Tuesday, October 20, 2009

WBCMT 2006-C23 - 620 AoA $205mm

620 Sixth Ave problems continue. The loan, 620 AoA, is in WBCMT 2006-C23, is barely covering at the end of 2Q 2009 at 1.02x, with 90% occupancy. The occupancy has since dropped off: sounds like Filene's (42,136 sf, 6% NRA) is out (lease expires 2010 with an option to renew at a substantially higher rent, Men's Warehouse bought Filene's out of bankruptcy and has announced closure for this location), TJMaxx is in but the broker that brought them (or at least the one that should have given some exclusivity agreement) is suing the owner (Chetrit). CRENews noted today that the largest tenant, The Gap (244,278 sf @ $20.68/psf, 37% of NRA), was relocating to 40 Worth St.

Despite the litany of problems, it's not as bad as it sounds. Filene's is/was paying $19.97 psf. Even today, they could likely double or even triple this to a new tenant (despite 8.1% average vacancy in the area). Average rents in the area, per Reis, are 33% higher in the high $20 area, street level retail, though, could easily be three times as much in the high $50s or low $60s. Someone who bought the mezz debt late last year, probably got a pretty sweet deal. A sweet deal, with a lot of headaches - the mezz holder is currently battling it out over a transfer of a piece of land that was supposed to serve as collateral according to the mezz holder, although I do not see mention to it in the Prosup (the prosup list the property with improvements, and then the 7th floor and air rights as separately releasable under certain conditions).

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