Newswires columnist Max Murphy writes:
Worked pretty well last time, why not try it again?
Put together Bank of America, Fortress Investment Group, and a new, $460 million CMBS issue backed by commercial real estate in Florida. What could possibly go wrong?
Call us once bitten, twice shy, but it seems a little soon to be jumping back into the CMBS market, the collapse of which amid the recession roiled many investors and firms.
This is a bank, BofA, still in hock to the U.S. government because its descent into riskier assets like CMBS helped cause its need for tens of billions in emergency cash to survive. Many other banks have since regained sufficient health to repay their Treasury Department bailouts; BofA, not so much.
It’s partnered with troubled asset manager FIG, whose real estate assets are backing the seven-year issue. Things were so tough for Fig that 90% of its market capitalization vanished last year.
Add to this the fact that the properties are in Florida, one of the hardest hit real estate markets in the U.S. And, it’s not eligible for funding through the Treasury’s Term Asset-Backed Securities Loan Facility, or TALF, program.
This could end badly, right?
