In terms of dollars, that means about $136 million of the$307-million pool is retail, such as a 471,444-square-foot enclosedregional mall in Texas, and McCarthy says the entire pool isdominated by assets that are up and running. "In any bankportfolio, you might find a healthier mix of broken condominiumloans and REO, as well as development and land transactions," hesays. "Whereas this sale is almost all vertical assets." He addsthat there will probably be more vertical assets coming up for salethan there have been previously.

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Most of the assets--which also include about $88 million ofmultifamily--are generating positive cash flow, although perhapsnot to the degree they were before, McCarthy says. "They run across-section from no duress to where the occupancy and rent rollsare down and they're struggling." Not surprisingly, there's anemphasis on assets in states "hit a little harder than others" bythe recession, including Michigan and Ohio, although some fromhealthier markets such as Texas and New York.

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"We've got a very strong interest in this sale," says McCarthy.He explains that the most competitive bidders tend to be "nationalplayers with a domain expertise for the collateral type. Somebodywho's a great operator of retail or multifamily, for example, asopposed to a generalist in every property type. And they have avery evolved exit plan for the asset."

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At the opposite pole, great success is often had by localbidders. "Maybe they don't have as low a cost of funds as thenational players, but they can bid with a bit more conviction,"McCarthy says. "They know the local brokers who can give them amore definitive answer. They know the people who might be able toperform any deferred maintenance; they know leasing agents, andthey may be aware of opportunities for the asset that someone whoisn't tapped into the local market wouldn't know." Outside of thosetwo general categories, he says, the successful bidders are "peoplewho know exactly what they want."

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As 2010 progresses, says McCarthy, "We're seeing more biddersand seeing more deals close." He adds that "the percentage ofvertical assets will be higher" "in future loan sales. Moreover, hesays, "We're seeing the bid/ask gap narrowing a bit. Certain partsof the country may be stabilizing. Buyers are a little morerealistic and buyers are a little more aggressive. We're seeingsome very positive opportunities for buyers and sellers."

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The current pool was put together by a special servicer onbehalf of the CMBS trusts, and McCarthy says we may see largerpools like this one, assembled by astute servicers. "Specialservicers look on this as an arrow in the quill," he says. "There'sa lot of pent-up demand and this is a very cost-effective way ofcreating a competitive environment to sell the assets."

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The assets are being offered on a competitive, sealed bid basiswith bids due Feb. 25. Prospective bidders may bid on an individualasset, any number of assets or the entire portfolio. Visitwww.carltonexchange.com for more information.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.