Thursday, April 29, 2010

$1.28 billion CMBS loan in the works

The $1.28 billion 10-year balloon is reportedly close to being done.

Bank of America will refinance the 51-story office tower it co-owns with the Durst Organization on Bryant Park with help from J.P. Morgan Chase & Co., sources close to the deal said.

The refinancing comes a mere 10 months after the owners refinanced the Bank of America Tower at One Bryant Park with a $1.28 billion, three-year loan. Sources say this time the owners are seeking a 10-year loan for $1.3 billion that will be partially securitized and sold to a variety of investors.

Maybe there was some concern that is beyond my scope of reasoning, but why is JP underwriting this loan when the building houses most of BOA's CMBS operation? I have some thoughts on the matter, but will leave it open for discussion...

Monday, April 26, 2010

'06 - '07 AJs...

AJ lists today were priced anywhere from 44 to 86. BOA sports the richest and the cheapest AJs, credit quality be damned. All the big boys and girls had pretty good inventories from the last few weeks as they drove the markets up - so plenty to choose from... at inflated prices...

Saturday, April 24, 2010

The insanity!

The WSJ had a cute little article and imagery regarding CMBS loan mods. Nothing groundbreaking, but I didn't want to be accused of missing a story about CMBS in the MSM again.

There was a reminder in there that Fitch's highest loss projection on any one deal is just 11.7%. This number is trotted out right before they compare it to an annualized default rate, but describe it as a cumulative default rate (comparing it to a Loss rate, nonetheless). To cement their lack of understanding in the CMBS market, they later make a reference to the early-90s, which had an AVERAGE loss rate of 8% (and they think Fitch's CMBS worst deal forecast of 11.7% is reasonable enough to put into print).

Friday, April 23, 2010

Stuy Town to be split...


From Bloomberg:
By Oshrat Carmiel
April 23 (Bloomberg) -- Manhattan’s Stuyvesant Town and Peter Cooper Village apartments, the city’s largest residential enclave, could be sold in two pieces under a court proposal filed by lenders.
Debt due on the properties has now ballooned to $3.66 billion, according to a filing in U.S. District Court in New York.

Thursday, April 22, 2010

S&P Makes a Funny - ESH Defaults

S&P finally applied appropriate D ratings to 14 classes in the ESH deal, up to the A4.

Interestingly, there is nothing new in the S&P review that we didn't write about as far back as December 2008, and it's not because we are overly bright or have exposure to the deal. It is because it has been obvious it would fail to most folks for some time.

GSMS 2007-EOP $4.9 billion getting restructured?

Bloomberg Reports:
April 22 (Bloomberg) -- Blackstone Group LP may ask creditors to restructure $4.94 billion of debt remaining from its 2007 purchase of Sam Zell’s Equity Office Properties Trust, according to two people familiar with the discussions.
Blackstone would consider paying down about 5 percent of the balance and agreeing to a slightly higher interest rate in exchange for extending the maturity, according to the people, who declined to be identified because the talks are private. The debt, which was packaged and sold as a commercial mortgage-backed bond in June 2007, matures in 2012, according to data compiled by Bloomberg.
While U.S. commercial property values have fallen almost 42 percent since 2007, the Blackstone properties are generating enough cash to pay the mortgages, according to the data. The private equity firm led by Chairman and Chief Executive Officer Stephen Schwarzman acquired the real estate in 2007 in a $39 billion leveraged buyout, the biggest to date at that time, and

Which will be a roadmap for all the poor schmoes they flipped the early properties to, also in CMBS deals (i.e. Beacon & Seattle in SS as of this month)...

Blackstone also sold EOP real estate Seattle, including 17 office buildings to Boston-based Beacon Capital Partners in 2007. Additional EOP sales were made in Diego and Portland, Oregon.

We should note that we looked at the financials in 2007 and 2008, and they were so screwed up even BoA (the servicer and lead) couldn't even tell us which properties were contributing how many dollars (a bunch were JVs) each period and what the actual debt service ratios were. You really couldn't even tell which properties were still contributing cash and which had been flipped, and it became apparent that BoA didn't know either. Even after spending a weekend with the financials and your own due diligence, there simply was too much misinformation and bad information that you couldn't nail anything down. I think it was intentional, and I didn't buy any bonds purely based on the lack of information issues, not even mentioning the credit issues. Oh I wish I could remember the names of the individuals and I'd publish them.

