666 Fifth Avenue gone to special

666 Fifth Avenue transferred to special seeking modification:

"Since the 666 Fifth Avenue loan does not mature until 2017, the special servicer must believe it is in the best interest of the trust to work with the borrower on a loan modification rather than taking control of the property in a depressed market and declining fundamentals," Mancuso said.

This loan does not cover it's debt service by a long shot, despite being 86% occupied (although a portion of that space is dark and likely at lower leases then today's market - in the $60s for class A in midtown). They're current monthly shortfall amount, is about $2mm, not small, but they do have a $70mm reserve balance - 70/2 equals 35 months until it dies at the current pace. The reserve balance is thanks in part to selling half the equity in 2008 to Carlyle Group, and it's not listed in the reserve report from the servicer (which has got to make you a little uneasy).

The big issue is the Orrick space which accounted for something like 232k sq ft at $45 psf will roll at the end of this month and they are leaving ($10.4mm per year in revenue, roughly). They have no firm prospects, but have 3 proposals out currently asking $70/psf (~$16.2mm revenue). Again, midtown class A is more like $60 psf (~$13.9mm revenue).

Can the servicer even allow a modification if there really is 3 years worth of debt service still in there? Are there any automatic ASERs associated with this event?

The total loan is huge - to quote the article, Kushner defined the top with this deal. $1.215billion is split into 8 different A-notes: Pari Passu loans A-1 & A-2 Notes ($124.5mm each securitized in GECMC 2007-C1), A-3 & A-4 Notes ($197.5mm each, securitized in WBCMT 2007-C31), A-5, A-6 & A-7 Notes ($142.75M each, securitized In WBCMT 2007-C33), and an A-5 Note ($142.75mm). These deals were brought to you by Wachovia and BoA, if anyone is keeping track - blame Charlotte this time.