In anticipation of a Wednesday, Sept. 15 hearing on covered bonds in the Senate Banking Committee, the CRE Finance Council and a coalition of commercial real estate groups sent a letter to Committee Chairman Chris Dodd (D-CT) and Ranking Member Richard Shelby (R-AL) urging support for the alternate financial instruments’ place in the U.S. financial markets.

In the past, the CRE Finance Council has testifiedbefore the House Financial Services Committee and it supports HR 5823, “The United States Covered Bonds Act of 2010.” The legislation, which could move to the House floor for a vote this year, includes highly-rated commercial mortgages and commercial mortgage-backed securities (CMBS) as “eligible collateral.”

Groups other than CRE Finance Council that signed the letter include: American Land Title Association, American Resort Development Association, Appraisal Institute, Building Owners and Managers Association International, International Council of Shopping Centers
NAIOP, the Commercial Real Estate Development Association, National Apartment Association, National Association of Real Estate Investment Managers, National Association of Real Estate Investment Trusts, National Association of Realtors, National Multi Housing Council and The Real Estate Roundtable.

“Today, the CMBS market is showing some important signs of life, but tremendous uncertainty remains in the market, depriving the CRE market of this important source of financing,” the coalition letter to Banking Committee leadership states. “As such, we applaud consideration of legislation that would facilitate the creation of a U.S. covered bond market in order to encourage CRE lending and investing.”

The Council and the Coalition of signatories believe covered bonds would provide a new and diverse funding mechanism that could offer additional sources of capital and liquidity, adding such a measure would support commercial real estate and a broader U.S. economic recovery, while supporting job growth and better serving the American consumer and businesses seeking access to credit.

“The CRE Finance Council strongly supports efforts to facilitate a U.S. covered bond market as an additive financing tool," said Lisa Pendergast, managing director, CMBS strategy & risk, Jefferies & Company and president of the CRE Finance Council. “We are encouraged that the Senate Banking Committee is examining how covered bonds can act as an additional source of capital.”

Click here to view the letter submitted to the Senate Banking Committee.

For more information, visit www.cref.org.