They served as president and chairman,
respectively, at Weeks Corp., a company
they took public as a REIT in 1994, then
sold to Duke Realty in 1999. Robinson then
went on to serve as president of Miami-based Codina Group before joining
Cousins to start an industrial division in
2004. Since 2004, Weeks has also partnered
with Cousins to develop industrial buildings
in Atlanta.
Cousins does not have plans to replace
Robinson or Currie, and any operating
industrial properties will now be managed
internally by its office/multifamily division.
“Combined with their departure, this
land sale means Cousins is not pursuing
new speculative industrial development
opportunities in Atlanta, giving us more
time and resources for office, retail, residential and mixed-use opportunities,” says Tom
Bell, chairman and CEO of Cousins
Properties. “We believe they can deliver the
best returns for our shareholders.” Cousins
will continue to manage its diverse portfolio, which includes interests in 7. 7 million sf
of office, 4. 8 million sf of retail, 24 residential assets under development and 9,000
acres of land.—Crystal Proenza, GlobeSt.com
ING Says Recession
Will Be Short, Shallow
The easing of a “short and shallow” recession at year’s end will be followed six
months later by an upturn in commercial
real estate fundamentals, which nonetheless
are already solid. That was one of the long-term predictions offered by ING Clarion in
its new report, “Real Estate Investment:
Finding Value in a Changing Market.”
“It almost doesn’t matter who wins the
debate about whether we’re in a recession,”
said Stephen Furnary, chairman and CEO
of ING Clarion, at a press briefing at the
company’s New York City offices last
month. However, he said, the industry has
not yet felt the effects of the economic
downturn, and any flattening of income
growth so far has not been meaningful.
On the other hand, the debt crisis has
had an impact on the appetite of would-be
investors. Furnary noted that the Q1 volume of transactions for his company this
year is one-third the normal level; ING
Clarion racked up transactions totaling $5
billion per year in both 2006 and 2007. He
predicted that the logjam would not break
until investors believe that pricing has hit
“rock bottom.”
David Lynn, head of US research and
strategy, noted the stagnancy in the CMBS
market will ease up sooner than it did during the downturn of 1990. “In 1990, capital
wasn’t available,” said Lynn. “Today there’s
RATINGS
continued from page 12
throw cold water on a very chilly market.”
Currently, the same rating systems are
used for both structured securities and
other assets, such as corporate or municipal bonds. However, in response to the
subprime mortgage meltdown, the
President’s Working Group on Financial
Markets issued a report in March that
recommended “changes to the credit rating process that would clearly differentiate ratings for structured products from
those for corporate and municipal securities.” The matter was discussed at an
April hearing before the Senate Banking
Committee. At that time, Securities and
Exchange Commission chairman
Christopher Cox indicated that the
agency would solicit comments on any
regulatory changes during the summer.
Meanwhile, two credit rating agencies—Fitch Ratings and Moody’s
Investors Service—have undertaken their
own reviews of credit ratings for structured securities. In February, Moody’s
asked for general comments on the issue.
Also in the report were suggestions for
possible changes, ranging from devising a
completely new rating scale for structured securities to keeping the current
system intact, but providing more information and commentary on the securities. Comments were due by Feb. 29, and
the agency stated it would issue another
report, but has yet to do so, according to
a Moody’s spokesperson.
Last month, Fitch also undertook a
review of what it termed potential
“complementary scales or indicators
for structured finance transactions,”
which included ways to add more
transparency to the securities. Among
the suggestions was a loss given default
rating that would evaluate actual losses
following a default by a structured
finance product, which could differ
materially from other asset classes. Also
under consideration by Fitch are a scale
that would assess a security’s potential
for rating transition or volatility and a
review of the underlying collateral or
pool of assets in the securities. Fitch
requested feedback and plans to issue
drafts on the proposals by early June.
While industry insiders raise no objections to increased transparency and information, they balk at the creation of a separate rating process for structured securities, arguing it would only lead to investor
confusion at a time when the market is
trying to get back on track.
“Just assigning a different scale to the
ratings is not going to tell the investors
anything,” says Dottie Cunningham, CEO
of the New York City-headquartered
CMSA. “It’s really the increased transparency of the rating agencies’ methodologies that’s important for investors.”
Moreover, a new rating system is
unnecessary because the paramount factor for any debt issue—whether a corporate bond or a structured security—is if it
can pay off its principal and interest in a
timely manner, says Lisa Pendergast,
managing director of CMBS strategy at
RBS Greenwich Capital in Greenwich,
CT. A triple-A rating should mean the
same for both a structured finance security or a corporate bond, she emphasizes.
Placing a distinction between the two
would only raise more questions in the
minds of investors or investment managers, thereby inhibiting participation in
the asset class. “You already have
investors who have significant exposure
to triple-A structured finance bonds,” she
says. “The question they may have is, are
they different than other triple-A bonds?
If it is now different, it not only affects
your investment decisions going forward,
but also the portfolios you have already
purchased based on those triple-A ratings.
It tosses a wrench into things halfway
through the process and it isn’t quite fair
to investors. It makes it more difficult to
buy a triple A CMBS versus a triple A
corporate because now they are slightly
different. Clearly, you always want to err
on the side of caution and say, I guess I
can only buy that triple A corporate.”
That, maintain industry participants,
would halt any recovery in the CMBS
sector at this time. “When you throw a
new ratings into the mix, it’s unclear what
that means,” says Michael Carrier, senior
director for secondary markets at the
MBA in Washington, DC. “Adding a new
ratings structure would be another obstacle to restoring liquidity in the market.”
Pendergast states while there is
momentum for the SEC to move quickly
to implement any recommendations, she
is unsure whether it can be done as rapidly as the agency has targeted. However,
she didn’t rule out the possibility that
something could be done this summer.
“Given all the various parties
involved, it’s tough to say how quick is
quick,” she says. “I think they are talking
about getting all the recommendations
on the table by the summer months and
then potentially having something done
beyond what the rating agencies would
do themselves sometime by the end of
the year.”—Maria Wood
