Originations

The ratings of Gables Residential Trust, a multifamily real estate investment trust based in Boca Raton, Fla., have been downgraded by Moody's Investors Service and placed under review for possible further downgrade.The downgrades were as follows: Gables Realty LP, senior unsecured debt, from Baa3 to Ba1; Gables Residential Trust, series C-1 and D preferred stock, from Ba1 to Ba2, and preferred stock shelf, from (P)Ba1 to (P)Ba2. Moody's said the actions were prompted by Gables' announcement of an agreement to be acquired by a partnership managed by ING Clarion Partners. Under the pact, the ING Clarion partnership will acquire all of Gables' common stock for $43.50 per share in cash. The total consideration of approximately $2.8 billion includes the assumption and refinancing of approximately $1.2 billion of Gables' outstanding debt and preferred shares. Moody's said that "although the precise capital structure of Gables subsequent to this transaction is not yet clear, it is likely that leverage, particularly secured leverage, will increase materially, while fixed charge coverage will decrease." The rating agency said Gables will likely operate with "a more aggressive risk profile" because it is expected to increase development activities under its new ownership. Moody's can be found online at http://www.moodys.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 709.1 to 755.5 on a seasonally adjusted basis during the holiday-shortened week ended June 3, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 4.9% on the week and were up 31.5% from their level of a year earlier. The Purchase Index rose from 462.7 to 479.3 on a seasonally adjusted basis, while the Refinance Index climbed from 2142.1 to 2362.1. Refinancings represented 42.9% of total applications, up from 41.2% the previous week, while adjustable-rate mortgages accounted for 31.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.61% to 5.55%, and points (including the origination fee) increased from 1.07 to 1.12 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

MuniMae, a Baltimore-based investor in multifamily mortgage debt and equity, has announced an agreement to acquire Glaser Financial Group Inc., a commercial mortgage banker based in St. Paul, Minn.If certain performance standards are met, the acquisition price will be approximately $67 million payable in cash and stock, MuniMae said. After the closing of the transaction, Glaser will operate as part of MMA Financial, an operating subsidiary of MuniMae. "This acquisition brings significant scale to our origination platform in the upper Midwest as well as our Fannie Mae and Freddie Mac servicing portfolios, and further strengthens our product offerings related to senior housing," said Michael Falcone, MuniMae's president and chief executive officer. The company said about 40% of Glaser's originations are related to housing for senior citizens, and that its servicing portfolio totals $3.5 billion. MuniMae can be found online at http://www.munimae.com.

Home sales will set another record this year -- the fifth in a row -- as a result of lower-than-expected mortgage interest rates, according to the latest forecast by the National Association of Realtors.The NAR is now forecasting 6.89 million existing-home sales for 2005, which would exceed last year's record of 6.78 million by 1.6%. The forecast for new-home sales calls for an increase of 3.2%, to 1.24 million, and housing starts are projected to rise 3.4% to 2.02 million, the highest level since 1973. "Not only have mortgage interest rates declined, but an expected rise in the second half of the year will be slower than in earlier projections," said NAR chief economist David Lereah. "As a result, we now expect to set records for both existing- and new-home sales this year." The NAR is now forecasting that the 30-year fixed mortgage rate will rise to only 6.1% in the fourth quarter and to reach 6.5% by the end of 2006. The association can be found online at http://www.realtor.org.

Hometown Commercial Capital, Burlingame, Calif., has announced the formation of a joint venture with Belvedere Capital Partners aimed at extending nationally Hometown's community bank lending programs for commercial real estate investors.William G. Fisher has been named chief executive officer of the new firm. Mr. Fisher was previously an executive vice president at Wells Fargo and was more recently the founder and CEO of an unnamed financial services start-up firm, the company said.

Gables Residential Trust, Boca Raton, Fla., has announced an agreement under which a private equity partnership managed by ING Clarion Partners, a wholly owned subsidiary of Amsterdam-based ING Groep NV of the Netherlands, will acquire Gables for a total consideration of about $2.8 billion.Gables said the deal would be the largest public-to-private real estate investment trust transaction in the multifamily sector. Under the agreement, the ING Clarion partnership will acquire all of Gables' common stock for $43.50 per share in cash, which Gables said represents a 14% premium over its closing share price on June 6 and an 18% premium over the average share price of the previous 10 days. The total consideration includes the assumption and refinancing of approximately $1.2 billion of the company's outstanding debt and its outstanding series C-1, series D, and series Z preferred shares. Gables said the deal is being financed by $400 million of equity provided by ING, with the remainder of the debt and equity capital being arranged by Lehman Brothers Inc. and its affiliates. The multifamily REIT can be found online at http://www.gables.com.

Genworth Financial Inc., Richmond, Va., has announced the introduction of SecureFirst, a service that automatically analyzes mortgage loan applications and alerts lenders to the possibility of fraud.The service analyzes loans submitted through Genworth's AU Central automated underwriting platform to determine whether a loan needs further review, the company said. Reports are custom-tailored to specifications set by participating lenders and investors. "SecureFirst will protect our lender customers by alerting them to a potential problem when the loan is locked for underwriting," said Kevin Schneider, president of Genworth's U.S. mortgage insurance business. Genworth said it is the first mortgage insurance provider to offer fraud protection screening. The company can be found online at http://www.genworth.com.

