diligence burden on CDFIs, especially for those who have already been rated, as well as speed up MLCDC's approval process and facilitate the faster deployment of capital," said Dan Letendre, an MLCDC director and CARS advisory board member. MLCDC received a $93 million allocation under the New Markets Tax Credit program in June 2006, and will begin making loans and investments under the program in early 2007.

The Eleventh Federal Home Loan District Cost of Funds Index for September stood at 4.382%, a rise of 10.5 basis points from 4.277% in August.The index is a weighted calculation of the cost of mortgage lending funds used by members of the Federal Home Loan Bank of San Francisco, and is announced on the last day of the following month. In July 2004, the Federal Open Market Committee began a series of 17 increases of the federal funds rate, finally halting at its Aug. 8, 2006 meeting, and taking no action at two meetings since then. The increases totaled 425 basis points. The 30-year fixed rate mortgage reached a low of 5.45% in March 2004, according to the Freddie Mac Primary Mortgage Market Survey. It peaked at 6.76% in July 2006 before falling to 6.36% in October. The same survey shows the one-year adjustable-rate mortgage bottoming at 3.41% in March 2004 and rising to 5.79% this July before falling back to 5.55% in October. From trough to peak, the rise totaled 238 bps. In comparison, COFI bottomed out at 1.708% in May 2004. Since then, it has added 267 bps.

New York Mortgage Trust Inc., New York, has announced the retention of Milestone Advisors LLC as a financial adviser to help explore the real estate investment trust's strategic options, including a possible sale or merger.The REIT, which originates and invests in residential mortgage loans, said the retention of an adviser was prompted by "recent unusual market activity" and inquiries received by the company. New York Mortgage Trust, the parent company of New York Mortgage Co. LLC, said it is engaged in discussions about a possible sale or merger, but added that it "does not intend to make further public statements regarding this matter until either a definitive agreement is reached or discussions are terminated."

The Market Composite Index, an overall measure of mortgage applications, fell from 588.6 to 570.8 on a seasonally adjusted basis during the week ended Oct. 27, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 3.3% on the week and were down 11.2% from the level recorded a year earlier. The Purchase Index fell from 382.4 to 375.6 on a seasonally adjusted basis, while the Refinance Index fell from 1790.4 to 1709.2. Refinancings represented 45.0% of total applications, down from 45.6% the previous week, while adjustable-rate mortgages accounted for 25.9%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased from 6.36% to 6.24%, and points (including the origination fee) rose from 1.04 to 1.09 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Inland Retail Real Estate Trust Inc., Oak Brook, Ill., has announced a merger agreement with Cleveland-based Developers Diversified Realty Corp. under which DDR and its partners will pay $6.2 billion for the more than 300 retail properties in the portfolio of Inland Retail and its joint ventures.Inland Retail, one of four real estate investment trusts sponsored by Inland Real Estate Investment Corp., said the transaction will not affect the stockholders of the other Inland-sponsored REITs. Daniel L. Goodwin, chairman of The Inland Real Estate Group of Companies Inc., touted Inland's record as an incubator of real estate investment companies and said Inland American Real Estate Trust "is in the process of acquiring more property than Inland Retail is expected to sell through this proposed merger." The Inland group of companies can be found online at http://www.inlandgroup.com, and DDR can be found at http://www.ddrc.com.

For every would-be homeowner of Hispanic descent that is approved for a mortgage, two are turned away because they can't qualify under traditional credit scoring models, according to a survey of Latino housing specialists.And that is a conservative ratio, according to Gary Acosta, a co-founder of the National Association of Hispanic Real Estate Professionals. "Some said they turn away people on a 5-to-1 ratio," the San Diego mortgage broker said at his group's annual convention in Las Vegas. NAHREP chairman Frances Martinez Myers credited the lending community with "making great strides" in helping Latinos become owners, but lamented that the gains have come at the expense of lower credit standards and higher loan-to-value ratios. Maintaining that "continuing to lower the bar may not be the healthiest solution for consumers or the industry," Ms. Myers called on lenders to become more aggressive in using scoring systems that base their ratings on such nontraditional traits as cash income from multiple jobs, cash payments for rent and utilities, and cash remittances sent to family members living in other countries. "Broadening the current credit spectrum to be more inclusive of culturally influenced Hispanic borrower traits is what the industry must begin to do" to close the ownership gap between Latinos and whites, said Ms. Myers, who is senior vice president for business development at Fox & Roach/Trident, a Philadelphia-based realty firm. Lenders that learn to crack the Hispanic credit code can slice into what NAHREP says is a pot of $200 billion in mortgages that are not now being made because Latinos don't measure up under traditional credit scoring standards.

Equity Office Properties Trust, Chicago, has reported a net loss of $139.4 million ($0.40 per share) for the third quarter, compared with net income of $93.7 million ($0.23 per share) for the third quarter of last year.EOPT, the largest office real estate investment trust by market capitalization, attributed the loss to a "previously announced noncash impairment charge of $188.9 million taken in anticipation of future asset sales." On a funds-from-operations basis, EOPT reported a loss of $3.4 million for the third quarter ($0.01 per share), compared with $227.7 million ($0.50 per share) for the third quarter of 2005. (FFO is a standard, not recognized under generally accepted accounting principles, that is commonly used as a performance indicator in the REIT industry.) "We continue to reposition our portfolio to take advantage of the positive momentum in office markets," said Richard Kincaid, the REIT's president and chief executive officer. He added that office rents and occupancy have gone up in EOPT's markets. The REIT can be found online at http://www.equityoffice.com.