firesales,mezzanine lending,gfc perspectives

There isnt much happening here but I thought that the following two articles might be an interesting example of firesaled assets in a messanine lending environment of the GFC.
I use these Fortress Investment articles as an example only as this may not be the Company or the situation here.
I dont follow it all but hope Australian property does not get firesaled and devalued.

NO 1.
Fortress wins Swig luxury building in auction...........
" The downfall of the residential real estate market will create more deep discounts for investors, especially for asset managers and private equity firms.

One such investor is Fortress Investment Group LLC's (NYSE:FIS), which won a foreclosure auction Thursday for a New York City condominum conversion project called Sheffield57 for $20 million. The project was orginally valued at $640 million.

The sale registered as the third-high-profile mezzanine foreclosure in the U.S. in 2009, following sales of Boston's John Hancock Tower and 1330 Avenue of the Americas in New York, according to Bloomberg.


So how could a project that seemed so right sour to the point where it fell to foreclosure? Well, it was the same combination of forces that destroyed the broad home sale sector: A bubble burst that was fueled by easy money from lenders; demand was created by buyers that still had well paying jobs at the and the overall economy had not fallen into deep recession. Developer Kent Swig was so confident of his project he took out nearly $640 million in debt on the property hoping to deliver luxury condos that had everything from pet spas to top of the line appliances and concierge services.

But for Swig the market for buyers evaporated as the economy began to falter in the second half of last year. Swig was able to sell 40% of the units but it wasn't enough to stave off a default on the $400 million first mortgage, which he received from a unit of Credit Suisse First Boston,in April and an additional $240 million mezzanine loan, which was held by Guggenheim Structured Real Estate Partners LLC, in May. - Gerald Magpily"

http://www.thedeal.com/dealscape/2009/08/fortress_picks_up_swig_luxury.php

compared that perspective to this article.
No. 2
"Fortress Swoops Up New York Condo AUGUST 7, 2009
By LINGLING WEI and NICK TIMIRAOS
Fortress Investment Group LLC acquired a high-profile New York condominium development in a foreclosure auction Thursday in an early sign that opportunistic buyers are beginning to swoop in on distressed commercial real estate.

In a complicated series of transactions, Fortress paid less than $100 million for the remaining unsold units in the condo conversion project in Midtown, called Sheffield57, which had been owned by a group led by developer Kent Swig. Mr. Swig's group had sold fewer than half the 597 condo units in the project, whose total price tag -- including the original equity contribution by Mr. Swig's partnership -- came to about $700 million.

Fortress used a strategy that is becoming increasingly popular among vulture investors: The private-equity firm first bought at a discount the $70 million controlling senior slice of the so-called mezzanine debt, which fills the gap between equity and the first mortgage. Then Fortress essentially bid a fraction of the debt at a foreclosure auction. In the meantime, Fortress also paid off the remaining $32 million left on the first mortgage, which had been packaged and sold as commercial-mortgage-backed securities.


At the auction held at the New York office of law firm Allen & Overy, which represents Fortress, the private-equity firm was the only bidder, with a bid of $20 million. A Fortress spokeswoman didn't return calls seeking comment. Fortress purchased the slice of senior mezzanine debt from a fund managed by Guggenheim Partners. Holders of the more-junior slices of the mezzanine debt saw their stakes essentially become worthless. These holders included J.P. Morgan Chase & Co., New York Life Insurance Co. and Gramercy Capital Corp. A spokesman for J.P. Morgan declined to comment. A spokesman at New York Life said the company had only "a modest interest" in the mezzanine debt. An official at Gramercy didn't return requests for comment.
The condo project was hit with the financing drought and the economic downturn. The group led by Mr. Swig took out a $400 million first mortgage for the 50-story rental building from a lending unit of Credit Suisse Group. Mr. Swig's group also borrowed $240 million in mezzanine debt and put in about $70 million in equity, using the funds to convert the rental units into condos. But the borrower defaulted on the debt when it came due.

The project also is reeling from slow condo sales amid the recession. Rose Associates -- the New York apartment landlord that sold the building in 2005 to the partnership led by Mr. Swig for $418 million -- has been retained by Fortress to manage the completion of the fractured condo project, according to a person with knowledge of the matter."

http://online.wsj.com/article/SB124956837749111153.html

Its even worse when you consider that a 'listed' Company could be shorted and margined into a firesale situation,imlo.