Tuesday, September 29, 2009

CMBS Delinquency update - Realpoint

Realpoint just sent out updated delinquencies of 3.471% in CMBS, and are forecasting at least a 6% delinquency by December citing Peter Cooper/Stuy Town (PCV/ST) and the Extended Stay Portfolio. I think it'll be higher than that - PCV/ST isn't the only loan running out of debt service reserves in the 4th quarter; its not even the only loan in NYC running out in the 4th quarter!

We'll see a high number of well-known properties go delinquent and make headlines. Get ready for the pain!

Monday, September 28, 2009

An Assessment

I'd love to see the report - anyone got a copy??

ZH has a great "assessment" of what's coming in the market, and the above chart was borrowed from there.

Xerox buying ACS - A few CMBS loans

Just filing away for future use once we get an idea what type of consolidation will result. Anyone know which locations are mostly administrative?

Deal Property Name City St Tenant Exposure %Exp Total Sq. Ft.
CCMSC 2001-245 245 Park Avenue New York NY Xerox 32,566,302 7.4 1,620,923
JPMCC 2006-CB15 1301 Ridgeview Drive Lewisville TX Xerox 5,040,987 6.36 116,647
GSMS 2007-EOP Xerox Campus Palo Alto CA Xerox 3,103,140 0.06 205,593
MSDWC 2003-TOP9 2700 North Central Building Phoenix AZ Xerox 1,547,469 11.74 219,920
BACM 2006-4 STEVENS FOREST GREEN COLUMBIA MD Xerox 1,185,615 8.34 82,817
MSC 2005-IQ10 Engineer Road Industrial SAN DIEGO CA Xerox 417,671 16.32 40,715
EURO 24X South Quay Plaza London London Xerox 222,429 0.3 383,301
PSSF 1999-NRF1 Roche Drive Columbus OH Xerox 117,925 7.82 50,015
BSCMS 2007-PW16 KBS - Crescent Green Cary NC Affiliated 15,228,973 47 248,782
JPMCC 2005-LDP4 Papago Spectrum Office Building Tempe AZ Affiliated 9,901,178 52.16 159,764
CGCMT 2005-C3 NORTHRIDGE CENTER I AND II ATLANTA GA Affiliated 4,253,826 32.56 188,009
MSC 2006-HQ9 80 Broad Street New York NY Affiliated 2,666,138 3.55 397,485
CSMC 2006-C3 Pecos Trail Office Compound Santa Fe NM Affiliated 507,611 14.74 32,354

UPDATE: Sucks that the entire table doesn't fit... I'll try to correct later, but I do have balances, etc. Email me if you want them.

Developers Digging For Repentance

DDR sells $300 mm of corporate debt at 9.75% yield, maturing in March 2016. They have two corporate issues maturing next year totaling $378.6mm outstanding: a $151mm 5% 5/3/2010, and a $227.6mm 4 5/8% 8/1/2010; both BB rated.

They also completed their 30mm share sale to the Otto family with the final 15mm sale completed last week. The WSJ article also noted that they have sold $439mm of assets, and paid down $250mm in debt ($151 mm was mortgage debt). They've also issued additional equity around 1.8mm shares.

To our knowledge, they're still working on a two loan refinance of a portfolio of mortgages in the amount of $600mm (one is $400mm and expected to close in the 4th quarter).

According to the Ukiah Daily Journal, they're greasing the political wheels to get favorable zoning on some undeveloped land. They're paying for the expensive grease too - it sounds like.

At last check, they had over $500 mm due on CMBS mortgages in 2009 and 2010 - not sure how those have played out exactly to date. All in all, the firm is working pretty hard at tackling issues head on, harder than many others - will be interesting to see how successful they are in coming months.

Things I missed last week (and two weeks ago), and this week's calendar

Marriot is shuttering it's timeshare business - no more MVCOT deals.

Harrah's just bought Planet Hollywood's junior debt, over a week ago, I was looking the other way.

Tuesday brings retail numbers and updated home price index levels from Shiller. Natural Gas data comes out on Thursday.

