Originations

Three classes of Lehman Brothers Floating Rate Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2005-LLF C4, have been downgraded by Moody's Investors Service.The downgrades were as follows: class H, from Baa1 to Baa2; class J, from Baa2 to Baa3; and class K, from Baa3 to Ba2. Moody's also confirmed or affirmed the ratings on 13 other classes in the deal. The rating agency attributed the downgrades to the poor performance of four of the 10 loans collateralizing the certificates. The four loans, representing 40.7% of the pool balance, are: the IMT Central Florida Portfolio Loan; the Genesee Valley Center Loan; the Fairfield Inn by Marriott Portfolio Loan; and the Kaminski Minnesota Portfolio Loan.

Inland Real Estate Corp., Oak Brook, Ill., a constituent of the S&P REIT Composite Index, will replace Maverick Tube Corp. in the S&P SmallCap 600 after the close of trading on Oct. 2, Standard & Poor's has announced.S&P said the reason for the change is that Maverick is being acquired by Tenaris SA. Inland is a real estate investment trust that specializes in shopping centers, primarily in the Midwest. S&P can be found online at http://www.standardandpoors.com.

Alexandria Real Estate Equities, a real estate investment trust based in Pasadena, Calif., has announced plans to offer 2.5 million shares of common stock.The office/laboratory REIT said the expected proceeds of approximately $240 million will be used to reduce the balance on its unsecured line of credit. Merrill Lynch, Pierce, Fenner & Smith Inc. and Banc of America Securities LLC are the joint book-running managers for the offering. The REIT has granted the underwriters an option to buy up to 375,000 additional shares to cover any overallotments.

Zacks Equity Research, Chicago, has declared Equity Office Properties Trust its "Bear of the Day" -- a stock expected to underperform the markets over the next three to six months -- for Sept. 26.Equity Office is a Chicago-based real estate investment trust. "Although the company exceeded our second-quarter estimates by $0.01 per share, operations remain mediocre," Zacks said. "Rent roll-downs continue throughout the portfolio, and occupancies are still low in key markets. Earnings will continue to suffer dilution through dispositions, as the company cannot replace lost income fast enough." Zacks added, however, that it is beginning to see "improving fundamentals" in some of the REIT's key markets. Zacks can be found online at http://www.zacks.com.

As condominium and land loans begin showing up in collateralized debt obligations, investors should exercise caution because of the higher default risk inherent in these loans, according to Fitch Ratings.Fitch said its concerns about condo conversion loans have been magnified by projects that are weakening as speculators -- who helped create an inflated perception of market demand -- exit certain markets. "Many converters are paying substantially more to acquire the properties than their value as multifamily rental properties," said Fitch director David Harrison. "If the converted units cannot be sold quickly, the highly leveraged loans have a greater likelihood of default, since the loan-to-value ratio does not work if the property is re-apartmented." Land loans do not generate cash flow either, and are equally susceptible to market risks, he said. "Land loans and bridge facilities are extremely susceptible to risks related to their zoning and entitlement status, since delays in land zoning and entitlement are typically measured in years, as opposed to months," Mr. Harrison said. Fitch addressed the issues in two recently published criteria reports on commercial real estate CDOs.

The nation's mortgage insurers are launching a campaign to remind brokers and agents about the advantages of low-downpayment mortgages with private mortgage insurance for many first-time and move-up homebuyers.The Mortgage Insurance Companies of America is kicking off the campaign with six full-page, full-color ads in the October issues of several industry publications with the tagline "PrivateMI -- Today's smart choice." Online ads on a variety of websites popular with brokers and agents will also begin in October. "This campaign is designed to assist agents and brokers in helping their clients make smart choices in today's climate of steadily rising interest rates and slowing home price appreciation," said Steve Smith, chief executive officer of the PMI Group Inc., Walnut Creek, Calif., and president of MICA. The ads emphasize key PrivateMI attributes such as saving money with lower monthly payments, faster equity buildup, fixed premium rates, predictability, cancelable premiums, and lower risk for borrowers. MICA can be found online at http://www.micanews.com.

Stewart Title Guaranty Co., Houston, has become the latest target of California Insurance Commissioner John Garamendi, who has filed an accusation against the company alleging that it was engaged in an illegal captive reinsurance scheme between 1999 and 2005.Mr. Garamendi is alleging that the reinsurance companies created by homebuilders and lenders were sham firms with no offices and no employees. The premiums involved totaled more than $443,000 and involved 3,650 California homeowners. Last year, Mr. Garamendi went after First American, Fidelity National Financial, and LandAmerica over their captive title reinsurance programs. According to a statement from Stewart, each of those programs was dissimilar to the captive business conducted by Stewart. The company said the Department of Insurance is seeking almost $47 million in damages and penalties. "Stewart believes that such penalties are erroneous and that its reinsurance purchases complied with all federal and California requirements," the title insurer said. "Stewart intends to vigorously defend the propriety of its reinsurance purchases and is providing information to differentiate them markedly from concerns the commissioner has raised in his previous reviews of reinsurance programs conducted by its competitors."

