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Strategies & Market Trends : Waiting for the big Kahuna
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To: Chip McVickar who wrote (32527)10/27/1998 3:11:00 PM
From: Ken98  Read Replies (1) of 94695
 
Chip, I think Cramer is right on this one. I work with commercial real estate and the market for commercial real estate has been put on ice for the past couple of weeks. There is no liquidity. The REITS are out of the market (have been for 2 months), the conduit lenders are out of the market (they are walking hard loan commitments because they can't get warehouse lines), the national retail banks are out. Last week the WSJ reported that there is more than $30B in mortgage backed securities sitting in the pipeline of the investment banks. No one is going to do another conduit loan until all of that inventory is gone. A lot of the major players (debt and equity) have gone to the lockeroom until 1Q 1999.

Cramer's comments about Lucent seem to be the same story. There's a reason why they floated $2B to Winstar for equipment - Winstar was shut out of the junk bond market. Lucent (like GE before them) has become a "hedge fund in drag." Look for more of these deals - they are now the lender of last resort for the CLEC industry.

Its all about liquidity - its the oil in the big engine. The engine can only run for so long without oil. That's why I think Cramer is right on this one after reading that article.

Thanks for the post. Regards, Ken.
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