Bloomberg News

UBS Said to Lend on Poughkeepsie Mall in CMBS Push Amid Turmoil

October 06, 2011

Oct. 6 (Bloomberg) -- UBS AG has committed to making a $176 million loan for a shopping mall in New York, persisting with efforts to boost its commercial-real estate financing even as credit market gyrations prompt other lenders to retreat.

The bank originated the debt this week on the Poughkeepsie Galleria, a 1.2 million square-foot shopping center, according to a person familiar with the deal. The Zurich-based firm plans on packaging the debt with other loans as securities this year, said the person, who declined to be identified because the negotiations are private.

UBS hired Ken Cohen, the former head of commercial-mortgage bonds at Lehman Brothers Holdings Inc., in May to bolster its team as sales surged and lenders crowded the $600 billion market. The debt has since been whipsawed as investors shun all but the safest securities on concern that the global economic recovery is faltering. JPMorgan Chase & Co. cut its forecast for issuance this year by as much as $15 billion from $45 billion.

Torie von Alt, a spokeswoman for UBS, couldn’t immediately provide comment.

The extra yield investors demand to hold top ranked commercial-mortgage bonds instead of Treasuries jumped to 323 basis points, or 3.23 percentage points on Oct. 4, the most since February 2010, according to Barclays Capital index data. Spreads on the Barclays Capital CMBS AAA Super Duper Index have widened from 178 on April 26, the index data show.

“We haven’t seen stabilization yet,” Julia Tcherkassova, a commercial-mortgage debt analyst based in New York at Barclays Capital said yesterday in a telephone interview. “Originators need to see that stability.”

Wall Street has arranged about $25 billion in commercial- mortgage backed securities this year, compared with about $11.5 billion in all of 2010, Bloomberg data show. Sales plummeted to $3.4 billion in 2009 compared with a record $234 billion in 2007, the data show.

The number of firms looking to originate commercial mortgages for sale as bonds quintupled to 25 from a year earlier by December 2010, according to Standard & Poor’s report at the time.

--Editors: Pierre Paulden, Mitchell Martin

To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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