Kite Realty Group, an Indianapolis-based retail real estate investment trust, has entered into a joint venture with Prudential Real Estate Investors to invest up to $1.25 billion in U.S. retail properties.The venture is interested in "well-positioned community shopping centers in strategic markets in the United States," Kite said. The two partners expect to make equity capital contributions of up to $500 million for projects over the next four years, with PREI, the real estate investment management business of Parsippany, N.J.-based Prudential Financial, contributing 80% and Kite 20%. Upon the stabilization of the projects, additional debt funding will also be sought. Kite, which will also identify the projects, will manage the properties and receive additional management fees. PREI can be found on the Web at http://www.prei.com.

Fannie Mae and Freddie Mac have announced the joint availability of 83 non-executable Spanish translations of the Fannie Mae/Freddie Mac Uniform Instruments to help lenders better serve consumers whose dominant language is Spanish.The jointly-owned translations are meant to complement the English-language documents a mortgage borrower would sign, the government-sponsored enterprises said. "We encourage the distribution of these complementary translations to Spanish-language-dominant consumers early in the homebuying process, so that potential borrowers can read the mortgage documents written in English with a side-by-side Spanish translation and better understand what they will sign at closing," said Fannie senior vice president Mercy Jiménez. The translations, which are provided for 54 security instruments, 20 promissory notes, and nine related documents, are available for all 50 states, the District of Columbia, Guam, and the U.S. Virgin Islands. Anyone can download the translations for free starting Oct. 2 at http://www.efanniemae.com and http://www.freddiemac.com\uniform.

Natural disasters caused "a stunning $89 billion" in privately insured catastrophic losses in 2004 and 2005, and property insurance premiums have risen "from 100% to over 600%" in some coastal areas that are vulnerable to hurricanes, according to the Mortgage Bankers Association.In a white paper on natural disasters and catastrophic insurance, the MBA said there is an insurance availability and affordability crisis in some states that is also affecting commercial mortgage borrowers, lenders, and servicers. The MBA hopes the white paper will spark discussion about finding solutions to promote access to property insurance at affordable prices, MBA vice chairman Kieran Quinn said. The association can be found online at http://www.mortgagebankers.org.

Sales of existing single-family homes flattened out in August after a five-month decline, but prices fell for the first time since 1994 and further price declines are expected for the rest of the year.The National Association of Realtors reported that August resales of single-family homes were unchanged from those in July at a seasonally adjusted annual rate of 6.28 million -- down 12.3% from that of August 2005. The median single-family home price fell 1.7% last month from that of year ago. The biggest decline ever recorded by the NAR was 2.1% in November 1990, when the economy was in recession and mortgage rates stood at 10%. NAR chief economist David Lereah stressed that a price correction is necessary to stabilize the housing market, and he said he believes the decline in sales has bottomed out. "I suspect that if prices continue to come down, sales will stay flat and modestly increase," Mr. Lereah told reporters. Meanwhile, sales of condominiums and cooperatives fell 3.5% in August from the level recorded in July and prices were down 2.4% from those of a year earlier. Overall, resales of single-family homes, condos, and co-ops fell 0.5% from a seasonally adjusted annual rate of 6.33 million in July to 6.30 million in August. The NAR can be found online at http://www.realtor.org.

Two classes of Metropolitan Asset Funding Inc. II, series 1998-B, have been downgraded by Moody's Investors Service.Class B-1 was downgraded from B3 to Caa1, and class B-2 was downgraded from Ca to C. The downgrades were attributed to credit enhancement levels that are deemed low in view of projected losses on the underlying pools. The transaction consists of subprime and seller-financed first-lien fixed-rate loans.

Equity Inns Inc., Germantown, Tenn., has obtained a new $150 million unsecured line of credit from a syndicated group of banks co-led by J.P. Morgan Securities Inc. and Calyon New York Branch.The real estate investment trust said the facility bears a variable rate of 1.25%-1.88% over the London interbank offered rate and includes an accordion feature that allows Equity Inns (subject to certain lender approval) to extend the borrowing capacity to $250 million. It matures in September 2010, with a one-year extension at the company's option. The hotel REIT can be found on the Internet at http://www.equityinns.com.

