Distress or no, Citigroup’s a vendor that’s discovered it doesn’t want to be in the property game anymore, meaning that somewhere between $5bn to $10bn worth of assets are currently on the market. That indicates the company believes there’s investor interest, and financing available. Apollo Global Management and Macquarie Group are thought to be in the running.
Property owners have found it difficult to refinance because the market for commercial mortgage-backed securities that fueled the real estate boom has slowed. CMBS sales fell to $12.2 billion last year from a record $237 billion in 2007, according to JPMorgan Chase & Co. Falling values are likely to spur rating cuts for subordinate CMBS bonds sold from 2006 to 2008, Moody’s said in November.
That’s an amazing stat: $237bn in CMBS sales in 2007 down to $12.2bn in 2009.