Commercial Briefs

MBA (3/28/2008 ) Murray, Michael
An overall weakening trend took place in the second half of 2007 within key European industrial property markets, based on rising supply and reduced demand from occupiers, said Moody's Investors Service in its Red-Yellow-Green report, CMBS: European Red-Yellow-Green Year-End 2007 Update of European Industrial Property Markets.
The Moody's composite score for European industrial markets in 2007 dropped from a green ranking of 75—the strong market scale ranges 67-100—to a weak green score of 67. The effect on consumer spending from continuing financial market turbulence and credit tightening led to the decline of occupier absorption, which could also affect the retail distribution sector and indicate potentially more weakening this year, the report said. Moody’s said a peak in the cycle might have been reached, but a demand-led slowdown was likely in the eight European markets covered in the report.

Net absorption for Europe as a whole declined to 1.7 percent from 2.5 percent a year earlier, making for a weak green market that has the potential to reclassify as yellow this year, the report said. The yellow composite score ranges from 34-66, followed by a red score of 0-33.

Four yellow markets now exist—compared to one at the end of 2006—but there are no red markets as Brussels moved up from the red zone after mid-2007.

Jeroen Heijdeman, analyst at Moody’s and co-author of the report, said the slowdown was most pronounced in the United Kingdom, as net absorption fell to 1.6 percent from 2.9 percent with a forecast of construction increasing. Moody's expects vacancy levels could rise further as more space is delivered to the U.K. market this year, along with an increase in void and rent-free periods.

Rod Bowers, associate analyst and co-author of the report, said the decline is the first one since Moody’s started analyzing the European Industrial markets in 2003.

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DebtX, Boston, said it would sell more than $380 million in commercial real estate loans secured by properties in the southeastern United States with the first of four loan portfolios for bid April 15.

The transaction includes more than 200 lending relationships, and the loans range from up to $20 million, secured primarily by land and commercial and residential development projects throughout the Southeast—including Atlanta, Orlando and South Florida.

Investors will be given the opportunity to bid on pools and individual loans for performing, sub-performing and non-performing loans. Qualified investors can register to view and bid on the assets at http://www.debtx.com.

Kingsley Greenland, CEO of DebtX, said as credit quality weakens, institutions are choosing to sell loans into the secondary whole loan market—which is increasingly liquid. "A loan sale expedites problem resolution, while enabling institutions to lower risk, improve diversification and strengthen profitability,” he added.