Originations

Single family housing starts fell 4% in August but construction activity still remains very robust.The U.S. Commerce Department reported that housing starts fell from a seasonally adjusted annual rate of 1.54 million in July to 1.48 million in August. The July number was revised upward from 1.52 million, which was considered the best month for starts in 17 years. So far, it appears the rise in mortgage rates this summer has not even dented demand for new homes, and single-family permits rose by 2.3% in August. "We were expecting some decline, but the numbers are surprisingly strong," said National Association of Home Builders economist Michael Carliner. The government also reported that multifamily starts fell 4% in August to a seasonally adjusted annual rate of 308,000.

LTC Properties Inc., Malibu, Calif., has announced the pricing of a public offering of 2 million shares of 8.5% series E cumulative preferred stock, with a liquidation preference of $25 per share.The company said each share will be convertible at any time into shares of common stock at a conversion price of $12.50 per share of common stock, subject to adjustment under certain circumstances. The transaction was managed by Stifel, Nicolaus & Co.; McDonald Investments Inc.; and Harris Nesbitt. LTC is a real estate investment trust that invests in long-term care and other health care facilities.

Westfield America has entered into a nonbinding letter of intent with the Port Authority of New York and New Jersey for the sale of Westfield's interest in the World Trade Center retail net lease for $140 million.The Australian property trust said this would allow it to recover its initial investment in the property and "associated costs." This development is "the culmination of several months of discussion" between the Port Authority and Westfield on how to proceed with the redevelopment of the retail facilities at the World Trade Center, Westfield said. "We are selling our interests to the Port to help simplify the overall rebuilding process and expedite the rebuilding of the World Trade Center," said Westfield chairman Frank Lowy. "While Westfield wanted to be a part of the future of the World Trade Center, we recognized the conflict between the interests of the public and the needs of our commercial/net lease rights. Selling our interest back to the Port will allow the public interest to take precedence."

Meanwhile, Allen L. Wehrhahn has been named president of Key Home Equity Services, a division of KeyBank's Consumer Finance unit.Mr. Wehrhahn will be responsible for Key's national brokered home equity division and its home improvement lending group, the company said. He was most recently chief administrative officer for Key Consumer Finance. The company can be found on the Web at http://www.keybank.com.

Michael Cacciaguida has been named president of Champion Mortgage, Parsippany, N.J., a division of Cleveland-based KeyBank USA.Mr. Cacciaguida, a 17-year veteran of Champion, has held many positions at the company, most recently as vice president of underwriting, operations, and sales, Champion said. In his new post, he will focus on the company's organization, direction, and financial performance.

With loan volumes falling, wholesalers need to monitor their mortgage brokers and exert control over loan pricing, according to John Konyk, senior vice president of National City Corp."If you ever wanted to pick a time to be careful about product, pricing issues, suitability -- this is it," Mr. Konyk told a fair-lending conference sponsored by the Consumer Bankers Association. He warned the conferees that brokers have gotten used to making lots of money. But now the business is slowing down. "Don't kid yourself and don't let the numbers cloud your judgment," he said. "Establish pricing policies and controls and maintain the same policies for your retail business as your wholesale business." Mr. Konyk is in charge of regulatory management risk at NCC, which has national bank subsidiaries that do prime and subprime mortgage lending. The CBA can be found online at http://www.cbanet.org.

Voters in Texas have approved a constitutional amendment that allows lenders to offer home equity lines of credit for the first time in the state's history.But even more important than the HELOC language is a cure provision for home equity lenders, according to Larry Temple, general counsel for the Texas Mortgage Bankers Association. This allows lenders to avoid severe penalties by correcting minor mistakes. It will, said Mr. Temple, encourage more lenders to offer home equity loans, and will also eliminate the "Texas premium" that borrowers paid as a result of the added risk to lenders. The decision will become effective in 15 to 30 days, when Gov. Rick Perry certifies it as official.

SIB Mortgage and its affiliate Ivy Mortgage are on the auction block, sources have told MortgageWire.A subsidiary of Staten Island Bancorp of New York, SIB is a top-40 lender that funded almost $10 billion in loans last year. Ivy Mortgage is the retail arm of the company; SIB Mortgage is the wholesale arm. A marketing official for SIB Mortgage said she has heard the news that the company might be for sale, but said it's "just a rumor -- I don't think it's true." But one source said an offering book has been circulated on SIB. (See the Sept. 15 issue of National Mortgage News for full details.)

