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Babcock & Brown's Troubles Hit U.S. Apartment Market
Digested From "Babcock & Brown's Troubles Down Under Hit U.S. Apt. Market" CoStar Group (04/01/09) by Mark Heschmeyer

Australia's Babcock and Brown Ltd. was recently placed in voluntary administration, an action that is similar to Chapter 11
bankruptcy protection. The international investment firm is facing a series of challenges ranging from high financial leverage to a complex corporate structure. It is now feeling the pinch from declining investment values and fee income, not to mention constrained access to capital markets, heightened refinancing risk and greater risk of financial covenant breaches. Babcock &
Brown's action has also resulted in Standard & Poor's placing the ratings of four commercial mortgage-backed securities (CMBS) on
CreditWatch with "negative" implications. The Babcock & Brown CMBS loans are backed by 64 apartment communities in 10 states, totaling more than 18,800 rental units. In total, Babcock & Brown owns and/or manages around 100 U.S. apartment complexes with more than 20,000 units.
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