Surge in Sales Bypasses Commercial Market
Los Angeles Times, March 18, 2009
By Roger Vincent
... One form of such financing, derived from the sale of commercial mortgage-backed securities, has disappeared from the market almost entirely. Lenders last year issued just $5 billion of these securities -- which consist of commercial mortgages bundled together and sold by lenders -- compared with $78 billion in 2007.
"They're not a popular product, to put it mildly," said Delores Conway, professor of statistics at the USC Lusk Center for Real Estate.
But when the securities were being bundled by investment banks and sold all over the world the real estate market was flush with cash. There was so much money, in fact, that the securities can be blamed for driving up office rents, Conway said. Investors used proceeds from selling the securities to buy buildings at record prices and then raised rents to help pay their substantial mortgages...
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