Keystone Property Trust, West Conshohocken, Pa., has closed a $75 million unsecured term loan.The real estate investment trust said the loan has a term of five years, and is priced at 1.35%-1.75% above the London interbank offered rate, depending on the company's leverage. The proceeds were used to pay down the company's $185 million unsecured credit facility. The loan was underwritten by Wells Fargo Bank. Keystone can be found on the Internet at http://www.keystoneproperty.com.

One Liberty Properties, Great Neck, N.Y., has filed a shelf registration statement with the Securities and Exchange Commission seeking to issue up to $200 million in common stock.After the statement becomes effective, the real estate investment trust said it may offer common stock at various times and on terms based on its needs. The diversified REIT manages a portfolio of retail, industrial, office, and movie theater properties.

ABN Amro Mortgage Group Inc., Ann Arbor, Mich., has reported that its August production of $12.3 billion brought the company's total production to just over $100 billion for the year.The year-to-date total of $100.1 billion represents an increase of 52% from AAMG's production total at the end of August 2002, the company reported. AAMG's largest producer is its Interfirst Wholesale Lending channel, with $78.1 billion for the year. But its fastest-growing channels on a year-to-date basis are Standard Federal Bank and LaSalle Bank, up 168% (combined), and National Lending Center, up 131%, according to AAMG's figures. The company's website address is http://www.abnamro.com.

Prudential Mortgage Capital Co., Newark, N.J., has announced the formation of a $250 million closed-end fund designed to offer first-mortgage bridge and mezzanine financing for multifamily and commercial properties.The fund, PREFII Preferred Income Joint Venture Fund, was launched on behalf of investors by the company's debt funds management business, Prudential Real Estate Fixed Income Investors. It will specialize in providing structured financing for unstabilized or "situational" properties, the company said. "The overall debt market has become very commoditized, with lenders primarily only wanting to finance stabilized properties and not wanting to assume any type of property risk, such as lease-up or repositioning risk," said Doug Vikser, managing director of PREFII. "The fund has been designed to capitalize on this opportunity and realize the yield premium that could be achieved for taking on this risk. The fund has the ability to quantify the risks associated with a transaction and devise loan structures that mitigate the risk to investors." Prudential Mortgage Capital, the commercial mortgage lending business of Prudential Financial, can be found online at http://www.prudential.com/mortgagecapital.

A real estate expert is predicting a "bloodbath" in the apartment market when investors finally realize that they cannot reap the returns they expected.Bret Wilkerson of PPR, a real estate forecasting firm in Boston, told a Federal Deposit Insurance Corp. conference that the apartment market is the "scariest place in the real estate market today." He noted that properties are overpriced nationwide, vacancy rates are above 7%, and owners cannot push up rents because of supply-and-demand problems. Nevertheless, investors keep pouring money into the sector because they believe it is safe. "In the next six to 12 months, we are going to see a bloodbath in the multifamily market," Mr. Wilkerson said, as investors pull their money out of the sector. Other presenters at the FDIC's commercial real estate conference indicated that they have not seen any problems in financing acquisitions or refinancing multifamily loans.

Michael Berman has been named vice president and chief financial officer of Manufactured Home Communities, a Chicago-based real estate investment trust.Mr. Berman succeeds John Zoeller, who will remain as a consultant to the REIT. Mr. Berman has been associated with MHC since before its initial public offering in 1993. He has 17 years of experience as an investment banker, a money manager, and an associate professor of corporate finance and financial accounting at New York University, the company said. The REIT can be found on the Web at http://www.mhchomes.com.

A Minneapolis judge has ruled that Simon Property Group, Indianapolis, must turn over a 27.5% interest in the Mall of America for compensation of $81.38 million to Triple Five of Minnesota, a business controlled by the Ghermezian family of Canada.Triple Five, Simon's business partner in the Mall of America property, had initiated a lawsuit against Simon alleging that Triple Five was not given the opportunity to participate in a 1999 restructuring transaction whereby Teachers Insurance & Annuity Association sold a 27.5% interest in the property to Simon. Under the ruling, Simon is also required to turn over net profits it received from 1999 to the present. Responding to the ruling, Simon said the court's order is "legally and factually wrong" and that it intends to "vigorously contest" the ruling. The Mall of America is under expansion and will total over nine million square feet on completion, making it the largest retail property in the world, according to the Ghermezians. Simon, a real estate investment trust, can be found online at http://www.simon.com.

