Commercial Real Estate Remains Stalled

Wall Street Journal (09/26/07) P. B4; Dunham, Kemba J.Despite last week's interest-rate cut by the Federal Reserve, the 10-year Treasury yield has increased since then and caused borrowing costs to rise as well. As a result, many commercial property deals could remain in a holding pattern for at least the foreseeable future. Evidence of the ongoing credit crunch can be seen in last week's decision by Marylebone Warwick Balfour Group PLC to pull the sale of its US$1 billion hotel portfolio for the second time due to "current uncertainties in the markets." Some companies are pressing on undaunted; Lehman Brothers Holdings Inc., for instance, confirms that it has secured buyers for $8.9 billion worth of commercial mortgage-backed securities that will go toward funding its joint acquisition of Archstone-Smith Trust with partner Tishman Speyer Properties.