Wednesday, August 12, 2009

Pete Peterson's Blackstone Sold at the Height, Buyer Maquire Defaults

REIT Maguire Properties defaulted on loans involving seven office buildings in Southern California. Lenders received keys to the towers on August 10. BusinessWeek reported:

Maguire Properties is unusual both because of the quality of its assets and the magnitude of its debt problem, notes Michael Knott, an analyst at the real estate investment firm Green Street Advisors. The company has assets of $4.4 billion and outstanding loans of $4.6 billion. Many of its current woes trace to Maguire's $3 billion purchase of office buildings from Blackstone Group (BX) in 2007.
Blackstone Group co-founder Pete Peterson is a very lucky man. He made over $1 billion when Blackstone went public. How much did he make from the Maguire purchase? How much did he save from carried interest taxation? Peterson clearly landed in the green. Maguire is now in the red.

The Fed and Treasury may explore imploding real estate deals.

The Federal Reserve is expected to take a hard look at commercial real estate starting on Aug. 11, when the Federal Open Market Committee meets. Some members of Congress have been asking federal regulators and bankers to extend the Term Asset-Backed Securities Loan Facility (TALF), which aims to create liquidity in the market for real estate-related securities.
Structured Credit Investing reported little backlash from the Maguire default on US CMBS pricing. Is it priced in already? Or is the market counting on Uncle Sam to once again ride to the rescue? That horse must be mighty tired.