If it fails, the losers are:
- Equity Investors (BlackRock and TishSpey)
- $1.5 billion of Mezz debt holders - especially the bottom $200 million
- Tenants - what is done is done, to this point. The tenants want the investors out. Heck, the tenants bid on actually buying the building (for more than the current senior note value, mind you).
- Senior Mortgage holders (4 CMBS trusts) - The proforma appraisal had an LTV of 56%. Assuming that is wrong, you still have a lot wiggle room. I wouldn't want to own the B piece necessarily, but at the AAA level you are in an OK position - you have a back bid from the tenant group, even the misguided rating agencies (Moody's and Fitch) agree the servicer is likely to advance in full, and you have a slew of mezz lenders who are likely to take a stab at operating the property at a loss for some period of time.
- The outstanding debt service reserve, according to the Fitch report being referenced, as of 1/15/09 is $127.5 million. That is consistent with my September 2008 analysis, here, indicating that they are drawing $10 - 11 million a month from the reserve. Again, $127.5, divided by $11 million, I get about 11.5 months of reserve remaining - I can't figure out where Fitch is getting their 6 month estimate, but I'm sure there is something I am missing.