Orig List of Properties in the EOP deal:
Verizon Building
225 Franklin
500 Boylston (JV)
60 State Street (JV)
100 Summer Street
717 Fifth Avenue
10 & 30 South Wacker (JV)
Stamford Plaza Consolidated
Yahoo! Center (JV)
222 Berkeley (JV)
28 State Street
Santa Monica Business Park
Sun America (JV)
Center Plaza
150 Federal Street
10960 Wilshire Boulevard
Metro Center Tower
10880 Wilshire Boulevard
Norwest Center (JV)
125 Summer Street
One Post Office Square (JV)
Wellesley Office Park
Westbrook Corporate Center
Wachovia Financial Center (JV)
Towers at Shore Center
30 North LaSalle
Frost Bank Tower
One North Franklin
Oakbrook Terrace Tower
Peninsula Office Park
One Memorial Drive
Lakeway Center Consolidated
Xerox Campus
Rowes Wharf Office & Hotel (JV)
Corporate 500 Centre
Wilshire Palisades
Gateway Office
Skyport Plaza-East
Ferry Building (JV)
Bayhill 4-7
300 West 6th
The Tower at NEEP
One Congress Plaza
225 West Santa Clara Street
Palo Alto Square
One American Center
300 Atlantic Street
Commerce Plaza
Promenade II (JV)
Pruneyard Office Towers
Ten Almaden
Skyway Landing
Canterbury Green
Civic Opera House
The Tower in Westwood
San Jacinto Center
Sunnyvale Business Center
Foothill Research Center
101 North Wacker
Arboretum Courtyard
1500 Page Mill
Century Square
Corporate Centre
Searise Office Tower
Pruneyard Shopping Center
Metro Plaza
175 Federal Street
The Plaza at San Ramon
555 Twin Dolphin Plaza
177 Broad Street
Bay Park Plaza I + II
Shorebreeze I and II
One Lincoln Centre
Larkspur Landing Office Park
161 North Clark (JV)
333 Twin Dolphin Plaza
Pointe O'Hare
Austin Research Park I & II
Pasadena Financial
Embarcadero Place
700 North Brand
Hacienda Terrace
1221 Brickell (JV)
Ten Canal Park
25 Burlington Mall Road
One Bay Plaza
Drake's Landing
790 Colorado
Golden Bear Center
Bridge Pointe (JV)
1740 Technology
Pasadena Towers (JV)
2180 Sand Hill Road
Clocktower Square
Stonebridge Plaza II
201 Mission (JV)
429 Santa Monica Boulevard
1111 West 22nd Street
South Station
Santa Clara Office Center I - IV
SunTrust Center (JV)
Park 22
San Mateo Bay Center I
Fountaingrove Center
San Mateo Bay Center II
Treat Towers (JV)
One Canal Park
Prominence at Buckhead (JV)
Harbor Drive Executive Park
Westech 360
2951 28th Street (JV)
Redwood Business Park II
1200 Corporate Place
580 California (JV)
Wood Island Office Complex
Redwood Business Park III
Shoreline Office Center
3850 and 3880 Brickway Boulevard
Community Corporate Center
Skyport Plaza-West
Woodside Office Center
1333 H Street (JV)
Oak Valley Business Center-Cons.
The Lakes
1111 East 19th (JV)
Patrick Henry Drive
77 South Bedford Street
Great Hills Plaza
World Trade Center East (JV)
Redwood Business Park I
San Mateo Bay Center III
1700 Market (JV)
1620 L Street (JV)
Redwood Business Park IV
Waterfall Towers
Lockheed Building
Parkpoint Business Center
1601 Market (JV)
Redwood Business Park V
1179 North McDowell
Fountaingrove Executive Center
Scott Boulevard

Monday, April 19, 2010

Comings and Goings

The Moody's Real CPPI dropped 2.6% in February - following three months of increases. It's off 41.8% from the peak.