Mercy Loan Fund of Denver, a nonprofit subsidiary of Mercy Housing, has received $2 million in equity-equivalent investment from U.S. Bank.The fund will allow MLF to provide affordable housing loans in the 24 states where U.S. Bank operates. It is part of a four-year cooperative effort between the bank and the community development financial institution during which U.S. Bank has ensured $60 million in construction and permanent financing to create or rehabilitate affordable housing for low-income families. "We are particularly interested in Mercy Housing's plans to increase its lending in our existing markets, its new initiative using product innovations, as well as more coaching and technical assistance," said U.S. Bank market president Mark Smith.

Market Street Mortgage, Clearwater, Fla., has announced an agreement to acquire Major Mortgage, Cheyenne, Wyo., for an undisclosed amount.Major Mortgage has 27 residential production offices in Arizona, Colorado, Oklahoma, Nevada, Texas, Utah, Washington, and Wyoming. Market Street, a wholly owned subsidiary of NetBank, said Major Mortgage originated more than $690 million in mortgage loans last year. Major Mortgage, a full-service mortgage banker, is a wholly owned subsidiary of Wyoming Employee Resource, Capital and Service. Market Street can be found on the Web at http://www.marketstreetmortgage.com.

Cleveland-based KeyCorp has agreed to acquire Malone Mortgage Co., Dallas, which it says will expand its ability to provide Federal Housing Administration financing to commercial real estate developers.The terms of the transaction were not disclosed. Malone Mortgage originates, underwriters, and services multifamily FHA loans nationwide for new construction, acquisition, and the refinancing of existing facilities, KeyCorp said. The company said its commercial real estate line of business, KeyBank Real Estate Capital, boasts nearly $19 billion in annual financings and ranks in the top 10 FHA servicers in the United States. Malone Mortgage's annual financings total about $200 million, and its commercial mortgage loan servicing portfolio stands at approximately $1.2 billion, KeyCorp reported. The company can be found online at http://www.key.com.

ProLogis, a Denver-based industrial real estate investment trust, is acquiring Catellus Development Corp., a San Francisco-based industrial REIT, for a total purchase price of about $4.9 billion.The price includes Catellus liabilities being assumed by ProLogis, as well as transaction costs, the REITs said. Catellus shareholders can opt to receive either $33.81 per Catellus share in cash or 0.822 of a ProLogis common share per Catellus share. This price represents a 16.1% premium over the closing price of Catellus shares on June 3, according to the REITs. The combined company will have an interest in over 350 million square feet in about 2,250 facilities in 75 markets in North America, Europe, and Asia, the REITs said, as well as over 100 million square feet in potential "buildable" area. "By increasing the size and quality of our direct-owned pool of industrial properties, we create substantially more flexibility, enabling us to support further growth in our global development and fund business," said Walter C. Rakowich, president and chief executive officer of ProLogis. Ted Antenucci, president of Catellus, will be ProLogis' president for global development after the transaction closes.

Washington Mutual Inc., Seattle, has agreed to buy Providian Financial, a credit card provider based in San Francisco, in a deal currently valued at $6.45 billion.Of the total, 89% would be paid in WaMu stock and the rest in cash, the company said. WaMu said Providian's emphasis on middle-market customers makes it a strategically compelling fit. Kerry Killinger, chairman and chief executive of WaMu, said in a statement that the combination "also helps to further diversify our balance sheet and earnings by adding attractive, high-yielding credit card assets, while improving our net interest margin and adding stable fee income." Providian will become the fourth business unit at WaMu and will remain in San Francisco under its current chairman and chief executive, Joseph Saunders. Providian had not always gone after middle-market customers, a report from Standard & Poor's noted. The credit card company shed its "legacy portfolio" and moved away from the deep subprime customer toward a middle- to prime-market focus. "The successful implementation of the revised strategy is evident in the progress Providian has made to date in improving asset quality metrics specifically, and more generally, overall financial performance," said John K. Bartko, credit analyst at S&P.

Boykin Lodging Company, Cleveland, is looking at possible strategic options for the real estate investment trust with the help of UBS Investment Bank.Boykin, which focuses on upscale commercial and resort hotels, has interests in 22 hotels with a total of 6,227 rooms in 14 states, according to the hotel REIT. Nothing tangible has emerged so far from the move, Boykin reports.

Hudson Realty Capital, New York, has launched its third real estate fund, a hybrid debt and equity fund that is expected to originate more than $400 million in real estate-related investments.The fund will focus on "special situations" such as bridge loans, mezzanine financing, preferred equity, sponsor equity and distressed debt purchases, Hudson Realty reports. HRC targets net returns of 18% on its portfolio, including income and capital appreciation. Spencer Garfield, managing director of Hudson Realty said that the company expects an increased demand for "non-conventional debt products" as interest rates move up higher and traditional lenders tighten their lending criteria. SWH Funding, Hackensack, New Jersey, and Newbridge Realty Capital, New York City, are the companies behind Hudson Realty.

