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Wednesday, 12 March 2008

Another Commercial Property Derivatives Trading Platform Planned

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Commercial Real Estate Direct Report

The International Securities Exchange plans to launch platforms that would facilitate trading against the Rexx commercial property indices.

The trading would enable investors to take positions on the total return and on changes in rental rates of commercial property for 15 U.S. cities. The Rexx indices rely mainly on rental data to determine property values.

The International Securities Exchange, a New York subsidiary of German derivatives exchange Eurex, operates several electronic trading platforms that include stock options exchanges. Its first commercial property trading platforms are scheduled to start in the second quarter, based on property values in Manhattan, Houston, Chicago, San Francisco and on an all-market index that aggregates values from all 15 markets Rexx covers.

Derivative products allow investors to take long or short positions on a sector - real estate in this case - without owning any actual assets in that sector. They also can provide hedging tools for property owners and investors.

The launch of trading against the Rexx indices would add to what's been an evolving commercial property derivatives trading market that began in 2005 when Credit Suisse began providing for such trades pegged to the NCREIF indices.

Last year, the National Council of Real Estate Investment Fiduciaries, which manages the NCREIF indices, granted additional licenses allowing Morgan Stanley, Lehman Brothers, Banc of America Securities, Deutsche Bank, Goldman Sachs and Merrill Lynch to also organize trades against its indices.

Also last year, CME Group, which resulted from the merger of the Chicago Mercantile Exchange and Chicago Board of Trade, launched a market for trading options contracts on the S&P/GRA Commercial Real Estate indices developed by Global Real Analytics of San Francisco. And investment manager State Street Group bought a stake in Moody's/Real Commercial Property Price Indices and announced plans to provide derivatives trading against those indices, which are managed and published by a partnership of Real Estate Analytics of New York and Moody's Investors Service.

Cushman & Wakefield last year partnered with Newmark Knight Frank to invest in Rexx Index LLC, which was founded by Paul Frischer, who developed the Frischer Kranz Inc. Rent Model used to determine property values based on rents.

Comments? E-mail John Covaleski or call him at (267) 247-0112, Ext. 208.



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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2016
Investment Bank #Deals Vol$mln MktShr%
JPMorgan Securities 14.94 10,350.16 15.14
Deutsche Bank 14.21 9,926.60 14.52
Wells Fargo Securities 13.36 9,513.96 13.92
Citigroup 10.87 8,061.79 11.80
Goldman Sachs 10.05 7,563.72 11.07

 

MOODY'S/RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2016
Lender #Loans Vol$mln MktShr%
JPMorgan Chase Bank 133.67 8,670.33 13.34
Goldman Sachs 156.20 7,418.37 11.41
Deutsche Bank 178.17 6,510.75 10.02
Citigroup 184.41 5,512.20 8.48
Morgan Stanley 113.18 4,130.53 6.35

 

 

 

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