Fed’s debt sale could jumpstart the industry

A recent sale of debt by the Federal Reserve could improve the industry.

The Federal Reserve Bank of New York recently sold $7.5 billion in commercial real estate debt, which could help improve the market for commercial real estate companies, according to TheStreet.

The debt was initially from American International Group and was labeled MAX CDO. The billions in liabilities were sold to an investment group which included Barclays Capital and Deutsche Bank, the news source reported. The collateralized debt obligation was a group of commercial mortgage-backed securities that failed on the company, initially.

"It was very well received," Edward Shugrue III, CEO of commercial real estate advisory firm Talmage, told the news source. "It was a thoughtful and adroit move by the Fed and the timing was impeccable."

The Fed's purchase could have a ripple effect in the commercial real estate industry, Shugrue noted to the news source. This is because debt buying could become an important factor due to investor demand for purchases that have a higher potential return.

The exact price for the assets is not known, but the news source added that it could have been as much as seven-tenths of the asset's price.

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