NEW YORK - Bank of America Corp. plans to sell $460 million of securities backed by commercial real estate without relying on a US program to aid lending, three days after the first sale of the debt in more than a year.
Backed by mortgages on office and industrial properties in Florida, the bonds are split into four portions, the largest of which is $350 million of top-rated debt, according to people familiar with the matter. Fortress Investment Group LLC is the sponsor on the transaction.
The offering follows the sale from Developers Diversified Realty Corp. on Monday, the first issue of commercial-mortgage backed securities since June 2008, according to data compiled by Bloomberg. The Developers Diversified bonds were sold through the Federal Reserve’s Term Asset-Backed Securities Loan Facility. Most investors paid cash for the Ohio-based company’s debt rather than take loans from the Fed, according to data from the central bank.
In addition to mortgages, the Bank of America bond is backed by fiber optic cable leases and other assets, said the people, who declined to be identified because terms are private.
The government has made reviving the $700 billion commercial-mortgage bond market a priority as plunging property values and a pullback in lending threaten to derail an economic recovery. US commercial real estate prices are down 42.9 percent from the October 2007 peaks, Moody’s Investors Service said.
Investors can take out loans from the Fed’s TALF to purchase AAA bonds, enabling them to boost returns with borrowed cash. TALF was started in March to revive the market for bonds backed by consumer and small business loans, and expanded to newly issued commercial-mortgage bonds in June.
A spokeswoman for Bank of America, the biggest US lender, didn’t return a telephone call for comment.