InterFirst Wholesale Mortgage Lending, Ann Arbor, Mich., said the "fourth wave" of its mortgage broker satisfaction measurement initiative found a high level of satisfaction among brokers the company works with.Specifically, brokers liked the technology-based tools it makes available to them, its account executives and its mortgage closing process. The study indicated that higher broker satisfaction with InterFirst led to higher levels of closed loan volume sent to the wholesaler. "This fourth wave of satisfaction measurement has also provided vital information by demonstrating that customer satisfaction and mortgage brokers' experience with InterFirst has a direct link to the company's financial performance," said Willie Newman, president of InterFirst, a subsidiary of ABN Amro Mortgage Group. "Further, the results of this satisfaction measurement indicate the specific areas of InterFirst's business that have the greatest impact on mortgage broker satisfaction -- and its bottom line."

The average fixed rate for 30-year mortgages fell to 5.62% during the week ending June 2 from 5.65% the previous week, according to Freddie Mac.In addition, the average fixed rate for 15-year mortgages inched down to 5.20% from 5.21%, according to Freddie Mac. A year previous, the average 30-year rate was 6.28% and the average 15-year rate was 5.63%. These relatively lower fixed rates may be only a short-term trend, Freddie Mac said. "Improvements in the job market and rising wages will likely put upward pressure on mortgage rates in the coming months," said Frank Nothaft, Freddie Mac vice president and chief economist. "However, the same growth in income will partially offset any rise in rates, enabling housing to continue to be a healthy industry. Given the low rates we experienced last month, we expect home sales in May will remain strong," he said. The average hybrid and adjustable mortgage rates last week rose slightly, according to Freddie Mac. Five-year, Treasury-indexed hybrids averaged 5.10% vs. 5.07% the previous week and one-year Treasury-indexed adjustable rates averaged 4.26% vs. 4.21% the previous week. A year ago -- before Freddie started tracking the average five-year rate -- one-year ARMs averaged 3.98%.

Kimpton Group Holding, San Francisco, has launched Kimpton Hospitality Partners, a fund that will acquire and develop boutique hotel properties in the United States.The fund is looking to acquire over $450 million in hotel properties over the next two years, Kimpton reports. The primary target areas for acquisitions are New York; Boston; Washington, D.C.; Miami (and other South Florida cities); Los Angeles, Napa Valley, Calif.; San Diego; Seattle; and Chicago. The fund is led by Mike Depatie and Joe Long. Mr. Depatie said, "The timing is ripe for investment in the hotel sector. Many hotels are still underperforming due to the severity of the recent economic downturn, lack of capital or ineffective management. Most industry experts are predicting a further rebound in the hospitality sector, estimating room revenue growth to increase by more than seven percent this year and more than six percent in 2006."

Faithful to its one-product-company niche style, jumbo and super jumbo loan wholesaler No Red Tape Mortgage has launched Zero Down Mortgage, Sherman Oaks, CA, the first national wholesale lender exclusively dedicated to 100% purchase-only loans, operated through a completely paperless mortgage origination process."Zero Down is the only lender in the country solely providing 100 percent financing on purchase-only transactions," said president and founder of No Red Tape, Blake Scheifele. "Zero Down is taking advantage of the market's need ...As we enter the summer purchase months, Zero Down is effectively positioned for expansion within the mortgage industry by focusing on offering one product." ZDM said it will provide brokers with a single point of contact to manage the entire lending process, from quoting rates to moving files to documents. "Offering one product enables us to provide a streamlined, focused approach to this niche business," said David Klempner, a former broker and industry veteran appointed as ZDM's national production manager.

The Pending Home Sales Index, a leading indicator for the housing market, has risen to the highest level on record, according to the National Association of Realtors.Based on data collected for April, the index stands at 128.2, which is 3.6% higher than March and 9.2% higher than in April of 2004, the NAR said. The previous record reading was 128.1 in October of 2004. The index is based on pending sales of existing homes, including single-family and condominium properties. A sale is pending when a contract is signed but the transaction has yet to close. David Lereah, NAR's chief economist, said the index shows that record levels of home sales are possible for May and June. "Although the record we set for existing home sales in April was a bit of a surprise, the rise in sales contracts results from declining mortgage interest rates," he said in an NAR news release.

The Mortgage Bankers Association's Market Composite Index, an overall indication of home loan application volume, fell 2.8% on a seasonally adjusted basis to 709.1 for the week ending May 27, down from 729.6 one week earlier.However, on an unadjusted basis, applications were 12.7% higher than in the same week one year earlier. The purchase index decreased by 4.1% last week to 462.7, from 482.3 the week before. The refinance index fell slightly to 2142.1, from 2167.9 the week before. The refinance share of mortgage activity increased to 41.2% of all applications, from 40.3% the previous week. The adjustable-rate share of activity decreased to 33.3% of applications from 34.8% the previous week. The average contract interest rate for 30-year fixed rate mortgages decreased to 5.61%, down two basis points from the week before, with points decreasing to 1.07 from 1.27 for 80% loan-to-value ratio loans. The MBA can be found online at http://www.mortgagebankers.org.