A week after the first sale of commercial-mortgage-backed securities in more than a year, another deal is about to hit the market in the latest sign that capital markets are easing for corporate borrowers like real-estate investment trusts.
Inland Western Retail Real Estate Trust Inc., which owns some 300 retail properties nationwide, closed on Tuesday on $625 million in new financing from J. P. Morgan Chase & Co. to pay down its existing debt. The bank is expected to convert the $500 million first-mortgage part of the financing into a CMBS offering and sell through private placements the remaining $125 million in "mezzanine," or junior, debt to investors hunting for higher returns, according to people familiar with the matter. A spokesman at J.P. Morgan declined to comment.
Inland is a "nontraded" REIT whose shares are registered with the Securities and Exchange Commission but don't trade on a stock exchange.
The move comes as investors at mutual funds, pension funds, insurance companies and other institutions have regained their appetite for CMBS debt that features conservative underwriting, simple structures and greater safeguards for investors than CMBS sold during the boom years.
This growing demand reflects a trend in the broader equity and debt markets, which have started to open up for REITs and other corporations. So far this year, REITs have raised more than $20 billion by selling shares and bonds.
To be sure, the turn of the capital markets is still tentative. But it has led scores of small and private real-estate owners - the type that is still finding it hard to access capital - to think about going public to raise capital.
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