Saturday, September 26, 2009


That is a big number. It is more than twice the size of the NYC police force, it is twice the size of the county's population where I grew up, it is roughly the number of rockets Hezbollah has stockpiled according to its enemy Israel...

And, according to Mark Heschmeyer, it is the number CRE properties in distress within the US. You should read his article for the details, his articles are extremely well done in general, and it is hard to summarize his conclusions better than he does it himself.

UPDATE: I corrected my poor grammar and spelling errors - another reason to read the original article and not my summary.

Rally Sputters Friday

The week long rally driven by the IRS guidance initially, and later buoyed by announcement that the NAIC would accept Realpoint as a rating agency, stalled on Friday. Demand also faded for all the REIT IPOs that were planning to target distressed commercial real estate debt.

Investors know that a number of headline making defaults are in the pipeline for the fourth quarter of this year, and are taking profits off the table in the current rally.

CMBS The Biggest Challenge in CRE over the next 12 - 24 months - BNP Paribas

What is he talking about 15 different parties and 15 different layers of debt? Is he talking about a CMBS deal? I don't think he knows what he is talking about - skip ahead to minute 4:50 and can stop at 6:39.

This is the same tired argument of someone never involved in a loan mod or workout - it's difficult, but it should be difficult to default on an agreement and change the terms.

Friday, September 25, 2009

B Students

The rating agencies have obviously fallen down on the job, and no one disputes that. However, the most troubling comment you hear over and over are ones like this:

"It's clear to me we can no longer rely solely on the ratings agencies," Sean Dilweg, Wisconsin's insurance commissioner, said following the hearing of the National Association of Insurance Commissioners on Thursday in Maryland.

Dilweg is talking from the perspective of a regulator, not an investor, but NO ONE should ever have been relying solely on a rating agency to measure risks without a more transparent process in place (so you could further rate the rating agency's process). If he were an investor, rather than a regulator, he would be immediately fired for such a comment.

Thursday, September 24, 2009

mREIT offerings get cut in half...

Both Colony and Apollo saw their mortgage REIT IPOs get cut in half this week due to the overwhelming increase in supply of similarly structured IPOs that have been put together over the last few months. Starwood got in at just the right time and is effectively charging 2/20 fees on the IPO.

Others that had to limit their offerings over the last two months include CreXus, PennyMac, and Invesco. Some of these were cut because they just didn't have a good management group in place, but others have very well known managers and were just slapped down due to the wave of supply. Not too mention that prices following the IPOs have dipped for all of them - why buy the IPO at a premium (HT ZH).

Wednesday, September 23, 2009

Realpoint Approved by NAIC as a rating agency

Sorry no link to Bloomy article, but this should be another big win in the AA and up space. Insurers have to set aside significantly more money once the middle rating drops below AA.

Sept. 23 (Bloomberg) -- State insurance commissioners, seeking an alternative to rating firms Moody’s Investors Service and Standard & Poor’s, approved Realpoint LLC to evaluate commercial mortgage-backed securities in companies’ portfolios.

The ruling by the National Association of Insurance Commissioners means state regulators can rely on Realpoint in determining how much capital must be held by insurers, Scott Holeman, spokesman for the group, said today. Realpoint provides analysis to bond buyers through subscription, while S&P and Moody’s are paid by companies that issue securities.

Monday, September 21, 2009

Riverton Appraisal Update

The Riverton Apartments in CD 2007-CD4 was one of the first headline defaults in CMBS due to overly optimistic proformas and more importantly, a rent-control flip plan by some private equity group. These will continue hitting the news wires and be a main focal point for CMBS defaults for news outlets over the next 6 or so months - just wait.

The Appraisal came in much lower than expected, though, according to a Citi report out last week (sorry no link). Appraised at $340mm in Jan 2007, by some guy who hopefully has since lost his job, the June 2009 appraisal came in at just $108mm - still just a 4% or 5% cap rate. Interest shortfalls are eating into the O class.

