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Malay Bansal
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Malay Bansal is a capital markets professional with over 16 years of wide capital markets, commercial real estate, and structured finance experience.  He is a Managing Director at a New York based advisory firm working on structured finance, commercial real estate , clean energy, infrastructure,... More
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  • What does the Purchase of Extended Stay Say About State of CRE Markets?

    What seems like the final chapter on Extended Stay for now is interesting to analyze. On Thursday, Centerbridge led consortium that includes Paulson & co and Blackstone Group won the auction for Extended Stay after 11 rounds of successively higher bids and a marathon bidding session lasting 19 hours, when the rival group including Starwood Capital and TPG decided against another higher bid. The final purchase price was $3.925 billion, which is good for holders of $4.1 billion CMBS bonds, who were looking at a much higher loss last year when Extended Stay’s advisors had pegged the value at somewhere between $2.8 to $3.6 billion. But, does the intensity of bidding indicate that market is reaching somewhat frothy levels? Probably not, especially if Blackstone is making a meaningful investment, as they know the assets and the company well, having owned it previously. They sold it at $8 billion to the Lightstone group in 2007, and are buying back in at $3.9 billion.  

    Also, since Extended Stay owns budget hotels and not trophy properties, the heavy bidding challenges the convenient notion of bifurcated markets with lot of demand for trophy type properties and lack of demand for others.

     (comments from June 1).

    Disclosure: None
    Jun 13 12:20 PM | Link | Comment!
  • The Dichotomy in Commercial Real Estate Markets
    There is a dichotomy in commercial real estate at present. On one hand, there are worries about commercial real estate, with S&P downgrading three insurance companies – Principal Financial, National Life and Pacific Life - a week ago citing expected losses on commercial mortgages and CMBS. On the other hand, every property we have looked at, has had 30 to 50 offers from possible buyers already. Portfolios of loans, especially better quality ones, have attracted a lot of buyers too. How do you reconcile the two views? If you purchased a loan or property at the old inflated price, you may be facing losses. But if you are buying based on today’s lower valuations, it might turn out to be a good investment, especially given the returns on other asset classes (comments from May 24).

    May 31 11:02 AM | Link | Comment!
  • Is Optimism or Pessimism the Correct Feeling Towards the CMBS market?

    Just when spread tightening in last two months had started making market participants more optimistic, volatility came back to the CMBS market, and is causing some to wonder if optimism is the appropriate feeling towards commercial real estate at this point. A recent survey reported in press of 300+ top executives within the US commercial real estate market by a law firm had an interesting statistic regarding optimism vs pessimism. The pessimistic part was that 60% of respondents described themselves as bearish and did not expect the CMBS market to return in time to help refinance more than $150 billion in CMBS loans coming due in next two years. The optimistic part was that the number of bears has come down from 90% in Sep 08 to the current 60%! So, is optimism or pessimism the correct feeling towards CMBS? Clearly one can find reasons for both. Also clear is the need for careful and appropriately deep analysis of risks and rewards. For those contemplating conduit loan originations, the volatility highlights the need for proper hedging of loans while aggregating the pool. If market participants worked out an efficient hedging mechanism, that will help the conduit CMBS market come back sooner, and that will make a lot more people more optimistic (Comments from May 10).

    May 31 10:59 AM | Link | Comment!
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