Commercial property companies may sell about $3bn of mortgage-backed bonds starting in September as part of the government’s program to revive lending for shopping malls, skyscrapers and hotels.
More than a dozen real estate investment trusts are likely to participate in the Federal Reserve’s Term Asset-Backed Securities Loan Facility, or TALF, said Steven Wechsler, chief executive officer of the National Association of Real Estate Investment Trusts. Vornado Realty Trust may raise as much as $600m, a person familiar with the matter said yesterday.
The transactions would be the first new issues in the $700bn US market for commercial mortgage-backed securities since it shut down in 2008 as credit markets froze. Commercial property values tumbled and defaults accelerated. REITs turned to the stock market to raise capital to pay debt.