Irony - Peter Cooper Village Stuyvesant Town Suit

Frankly I hadn't read the actual suit, and really just hadn't thought about it much more detail than the WSJ provided initially. The sponsors of PCV/ST were sued for $200 mm (a bit shy of a single year's entire revenue) because they were taking advantage of a tax break for rent-controlled units, but actively deregulating the units. They lost, and a the case is currently in appellate court - it doesn't look good for the sponsors though.

However, the real irony is pointed out by the New York Observer's Eliot Brown - the winners of the suit are not the rent-regulated tenants at all! In fact, the winners will be the market-paying renters who replaced the recently kicked-out regulated renters - they will get paid back for any rent they have paid over the regulated level (we're talking $2k per month on most of these units)!

Hat Tip Deal Junkie.

Note: there are 11,227 units in the complex, not 13,000 as the linked story implies.

CPPI down 5.1% in July

CRE Prices dropped off a cliff in July:
Moody's: US commercial real estate prices resume steep declines in July

New York, September 21, 2009 -- Commercial real estate prices as measured by Moody's/REAL Commercial Property Price Indices (CPPI) renewed its steep declines and low transaction volume in July, Moody's Investors Service reports. The CPPI was down 5.1% from June after having declined by only 1% the prior month. It is now 30.8% below what it was a year earlier and 38.7% below the peak measured in October of 2007.

Whiskey Tango Foxtrot - Did Wachovia truthfully securitize any CMBS?

It’s not clear to me how much of this story is simply being misunderstood by the blogger/journalists writing about it, and how much is accurate. It doesn’t sound good for Wachovia/Wells either way. According to the article, Wachovia had trouble selling some of their CMBS new issue deals, basically everything below a 20% subordination rate. So, they sweetened the pot – buy our new issue cash bonds, and we’ll keep all the risk on our books by also selling you a CDS on the bond (at no cost). Effectively, the sold the cash bonds, and kept all the risk on their books. Does this violate true sale agreements?

It’s not really clear to me. Enron’s SPEs were blown up because they effectively maintained control of the assets after the ‘true sale’. At the end of the day you can see the deal where Wachovia was the primary originator, the lead manager, the servicer, the trustee (via Wells, although most of these have been changed), and in the case described by bankimplode.com, Wells now also holds all the credit risk associated with the bond. In reality they probably don’t have any real control, which should be scary to them, because they don’t hold the voting rights with the cash bonds and they don’t exert any real control as servicer or trustee.

I don’t know what’s worse – their credit exposure, or the risk that all of their CMBS deals get consolidated onto their balance sheet (>$50 billion outstanding just on their WBCMT shelf). Is this even a risk? Any lawyers out there care to chime in?

Glimcher Selling Lloyd Center to Merlone Geier - WBCMT 2003-C5

This is the largest loan in WBCMT 2003-C5, expected that the buyer will assume the loan, closing scheduled for December. CoStar reporting.

Just the sponsor switch, alone, is a net positive for the deal. Glimcher has trimmed assets through sales and by turning in the keys. This asset performs pretty well on its on though.

Sunday, September 20, 2009

This week's Calendar...

  1. Monday brings us the short-term Treasury auctions, of which the Fed is expected to account for 50% or more of the demand to prop up the activity! It is also "sleep in very late, get a surprise wake-up from the maid, rush to get the dishes done, and head into work going 90" day.
  2. The auctions continues Tuesday, but we also get some Retail data, which should be useful. The OFHEO index updates are released, but we're not giving them much credence since they change their name to FHFA, which just doesn't roll off the tongue as easily. Tuesday is also "watersports before work day, but really early, and likely very chilly" day.
  3. Wednesday gives us some oil data and a mid-afternoon fomc meeting.
  4. Thursday gets more interesting with the Nat Gas report. It will ultimately be "decision day on our very large, and profitable, natural gas holding" day.
  5. Friday brings new home sales.

Saturday, September 19, 2009

Rally fizzled on Friday - as it should...

