Commercial investors are watching the fall out of the Fannie and Freddie crises as much as anyone, since they have been a source of the limited capital available these days.

SOURCE: Bloomberg

Fannie Mae rose for a sixth day in New York trading, the longest streak since May 2007, after Chief Executive Officer Daniel Mudd replaced three top deputies in an effort to restore investor confidence.

Fannie and Freddie have reported $14.9 billion in net losses for the past four quarters as loan delinquencies rose.

Fannie and Freddie, created to boost homeownership, own or guarantee at least 42 percent of the $12 trillion in U.S. residential-mortgage debt outstanding. They also provide much needed capital to the commercial mortgage industry.

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SOURCE: Bloomberg

Investors are watching today's news with some understandable concern, given that Fannie Mae and Freddie Mac combined hold the lion's share of the mortgage paper in the US today...

Fannie Mae and Freddie Mac tumbled in New York trading to their lowest levels in more than 17 years on concern the government will be forced to bail out the mortgage finance companies, wiping out common stockholders.

Fannie slid 22 percent, while Freddie dropped 25 percent after Barron's reported that the Bush administration is anticipating the government-chartered companies will fail to raise the equity they need to offset credit losses, prompting the U.S. Treasury to act. The companies' stock market values are well below the minimum of $10 billion in capital that each would need to raise to ``have any credibility,'' Barron's said in its story.

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SOURCE: Forbes

The news this week is heating up and may turn out to be a watershed moment for the financing industry...

Bailout rumors have Fannie and Freddie shareholders worried that those stocks are in a race to zero.

On Monday, Fannie Mae and Freddie Mac plunged off a weekend report that posited that the government will indeed need to rescue the cash-starved firms and that equity holders will end up losing their shirts.

Fannie fell 17.8%, or $1.41, to $6.50 and Freddie lost 16.6%, or 97 cents, to $4.88. Investors don't have much left to lose; both companies have lost more than 90.0% of their market value in the last year.

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SOURCE: Bloomberg

As the financial pressures increase, Bernanke is being put on the hot seat to make some pivotal decisions soon...

Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.

In the year since credit markets seized up, the 54-year- old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.

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SOURCE: Globe Street

Just when we thought there was something positive happening in the REITs market B...

After recently giving multifamily REITs a marketweight rating, analysts at Banc of America Securities have downgraded the sector to underweight. The reason, according to locally based BofA analyst Dustin Pizzo, is that current valuations are no longer taking into account the potential pitfalls, so there is a chance apartment REITs may give back the tremendous gains they’ve enjoyed so far this year.

On the investment front, deals could continue to lag as sales volume declines and financing becomes less available and buyers opt to utilize debt assumptions and seller financing. "Over the next 12 months we believe asking prices will increasingly begin to reflect the new capitalization structure, increasing financing costs and pricing," says Pizzo. And with stock cap rates on the rise, any operating weakness or deterioration in financing will have a negative impact.

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SOURCE: Wall Street Journal

At least there are some signs of possible relief in the capital markets ahead...

Real-estate stocks have mounted a comeback so far this quarter, as Wall Street's worries over their ability to access the capital markets have eased.

The Dow Jones Equity All REIT Index has posted a 3.5% gain in total return between the end of the second quarter on June 30 and Tuesday's close, surpassing a 1% gain by the S&P 500-stock index and a 2.9% advance by the Dow Jones Industrial Average. The increase for stocks of real-estate investment trusts has -- at least for the first half of this quarter -- offset some of the index's second-quarter decline of 4.9%.

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"As the housing market tries to land on the runway, there's going to be a few hard bounces," said Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts. "Maybe you could think of this as a bounce up... Affordability has improved. We're starting to move toward a bottom."

SOURCE: Bloomberg

U.S. pending sales of previously owned homes unexpectedly rose in June as buyers swept up foreclosed and lower-priced properties.

The index of pending home resales rose 5.3 percent after a revised 4.9 percent decline in May, the National Association of Realtors said today in Washington. Other reports showed claims for jobless benefits jumped last week to a six-year high and consumer borrowing surged in June.

The most foreclosures on record have forced property values down enough to stir interest among buyers, helping to stabilize the market. Still, repossessions may keep mounting as stricter lending rules make it harder for owners to refinance their mortgages, economists said.

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SOURCE: Market Watch

Based on the recent report from a National Multi Housing Council (NMHC) survey we learn that the apartment sector of commercial real estate is holding up in demand, but still having challenges when it comes to funding deals.

According to NMHC Chief Economist Mark Obrinsky: "Demand for apartment residences is holding up relatively well despite the weakening job market and sluggish economy. If employment continues to fall, however, we'll likely see apartment demand follow suit."

"At the same time, the financial markets have still not returned to normal, with the CMBS market--and many banks--effectively sidelined."

"Overall," Obrinsky added, "the apartment industry remains reasonably well as a result of continuing fallout from the for-sale housing market and the fact that apartment firms did not overbuild during the latest economic cycle."

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LoopNet also owns and operates BizBuySell.com, the largest and most heavily trafficked online exchange for businesses for sale in North America, with more business listings, users and search activity than any other website.

SOURCE: Fox Business

LoopNet, Inc. (Nasdaq: LOOP), which operates the largest online commercial real estate marketplace with more than 2.75 million registered members, has increased its leadership position as the most heavily trafficked commercial real estate website. ComScore Media Metrix reported for June 2008 that LoopNet.com generated 859,000 unique U.S. visitors during the month, expanding its lead to 6.3 times the unique monthly U.S. visitor traffic than any other online commercial real estate listing service.

The June comScore report reflects a continued positive trend in relative traffic increases for the LoopNet marketplace. According to comScore, LoopNet generated 5.5 times the unique U.S. visitor traffic than any other commercial real estate website in May 2008 and 3.9 times the unique U.S. visitor traffic for June 2007.

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SOURCE: The New York Times

A bit of possibly good news for commercial real estate investors was reported today in the New York Times as the interest rate was held steady, but this move is also seen as a reflection of our tougher financial times...

With jobs leaking from the economy month after month, Federal Reserve policy makers decided on Tuesday to keep the key interest rate they control at its current level of 2 percent.

Emphasizing the dangers to the economy, the Fed said in its statement that a substantial easing of interest rates in recent months, “combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.” However, the Fed warned that “tight credit conditions, the ongoing housing contraction and elevated energy prices are likely to weigh on economic growth over the next few quarters.”

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SOURCE: Bloomberg

Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, may report net losses through the first quarter of 2009 as home-loan delinquencies rise to the highest on record, analysts' estimates show.

Freddie, based in McLean, Virginia, may say tomorrow when it releases second-quarter results that it had $1.9 billion in credit-related costs, while Washington-based Fannie on Aug. 8 will report $2.4 billion, according to Credit Suisse analyst Moshe Orenbuch in New York. The companies' regulator said in a July 22 report that Fannie and Freddie may need to write down the value of $217 billion in subprime and other risky securities.

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