Prudential, Perella Weinberg JV Opens Access to $1B in CMBS

It's a new day for Prudential, as a new joint venture with Perella Weinberg Partners will allow the financial firm to begin issuing CMBS, effective immediately.

By Nicholas Ziegler, News Editor
July 11, 2011

Courtesy Flickr Creative Commons user Deco Danny

It’s a new day for Prudential. While the company divested its commercial mortgage securitization business in 2008, a new joint venture with Perella Weinberg Partners will allow it to begin issuing CMBS, effective immediately. Calling it an “excellent opportunity,” David Twardock, president of Prudential Mortgage Capital Company, was quick to point out the chance for his company.

We can “leverage our national origination network and expand the financing options we provide for our borrowers,” he said. “Participation in the re-emerging CMBS market is critical to maintaining our leadership position in the commercial mortgage arena.”

The CMBS market is quickly heating up, making the vehicles once again attractive. According to a July 6, 2011, report by Trepp, for the first time since 2008, delinquency rates for CMBS fell for two consecutive months. The drop was likely driven by the liquidation of $1.8 billion worth of loans in June. And a further report by Commercial Mortgage Alert noted that only $2 billion of CMBS loans were delinquent by 30-59 days as of May 31, down from $2.8 billion a month earlier, signaling continued stability, or even a drop in the 60-day delinquency rate, in the near term.

David Schiff, partner at Perella Weinberg Partners and portfolio manager of the Asset Based Value strategy, was as optimistic as Twardock. He was anxious to bring “additional liquidity to borrowers and high-quality securities, secured by conservative underwriting on quality assets, to bond investors,” he said.

The Prudential Mortgage Capital Company, the commercial mortgage lending business of Prudential Financial, Inc., will use its finance expertise in conjunction with Perella Weinberg’s real estate lending and principal investing experience. Loans will be originated through Prudential’s origination platform, then warehoused and securitized by the joint venture before being serviced by Prudential Asset Resources.