Boston Properties

Let the CRE sales begin.

One would think that if anyone had an interest in painting an overly optimistic picture for the economy in general, and commercial real estate in particular, the Chairman of office uber-REIT Boston Properties would be it. Nope.

Spreads were mixed in the US with IG worse, HVOL improving, ExHVOL weaker, XO wider, and HY selling off (but while moves were marginal close-to-close, the sentiment was wider all day off a gap tight opening).

But better late than never, especially when you have the REIT dilution powerhouse behind you. CLI just announced it will issue a total of 7,475,000 shares with Merrill as lead underwriter. Use of proceeds: "To repay borrowings under its unsecured revolving credit facility" which has as syndication agent...pause... Bank Of America. Unfortunately the $180 million of max proceeds will not really help BofA with their total bank exposure...

Credit markets are extending their widening trend form late Friday today as single-names are underperforming indices for the first time in over a week. The skew (the difference between index and fair-value) is at its tightest in recent times and we suggest that with equity still significantly rich to credit that we will see equity underperform IG credit in the short-term.

Boston Properties chairman Mort Zuckerman has had enough, and according to Bloomberg has filed lawsuit against Ezra Merkin and Gabriel Captial for Madoff related losses. Mortimer, who owns 2.5 million shares in BXP, likely doesn't have much to worry about as long as BXP stock trades above $40/share keeping him planted nicely in the billionaire club. Whether this Forbes-eligible condition persists, only time will tell.

The Mortimer lawsuit is for a $40 million loss, has claims of fraud and negligent representation and seeks unspecified punitive damages. Mort claims:

Well, we did throw them in the TBTF category yesterday, and this could be the first step. Moody's just out with an outlook revision to negative on its current senior unsecured rating (Baa2).

Lately more and more investors have been asking the same question: why are traditional metrics of market stress and credit supply not indicative of what the market is doing? In particular, they look at the VIX index as well as 3 month LIBOR, which, last time around exploded when the market reached its post-Lehman lows in November. Why should it be different now, when the market reached a 12 year low last week and financial company CDS levels hit all time wides, yet both the VIX and LIBOR have barely budged?

One of the first major casualties of the hibernation in the NY commercial market is Boston Properties, which announced today after market close that it is suspending construction of what would have been a lovely 39 story glass build