The Distressed Debt Alert

Investors Worry About CRE Debt Coming Due, Survey Says

Unknown factors regarding the economic recovery have many commercial real estate investors anxious, with the uncertainties surrounding the large debt volume coming due in 2011 and 2012 amplifying their anxiety, according to a survey by PricewaterhouseCoopers.

The survey's second-quarter findings revealed commercial real estate investors' frustration and disappointment at the lack of quality buying opportunities that many expected would have materialized by now.

The report found that despite encouraging economic data reports for retail sales and job growth, the retail property sector continues to struggle. The report said that the office sector is showing improvement in overall vacancy rates, though surveyed investors envision a slow rebound for the office market. They expect a full office recovery to lag behind that of the U.S. economy.

Industrial market conditions continue to soften at a slower pace than in previous months, as quality warehouse assets are getting multiple bids and strong interest from prospective buyers, according to survey respondents.

The survey said that the apartment sector is leading the recovery with investment appetite for high-quality assets in first-tier markets prompting an uptick in transactions. Investors said that while rental rates have stabilized, rent declines from the previous two years are still working their way through apartment rent rolls.

Source: Press Release

Vornado Realty Trust has entered the auction to buy CW Financial Services, Bloomberg reported.

Earlier bidders Centerbridge Capital Partners and Apollo Global Management have dropped out of the running for the company that owns CWCapital Asset Management, the second largest special servicer in the country.

Source: News Story

Restaurant operator Luby's Inc. said it will purchase the assets of Fuddruckers Inc. for $61 million after being declared the winner of a bankruptcy auction.

The U.S. Bankruptcy Court in Delaware will hold a hearing Tuesday to consider approval of the sale. The transaction is expected to close by July 9.

Houston-based Luby's said in a statement that it agreed to assume certain Fuddruckers obligations, real estate leases and contracts, and will pay an additional $2.45 million in cash if it doesn't assume certain specified contracts.

Luby's said it will fund the purchase of the restaurant company from cash and an expansion of its credit facility.

The Fuddruckers parent company operates 60 Fuddruckers locations and three Koo-Koo-Roo restaurants, while franchisees operate an additional 138 Fuddruckers locations, which are not included in the sale.

Source: Press Release

Knight Capital Group named Vikram Natarajan as managing director and head of loan and distressed trading.

Natarajan was managing director at FBR Capital Markets, where he was responsible for distressed and loan trading, prior to joining Jersey City, N.J.-based Knight Capital Group.

Source: Press Release

AMRESCO Commercial Finance said it hired John C. Blizzard as senior vice president to help build the company's third-party special servicing and primary servicing business.

Blizzard will work with banks, hedge funds, insurance companies, regulatory agencies and other servicers on their non-performing commercial real estate loans, AMRESCO said in a statement.

Blizzard, who comes to AMRESCO from the Federal Home Loan Bank of Seattle where he was chief business officer, will be based in the company's Bellevue, Wash., office.

Source: Press Release

AMRESCO Commercial Finance said it received a special servicing rating of CSS3 from Fitch Ratings.

The Boise, Idaho-based commercial real estate finance company, which has provided commercial loan servicing to performing and non-performing loans for 17 years, also received a primary servicing rating of CPS3 from Fitch.

Source: Press Release

The Newark Group, a producer of recycled paperboard and paperboard products, said it filed for a prepackaged Chapter 11 bankruptcy.

The Cranford, N.J.-based company said its reorganization plan has received a vote of support from its impaired creditor groups and impaired equity interests. The U.S. Bankruptcy Court in Newark, N.J., will hold a hearing July 30 to consider confirmation of the plan.

The Newark Group said that it secured two debtor-in-possession loans, a $50 million revolver and a $110 million term loan, from ORIX Finance.

Newark Group said it will continue normal operations with current management during Chapter 11 and plans no changes to its overall business.

Source: Press Release

Delinquency rates for all commercial and multifamily mortgage investor groups rose in the first quarter, according to the Mortgage Bankers Association.

The percentage of loans held in commercial mortgage-backed securities that are delinquent 30 days or more rose by 1.54 percentage points from the fourth quarter of 2009 to 7.24% in the first quarter of this year, the MBA said in a report.

The percentage of loans held by FDIC-insured banks and thrifts that are 90 days or more delinquent increased by 32 basis points to 4.24%. The percentage of loans held in life company portfolios that are 60 days or more delinquent increased by 12 basis points to 0.31%.

Multifamily housing property loans held or insured by Fannie Mae that are 60 days or more delinquent rose 16 basis points to 0.79%, while the percentage of multifamily loans held or insured by Freddie Mac that are 60 days or more delinquent increased five basis points to 0.24%.

Construction and development loans were not included in the MBA's report.

Source: Press Release

Investment bank Sandler O'Neill + Partners hired Carlos Mendez to lead its newly created structured finance group.

Mendez will be responsible for arranging new term funding and alternative capital solutions and will advise clients on recapitalizations, Sandler said. Mendez was previously a founding member and senior managing director in the capital markets division of Institutional Credit Partners.

Sandler O'Neill said it also hired Joshua Eaton, Andrew Mauritzen, and Chris Howley as managing directors in the structured finance group.

Source: Press Release

Four telecommunications companies, backed by Las Vegas investor Maurice Gallagher Jr., filed for Chapter 11 bankruptcy, the Las Vegas Sun reported.

The Las Vegas-based companies CommPartners Holding Corp., CommPartners Carrier Services Corp., CommPartners Network Services and CommPartners LLC said they filed bankruptcy to prevent AT&T from shutting off services for its network.

Source: News Story

I.D. Interactive LLC, a Delray Beach, Fla.-based designer and manufacturer of casino video games, filed for Chapter 11 bankruptcy, the South Florida Business Journal reported.

Source: News Story