The Chicago Mercantile Exchange and real estate index firm Global Real Analytics are planning the first exchange-based commercial real estate futures and options contracts, on which dealers will be able to write structured property investment notes. Firms including Barclays Capital and UBS have already issued some property-linked notes, mostly referencing the Philadelphia Stock Exchange Housing Sector Index (DW, 6/16).
The CME contracts are expected to become available in the first quarter and will be based on GRA CREX, a more extensive version of existing GRA Commercial Real Estate indices that is being put together. Initially, 10 quarterly cash-settled contracts based on property type and geography will be available. The listings include a composite index, indexes on retail, office, apartments and warehouse properties, and five regional indexes.
The indices will come from data collected by GRA during a three-month period and use data from local and national commercial brokerage firms, appraisers, mortgage brokers, independent third party data providers and real estate publications. The indices will be based on recorded transactions and revised monthly.