Medical Properties Trust Inc., Birmingham, Ala., will replace Pan Pacific Retail Properties Inc. in the S&P REIT Composite Index after the close of trading on a date to be announced, Standard & Poor's has announced.S&P said the reason for the change is that Pan Pacific is being acquired by Kimco Realty Corp., also a constituent of the REIT index. S&P can be found online at http://www.standardandpoors.com.

Commercial and multifamily mortgage debt outstanding rose to $2.764 trillion in the second quarter, a 2.8% increase from the level recorded in the first quarter, according to the Mortgage Bankers Association.Multifamily mortgage debt outstanding alone reached $703 billion at the end of the second quarter, up 1.3% from that of the first quarter, the trade association said. "With mortgage bankers' originations up 24% in the first half of the year and servicing volumes at record levels, the industry is more efficient than ever at connecting real estate with capital," said Doug Duncan, the MBA's chief economist. Commercial banks hold the largest share of commercial/multifamily mortgages, at 44% of the total (including "commercial and industrial" loans, as well as loans on income-producing properties). Commercial mortgage-backed securities pools are next, holding 20% of the total, followed by life insurance companies, with 10% of the total. Considering just multifamily mortgages, the government-sponsored enterprises and Ginnie Mae hold the largest share of multifamily mortgages, at 30% of total multifamily debt outstanding. The MBA based its statistics on an analysis of Federal Reserve Board flow-of-funds data. The association can be found online at http://www.mortgagebankers.org.

Rep. Spencer Bachus, R-Ala., plans to circulate a draft of a predatory lending bill soon, but he has clarified that the draft is not the product of a bipartisan agreement, although he hopes to reach such an agreement next year."The bill Congressman Bachus is drafting is simply his attempt at the next step in an ongoing process of reaching consensus on subprime lending legislation," a statement issued by Rep. Bachus' office says. The chairman of the financial institutions subcommittee held discussions with key Democratic members of the House Financial Services Committee earlier this year. However, Rep. Bachus issued the clarification after Democrats pointed out that they have not participated in the drafting and don't know what is in his bill. "Rep. Bachus has worked with us in good faith, and I look forward to continuing to do that next year," Rep. Brad Miller, D-N.C., said in an interview with MortgageWire. "But it is not the consensus or compromise bill at this point."

Countrywide Financial Corp., Calabasas, Calif., the nation's largest residential lender, has confirmed that it will cut up to 10% of its "general and administrative" work force in the coming months.A Countrywide spokesman confirmed the job cuts to MortgageWire but could not offer a head count for the reduction. Layoffs have already begun, he said. Countrywide employs about 56,000 nationwide. He stressed that the layoffs -- which the company hopes to achieve mostly through attrition -- will not affect the lender's sales staff. One source told MW that the company has even canceled its regular practice of providing employees with free doughnuts on the last Friday of every month. (For further details, see the Sept. 25 issue of National Mortgage News.)

BioMed Realty Trust Inc., a real estate investment trust based in San Diego, has announced the pricing of a private offering of $150 million of 4.50% exchangeable senior notes by its operating partnership, BioMed Realty LP.The notes, due 2026, will be fully and unconditionally guaranteed by BioMed Realty Trust and will be exchangeable for cash or a combination of cash and shares of BioMed Realty Trust common stock. BioMed, which specializes in developing and managing laboratory and office space in the life science industry, can be found online at http://www.biomedrealty.com.

Extra Space Storage Inc., a Salt Lake City-based real estate investment trust, has priced a public offering of 10.5 million shares of common stock at $17 per share.The estimated net proceeds of $169.5 million will be used for debt repayment, property acquisition, and general business purposes, the REIT said. UBS Investment Bank and Banc of America Securities LLC were the joint book-running managers for the offering. The self-storage REIT can be found on the Web at http://www.extraspace.com.

Fitch Ratings has published finalized methodology incorporating the new SMARTView system into its structured finance ratings, tagging 51 commercial mortgage-backed securities deals as under review.Under the new system -- now available for Fitch-rated CMBS, with other asset classes to follow -- if a transaction is classified as Under Analysis (such as the 51 CMBS deals) it means that the rating agency will be issuing a rating action within 30 days. Fitch said 367 other CMBS deals were designated with the day's date (Sept. 20), indicating that no immediate action is necessary. "SMARTView will provide evidence to the investor community that Fitch is actively monitoring each deal on a continuous basis," said Mary MacNeill, a Fitch managing director. (SMART stands for surveillance, metrics, analytics, research, and tools.) The rating agency can be found online at http://www.fitchratings.com.