The looser guidance of the IRS drove a rally initially, but I think the market will back up. It's like the market found out a girl that it was hot for had just decided to become a prostitute, and it got excited about the imminent action, but after a roll in the hay has realized it can never take her home to see the parentals. She'll still come in useful in the future though.

Things simply aren't good either.
  • CRENews.com had an article out summarizing the rating actions year-to-date: 3,405 CMBS Downgrades, Only 82 Upgrades. Keeping in mind that rating agencies are extremely reactionary by nature (rather than making calls on the future - just wait until we actually have widespread problems).
  • PCV/ST is defaulting imminently, along with a number of other high profile loans that are not cashflowing. I'm calling for a December default on PCV/ST with an over/under of 1 month - bets are now being taken.
  • European CMBS loans were structured in an inherently weaker fashion in many regards, but also have additional covenants that lead to defaults faster (to protect the investor). That market is unraveling a little ahead of the domestic market. Not too mention there was ruling recently in France that allowed a Lehman-owned office building to pursue a workout strategy - DESPITE the fact that the bondholders wanted to take over the already defaulted loan as would normally happen. They're rewriting contract law everywhere, to the detriment of real estate investors, it is not just a domestic issue!
  • The IRS changes its mind all the time. I'll bet a small sum that 10-years down the road we'll be able to look back and talk about a REMIC that was broken up because of some loan mod they decided they didn't like.
  • Not to mention that some current- and next-pay AAA bond holders are going to be up in arms over the new IRS guidance - They already are.
  • Will TALF new issue be successful? It has some draw backs that make it even less interesting to investors than the legacy TALF, which frankly hasn't seen much demand because it was structured so poorly (on purpose) by NYFRB.
  • If new issue TALF isn't successful, we're going to have problems. The first new issue TALF deal should be DDR's - they have $900mm CMBS loans maturing next year, and another $500mm in 2011.
  • CMBS maturities are nothing compared to banks/thrifts, but some REITs have a lot of CMBS mortgage debt to roll (I still can't believe that idiot, Cramer, would tell you to buy REITs right now). The ones with the largest maturities (all are >$500mm) next year are, in order, GGP, Vornado, DDR, Simon, Colonial, and Regency.
  • Looking at REIT CMBS loan maturities over the next 3 years that exceed $1 billion, you end up with a similar list: GGP, Vornado, DDR, Simon, Regency, and Brookfield. Brookfield is an addition to the list, and has the second largest maturity schedule ($3.6billion) due the mortgages it used in the Trizec acquisition back in 2006. It has another $2 billion or so of CMBS loans due after 2012 as well.

Thursday, September 17, 2009

Sunny Day Real Estate - ProForma Underwriting

Sunny Day Real Estate was the original emo band of the '90s - The cover art is of the "Bronze Angel" in Vancouver, which I've always suspected was actually a Valkyrie, rather than an Angel, which scoop up the deserving and bravest heroes off the battlefield.

Proforma loans were less pervasive than the media would have you believe, but they are going to cause significant pain in the CMBS universe. There were about a dozen deals where more than a quarter of the loans were underwritten with some form of proforma underwriting. This came in two primary flavors:

  • Cash flow proformas - Property lease rolls indicated that new lease rates would be significantly higher. This was common in NYC Office where old $30 psf leases rolling over the next few years were underwritten using $100+ psf leases - most of these are more likely to be in the $60-70 psf area assuming things don't get much worse than they already are. Also common in NYC Multifamily where the landlords devised the strategy of kicking out rent control tenants and replacing them with market payers. The loans typically required a significant debt service reserve account to be set up in advance to cover the planned shortfalls in mortgage debt service - a lot of these accounts will dry up in the next 12 months (a few have already: Meyberry, Riverton, etc.; but bigger ones are coming: PCV/ST, 666 5th Ave, etc.)
  • LTV proformas - These were typical of loans that were, say, partially completed and leased out with a portion of the collateral under construction. No names jump to mind, but you can easily envision the Phase I shopping center that is leased with a Phase II under construction that is underwritten to a higher LTV. You can also picture the office tower with unsold condos and penthouses as collateral.
Trepp has identified about $38 billion of proforma loans (less than 5% of the market), but that doesn't seem to quite capture the issue. They looked at all conduit deals issued since 2005, and also included a few older deals and some non-conduit deals. The methodology was not disclosed to my knowledge.

