Dear John Thain

Big CMBS Loans Near Default; CMBX Soars, REITs Tank

My mistake, JPMCC 08-C2 *is* in Series 5. The source I went to wasn't authoritative and that's my error. It is, however, not necessary for my first point.

-DJT


On Nov 19 09:14 AM Dear John Thain wrote:

> Hi,
>
> First, I find nearly no evidence for your linkage between REIT stocks
> and two (technically three) loans in CMBS deals. I also don't even
> know how exposed CMBX Series 5 is to these loans since the deal you
> mention, JPMCC 08-C2, isn't in series 5.
>
> Second, you misunderstand DSCR since you erroneously cite it as a
> percentage when it is a multiple (the DSCR is 1.25x, not 1.25%).
>
>
> Third, you don't seem to understand the CMBS market when it comes
> to underwriting since over a 1.20x DSCR is considered standard and
> very safe.
>
> Lastly, it is entire meaningless to cite IO percentages of a CMBS
> pool. I'm not sure you know this, but loans backing CMBS deals, unlike
> similar residential deals, are generally 10/30's ... This means that
> they are 10 year loans that follow a 30 year amortization schedule
> and require a balloon payment (payment in full) after 10 years (unusual
> because the loan isn't fully amortizing).
>
> Please check your facts before drawing conclusions. Sorry..
>
> -DJT