DealZone

Noted: 5-year funk means no office firesales

 	 REUTERS/Toby MelvilleDespite a looming wave of defaults, sell-offs of European offices at knock-down prices are unlikely, because commercial property prices are likely to tread water for years, rating agency Moody’s says.

in a report on the region’s commercial mortgage-backed bond market, Moody’s said it expects more loan defaults, but doesn’t think commercial property values will “materially recover” for the next five years. (Reuters report here.)

This means that special servicers — the administrators responsible for deciding the future of bust securitisations — “will not pursue immediate sale of the properties … but rather continue to collect the rental cash flows where possible and dispose of the properties under more favourable conditions, which may reduce ultimate losses,” the agency said.

Some foreign buyers have not been put off, with South Korea’s National Pension Service spending 268 million pounds on a pair of prime London office buildings.

Curiouser and curiouser

The rabbit character from Alice in Wonderland poses next to a mural artwork at entrepreneur Marc Ecko's anti-sundance party, with a Mad Hatter Tea Party theme, during the 2008 Sundance Film Festival in Park City, Utah January 20, 2008. The 20-feet mural depicts paparazzi with actual cameras built into the art. REUTERS/Fred Prouser (UNITED STATES)Seen with a post-bubble eye, securitisation is a bit of a looking glass world. Lewis Carroll would probably have appreciated “synthetic” obligations not built on real assets, near-meaningless credit ratings, and legal documents that fail to do what they are designed for.

So spare a thought for holders of asset-backed bonds who have had to take a trip down the rabbit hole.

Some of the worst-affected bonds are commercial-mortgage backed securities (CMBS), which in Europe have suffered largely because of the plunging value of the property used as security for the debt.