Using data from Trepp and Intex, I backed into a number for cash flow proformas that is closer to 8% of the loans issued during 2006 & 2007. The dozen deals that Trepp identified as having more than a quarter of their collateral being proforma matched up with my results. It deserves some more attention, and I'll come back to the subject and post methodology and results at some point in the near future.

Further tightening today

Prices were up $2-$5 again today in CMBS - seems like a little too strong a reaction to the IRS letters on loan mods...

Sell Mortimer, Sell!

Cramer, Real News, Fed looking at regional banks, quadruple witching, and more

  • Cramer chimed in yesterday on the IRS guidance and thinks everyone should go long IYR. This is a horrible idea. Why would you buy IYR?!?!?, which is long equities with a TTM yield of 8.4% - this is a horrible risk-adjusted yield. It's lower than the yield on a safer corporate REIT bond. However, some of the other plays could be interesting in that link - NLY, for instance, has legacy issues, but also is buying distressed bonds in the current environment - that is a good play. CreXus has an upcoming IPO that is interesting for similar reasons.
  • Multiple reports have been out the last 48 hours about the Fed Examining the CRE portfolios at banks. Hopefully this isn't something new they started, but just a frenzy of reporting on something the Fed does a whole lot of. However, if they are really stepping up efforts, how long will it be before they realize they propped up the wrong market (CMBS) while ignoring the very real near-term maturity risks that lie on bank's underwater CRE and construction portfolios?
  • Outside of CRE, we get the NG storage report in about 1/2 hour, tomorrow is Quadruple Witching

Tuesday, September 15, 2009

IRS documents rules for REMIC modifications

HT Traffic Court and Real Estate Econometrics. Modifications outside of extensions, have historically been relatively rare, but they are becoming very common in the current environment. I don't have any hard data - just based on recent conversations.

IRS Remic modified rules

Irs 2

UPDATE: This drove 3-5 pt rally yesterday! It was more of a rule-relaxer than a game-changer, but the new guidance was fairly specific that modifications, especially extensions, could be taken as a preventative measure, and far in advance of an anticipated default event.

Wednesday, September 9, 2009

MBA Mortgage Delinquencies - 2Q 2009

I've never quite understood why MBA compares the various commercial mortgage types using apples and oranges - they have some listed as 30+ day delinquencies, others are 90+, and still others are 60+. It makes it virtually useless as a comparison tool.

So, if you were actually comparing them at the same scale, Banks & Thrifts would be the highest and are the most concerning. CMBS delinquencies have ramped up quicker, although the most recent spike is mostly one sponsor, the overall trajectory has moved upward faster in CMBS.

Tuesday, September 8, 2009

Offer wanted - West Caicos

Anyone know where I can buy this distressed loan?

On the otherwise uninhabited Atlantic Ocean island of West Caicos, work stopped in October on the Molasses Reef Ritz- Carlton Hotel and Residences, where cottages were priced at $6.5 million. About 400 Chinese employees of an Israeli construction firm, Ashtrom Properties Ltd., didn’t get paid, according to Jonathan Siegel, New York-based managing director of the project for Logwood Hotel Development Co. Some of them protested, surrounding the temporary housing occupied by their supervisors, preventing them from leaving until they received their money.

Markit's New TRS index launching this month

From Real Estate Finance & Investment

Markit will launch early this month TRX.NA, a total return swap index referencing cash commercial mortgage-backed securities. The launch was originally scheduled for Aug.3; reasons for the postponement could not ...

Monday, September 7, 2009

More Shoddy Journalism...

The BBC published a short article today (with a great image - see above) about how Fannie Mae and Freddie Mac jointly destroyed the housing market. The author, Greg Wood, refers to the MBS bonds as a "security" (in quotes!), and notes that these mysterious "securities" are similar to bonds or shares.

