The commercial real estate sector is still in the mergers and acquisitions mode, with two new deals announced in late May involving a national brokerage firm and a commercial mortgage lender. But the rationale for such transactions seems to be getting murkier, with analysts wondering whether the deals make sense for all parties.

On May 22, national brokerage house Grubb & Ellis announced a definitive merger agreement with Santa Ana, Calif.-based NNN Realty Advisors, Inc., an asset management firm that specializes in tax-deferred property exchanges, to form a joint real estate services firm with a total capitalization of $725 million.

The same day, New York-based finance company iStar Financial, Inc. announced a definitive agreement to acquire the commercial real estate lending business and 30 percent of the $6.5 billion commercial loan portfolio of Santa Monica, Calif.-based Fremont General Corp. for approximately $1.9 billion.

The Fremont deal comes as no surprise as the company was one of the lenders hit by the crash in the sub-prime market. The deal will allow Fremont to take down the risk on its debt and will extend iStar's geographic reach. But it could end up being a Trojan horse for iStar, says Morningstar analyst Erin Swanson. “The question in our eyes is how much exposure does iStar now have?” she asks. “The [actual] cost of the transaction can be much higher than the [$1.9 billion] purchase price.”