Jameson Inns Inc., Atlanta, has announced a strategic restructuring proposal under which it would terminate its status as a real estate investment trust and acquire the company that leases and operates its hotels.Jameson said it has agreed to buy Kitchin Hospitality LLC from Thomas W. Kitchin (Jameson's chairman and chief executive officer) and members of his family by issuing approximately 2.185 million shares of common stock and paying $1.3 million in cash. Kitchin would become Jameson's hotel operating division. Jameson said it expects to cease paying a dividend on its common stock for "the foreseeable future" as a result of converting from a REIT to a C corporation and will use the retained earnings for capital investments, debt repayments, and brand growth. "This restructuring is designed to strengthen Jameson's financial position, simplify its corporate structure, eliminate certain perceived conflicts of interest, and over the long term, enhance shareholder value," the hotel REIT said. Craig Kitchin, Jameson's president and chief financial officer, said the company believes it has "a significant opportunity" for growth, but that "our inability to retain earnings as a hotel REIT is keeping us from reaching our full potential." The company can be found online at http://www.jamesoninns.com.

Southern California is in a period of long-term growth for multifamily real estate investments in which biotech/biomedical and defense industry employment will be "major" drivers of housing development, according to an economist at the UCLA Anderson School of Management.Stephen D. Cauley, associate director of the Anderson School's Richard S. Ziman Center for Real Estate, said the growth arises from demographic trends. "We are in a period of sustained growth of portions of the population that will demand apartments: lower-income families who will never be able to afford homeownership, and young, highly educated professionals," Dr. Cauley said. He reported that per-unit prices for typical apartments in Los Angeles, Orange, and San Diego counties rose more than 20% in the past year. The forecast was presented at the fifth annual UCLA Multi-Family Housing Forecast Conference in Los Angeles. The Ziman Center can be found online at http://www.zimancenter.com.

Harrah's Entertainment, Las Vegas, is acquiring the privately held Horseshoe Gaming, another Las Vegas-based gaming company, for $1.45 billion, including the assumption of debt.Horseshoe operates casinos in Hammond, Ind.; Tunica, Miss.; and Shreveport-Bossier City, La. In connection with this acquisition, Harrah's said it is selling its Harrah's brand casino in Shreveport to avoid overexposure in that market. The acquisition will add 107,100 square feet of casino space to its existing 1.53 million square feet on a net basis, the company said. "This acquisition enhances our efforts to become the nation's leading distributor of casino entertainment," said Gary Loveman, president and chief executive officer of Harrah's. The company said it expects to save about $36 million annually within two years of closing the acquisition due to "operating synergies."

Classes B-6 and B-7 of DLJ Commercial Mortgage Trust, commercial mortgage pass-through certificates, series 2000-STF1, have been placed on review for possible downgrade by Moody's Investors Service.In addition, Moody's upgraded two classes in the deal and affirmed the ratings on two other classes. The certificates are collateralized by four loans, secured by commercial properties, ranging from 5.0% to 48.5% of the pool. The rating agency said its weighted average loan-to-value ratio was 115.6% based on year-end 2002 operating results, compared with 89.6% at the previous review. The decline in pool performance has been offset by increased subordination levels due to loan payoffs, resulting in the upgrade of two classes, Moody's said. Subordination levels have also increased "significantly" for classes B-6 and B-7, but the classes were placed on review for possible downgrade because they have experienced cumulative interest shortfalls of $58,867, which are expected to be replenished over the next few months, Moody's said. The rating agency can be found online at http://www.moodys.com.

First Franklin Financial Corp., San Jose, Calif., has reported a monthly mortgage loan production record of $2.13 billion for August, more than double the $945 million recorded a year earlier.First Franklin's year-to-date funding totals stand at $11.79 billion, surpassing its total of $10.72 billion originated in all of 2002, the company said. First Franklin also touted the fact that, at a time when many lenders have relied on the refinance boom for most of their business, its purchase-business product mix reached almost 70% in August. "By focusing our product development, sales, and marketing efforts on our purchase products, First Franklin has been successful in achieving a strong purchase-business mix," said Andy Pollock, First Franklin's president and chief executive officer. "This purchase-focused strategy will help us remain rate-resistant and keep production up if the market changes." First Franklin, a subsidiary of National City Corp., can be found online at http://www.first-franklin.com.