He further describes the fundamental flaw as being the result of the bubble bursting, rather than the causes. I stopped reading around here. How do articles like this even get published? It's obvious he's using a few catchphrases and doesn't understand the basics of his subject matter.

Great Pic though!

Saturday, September 5, 2009

Capmark's only value was its servicing platform

Following Berkshire's offer to buy Capmark's servicing, Moody's downgraded the remaining firm to C.
Moody's said the sale would impair Capmark's remaining business and eliminate a stream of income key to repaying debt. The ratings agency also said Capmark's assets have continued to deteriorate in quality and its banking arm may need an infusion of capital, all while its portfolio of unencumbered assets has shrunk.

The really impressive part of the whole story is the talent of the journalist writing the story. No only did they misspell words (I made corrections in the above quote from WSJ), but they obviously did 100% of their research via Google. They note at the end of the article:
The company primarily works with commercial real estate, according to its Web site.

uhhh, has it really come to this? This is more disappointing than Bloomberg's little basis point definitions every time they use the words "basis point", in a financial news article, aimed at people who better know what a basis point is!
A basis point is 0.01 percentage point and is equivalent to $1000 a year on a contract protecting $10 million of debt.
A basis point is 0.01 percentage point.

Friday, September 4, 2009

Rating Agency's free speech argument challenged successfully

I know this is yesterday's news, but after I posted the video to Massive Attack's - Angle in my little link to Costar's excellent article on Mezz foreclosures, I ended up refocusing my efforts on listening to all the other Massive Attack songs on Youtube. I'm easily distracted.

Regardless, as the WSJ so aptly noted:
Moody's and S&P moved to dismiss the suit on free-speech grounds. The judge said ratings are typically protected from liability and subject to an actual malice exception because their ratings are considered matters of public concern. "However, where a rating agency has disseminated their ratings to a select group of investors rather than to the public at large, the rating agency is not afforded the same protection," the judge said.

This has always been their first round of defense when they screwed up a rating and someone lost enough money to sue them, and it looks like it might not work going forward. At the end of the day, their ratings are backward looking at best, and realistically their methods are so poor and inconsistent that they are sloppy at worst, and maybe even criminal. Just by natural selection, any decent analyst at an Agency will get snapped up by a Street side research group. Even the ones that I actually liked were burdened from expressing their opinions by their overlords both inside and outside their own bureaucracies.

It's OKAY - CRE is just fine...

ZeroHedge's Ben Dover publishes a refreshing look at just how good things really are in CRE, and attempts to start a market for a new distressed product.

However, the comments really do beg the intellectual acumen of ZH's readership.

Thursday, September 3, 2009

Mezz foreclosures (CoStar)

CoStar has a great article out on mezz foreclosures.
Mezzanine loan foreclosure activity surveyed by CoStar in recent weeks includes the following:

  • Fortress Investment Group bought Sheffield57, a condo project in New York City developed by Kent Swig, for $20 million in a mezzanine foreclosure auction last month. Credit Suisse First Boston filed a default on the $400 million first mortgage in April and Guggenheim Structured Real Estate Partners LLC followed suit on a $240 million mezz loan the following month.

  • SL Green Realty Corp. (NYSE: SLG) said last week that 100 Church St., a 21-story office in Lower Manhattan, is on the market and slated for an Oct. 15 auction. The New York REIT alleged that owner The Sapir Organization failed to make payments on an $85 million mezzanine loan provided by SL Green and Gramercy Capital. SL Green has taken over management and leasing of the building.

  • Wachovia Bank (now Wells Fargo) filed a foreclosure lawsuit Aug. 18 against BentleyForbes Holdings and BF Las Olas, developers of the Las Olas Center in Fort Lauderdale, FL, which consists of two Class A office towers totaling 415,000 square feet, 52,000 square feet of retail and parking space. BentleyForbes bought the property in 2007 for $230.9 million, a record South Florida price of nearly $500 per square foot. Wachovia, representing a group of lenders, provided a $166 million first mortgage and a $49.4 million mezz loan.

