Investors Blame CMBX Index
For Their Misfortunes

Investors and issuers of commercial mortgage-backed securities have been sputtering with rage lately over the CMBX -- a two-year-old credit-market index that has been greatly influencing CMBS prices. Now some are trying to do something about it.

Commercial Mortgage Securities Association, an industry group that represents many of those who blame the index for their dwindled fortunes, has sent a letter to the company that runs the index, Markit Group Ltd., asking for disclosure of such seemingly basic information as daily trading volumes for the index. "The volatility in the CMBX index, caused by short sellers, distorts the true picture of the value of commercial-mortgage-backed securities," said Lee Cotton, president of the group, in a statement. "If the market had access to daily trading information, we might be able to determine a realistic value for the bonds ourselves."

But the request seems a long shot, at least for now. Ben Logan, managing director of Markit Group, declined to comment on the letter, but reiterated the comments he made last month in response to calls for more transparency in the index. "There is no place where volumes are available," Mr. Logan said at the time.

Beach Before Bonds?

For more than a week, Lightstone Group's chief executive, David Lichtenstein, has said he would reach an agreement any day with bondholders over $31 million in unsecured corporate bonds he defaulted on March 15. Now the holdup, according to Mr. Lichtenstein, is a family vacation.

Mr. Lichtenstein said one of the major bondholders isn't available to negotiate the extension that Mr. Lichtenstein is requesting on the bonds, which Lightstone Group inherited when it bought Extended Stay Hotels from Blackstone Group LP last year for $8 billion. "My luck -- the guy who is in charge of it, he called me and said, 'Look this is not very important to us and I'm on spring break with my kids. And let's just finish it when we get back,' " Mr. Lichtenstein said.

Missing bond-fund managers aren't Mr. Lichtenstein's only headache. Earlier this month, Standard & Poor's Ratings Services raised concerns about malls Lightstone owns in Burlington, N.C., and Macon, Ga., both of which face competition from new malls. The firm placed ratings on bonds that use those properties as collateral on watch for possible downgrades. Mr. Lichtenstein said the loans likely will be worked out.

Delay of Game

The Dallas Cowboys intend to play their home games in the 2009 season in a $1.1 billion stadium under construction in Arlington, Texas. But the $550 million first phase of the neighboring Glorypark, a development of shops, offices and apartments, won't arrive in time for kickoff.

Joint-venture partners Steiner + Associates and Hicks Holdings LLC have pushed back the 65-acre project's opening date to March 2010 from the fall of 2009. The reason: financing, of course.

With the credit markets going haywire, lenders have required larger repayment guarantees than anticipated, and the equity contribution required for the deal increased to 25% from the original 20%, Steiner President Barry Rosenberg said. It also has taken longer than expected for Steiner, Hicks, the city and lead lender Bank of America Corp. to get documents for Glorypark's $135 million in public bonds organized and sent to the Texas attorney general for review.

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