  • Mezzanine lenders in Terranea Resort, a $480 million oceanfront project in Rancho Palos Verdes, CA, filed a notice of default Aug. 11 on a $110 million loan to Terranea owner Long Point Development Partners. the Building Union Investment and Local Development Fund of America Trust, of Detroit

  • Detroit-based Building Union Investment and Local Development Fund of America Trust (Build) carried out a foreclosure sale of 104 acres in Cornelius, NC, where Cornelius Bromont LLC planned to build the $515 million Augustalee mixed-use project. Cornelius Bromont filed a lawsuit against Build last week seeking damages over the decision to foreclose on the project, which the Build funds described as being in a state of "technical default." Build said it acquired membership interests in four limited-liability companies that control the property and will work with the developer, the city and senior lender Fifth Third Bank on a plan to move Augustalee forward.

  • Citigroup seized the luxury 400-room St. Regis Monarch Beach Resort in Dana Point, CA, after owners Farallon Capital Management LLC and Makar Properties fell into default on a $70 million mezzanine loan. Citi scrapped a foreclosure auction after it became clear there would be no serious bidders.

  • In June, Bahrain-based Investcorp acquired a senior mortgage loan, a B-note for a senior mortgage and two mezzanine loans, all secured by U.S. commercial property assets, for a "discounted" $170.9 million. An office headquarters building in Washington, DC secured the senior mortgage loan. The two mezzanine loans, secured by office buildings in New York and Los Angeles, were acquired from a private investor. The B-note of a senior mortgage was secured by four self-storage facilities located in the boroughs of New York, and was purchased from a major commercial bank.

Wednesday, September 2, 2009

Mortgage Holder on the hook for collateral condi

Crain's reported last week that officials are up in arms over a Manhattan rent-regulated apartment building that has over 1,000 code violations because the mortgage holder (Citi) is not keeping the building up-to-code. Citi has not foreclosed on the building, mind you, a slum lord owns the building and owes Citi a mortgage, but advocates are going after Citi for the code violations. Apparently, Citi had made some empty gestures that they would ensure their collateral would not fall into disrepair.

Wonder what will happen when the advocates go after CMBS Trusts whose collateral has fallen into disrepair?

Bally's Emerges from Bankruptcy

Crain's reported that Bally's is finally exiting it's bankruptcy. There is a fair amount of Bally's exposure in the CMBS world. Hopefully now they can get back to scamming their clientele by setting them up on monthly "payments" without fully disclosing they are actually extending them a two year credit line - so when they decide they want to become a couch potato again, they'll still be on the hook for thousands of dollars that will impact their credit score and make them more of a degenerate than they already are.

Moinian versus Goldman

This should be interesting

Moinian’s Almah LLC, a company he controls and which owns the building, alleges that Goldman has “unclean hands” and “engaged in underhanded dealings designed to cheat” Almah out of tens of millions of dollars after entering into the deal with AIG. AIG isn’t named as a defendant in the suit.


Moinian’s complaint was in response to a lawsuit Goldman Sachs filed last month that alleges Moinian owes Goldman more than $3 million. Moinian benefited from Goldman staying in the building when it could have terminated its Maiden Lane lease last year, according to the bank’s complaint.

UK RMBS at +165 bps?

Surely that number is wrong...

from Bloomberg:

The yield over benchmark rates that investors demand to hold top-rated U.K. five-year mortgage-backed securities shrank 0.3 percentage points over the last month to 1.65 percentage points, JPMorgan data show. That’s near the narrowest spread, or gap, since July 18, 2008, and is down from as wide as 4.25 percentage points on Jan. 2, according to JPMorgan.

Maui Prince Hotel headed to foreclosure

The 310 key Maui Prince Hotel in Hawaii ($192.5mm in UBSCM 2007-FL1) is going into foreclosure.

The foreclosure may wipe out $227.5 million in mezzanine debt held by a UBS AG fund as well as $250 million in equity that Morgan Stanley and its partners put into the property, the
newspaper reported.