Uniqlo (We'll have to ask my wife what type of retailer they are - ADR FRCOY) got a 1/3 off deal on their rent at 666 Fifth Avenue (several deals) for the street level retail at just $20mm per year (down from $30mm asking). It's being touted as a record breaking deal, but it's not clear which record is being broken - there certainly have been larger over all deal sizes, and the price per square foot doesn't seem like a record breaker... In fact, the square footage must be wrong. It's listed as 89,000 everywhere I look, but that's just $224 psf - there are plenty of leases at $2,000 psf for fifth avenue retail (Abercrombie & Fitch is in the same building at $2+k, although their space is dark). There is an extra zero somewhere in there. Actually, I don't think the floor has that much space available. Abercrombie is out, Brooks Bros. is out. Maybe it stretches up into the office space and actually helps out the CMBS loan (which does not include retail) - the $psf might actually make more sense that way too (assuming the 89k is correct). It could be - I see they have a 51k square foot space at 546 Broadway (JPMCC 2007-LDPX).

Friday, April 16, 2010

Phew - it's all over, nothing else to worry about...

David Bianco, of the esteemed firm BAML, head of US Equity Strategy, informed us this morning (on our ride in on Bloomberg Radio, in between their primary programming that consists primarily of advertisements and PSAs urging us not to collect fire wood) that we're just in a Pessimism Bubble, and everything is really much better than you think. Get all-in on Equities or you're going to miss the boat.

On CRE, the interviewer (Tom Keene I think) asked "what are you seeing in CRE that all the pessimists are missing" (paraphrasing a bit). Bianco, "investors are willing to pay a dear price for income producing properties... even given the negative rent outlook, people are capitalizing income producing properties at very low cap rates... this is supportive of the loan book the big banks have of their big properties...", or something like that.

When cap rates get as low as they were, investors aren't valuing income, they're valuing speculation. I agree regarding the investment dollars chasing deals - you can't buy CRE in any form today without overpaying.

His entire interview made me more pessimistic on everything from equities to CMBS. I'd short BAC in response, but their "earnings" improved, mostly due to the Merrill acquisitions - ugh, I threw up in my mouth a little bit just now.

Thursday, April 15, 2010

SLG buys 600 Lex for $636 psf, $193mm

From BBG
In connection with the acquisition, SL Green will assume $49.85 million of in-place financing. The 5.74% interest-only loan matures in March 2014.

Pretty sure that's not a CMBS loan. Not sure whose it is.

Monday, April 12, 2010

Zero Sanity

Why have prices started screaming up? Not just in AJs & AMs, that are getting some increased demand from folks who are loaded up on SSs, but also down in credit....

Delinquencies - All time high - above 7%
Office Vacancy - 16 year high
Beacon & Seattle - with the special

Where's the good news driving this?

Friday, April 9, 2010

RBSCF 2010-MB1 - $309.7mm Large Loan Fixed - Priced

A1 [20.400] Aaa/AAA [2.51] 5/10-2/15 22.25 [41.5] I.SWP +80 2.350
A2 [220.391] Aaa/AAA [4.93] 2/15-4/15 22.25 [41.5] I.SWP +90 3.684
B 18.575 Aa2/AA [4.98] 4/15-4/15 16.252 [44.7] I.SWP +190 4.705
C 20.900 A2/A [4.98] 4/15-4/15 9.504 [48.3] I.SWP +290 5.705
D 29.434 Baa3/BBB-[4.98] 4/15-4/15 0.000 [53.4] I.SWP +425 7.055
X [259.366] Aaa/AAA [4.41]

Thursday, April 8, 2010

EQR buys luxury Washington Apartments @ $343 per square

Sorry no link.

EQR buys 425 Mass (fka Dumont) for $167mm from Broadway. 559 units.

This follows the two NYC apartment purchases earlier this year, and an in place agreement to pick up a third one from Macklowe.

Four Seasons Resort Maui defaulted

$425mm loan in two pari passu notes in GECMC 2007-C1 ($175mm) and CD 2007-CD4 ($250mm).

3Q 09 DSCR - 0.45x.

Matures 1/1/2014.

Reuters - Stick with what you know...

The headline reads "First CMBS conduit deal in two years nears pricing". I didn't read anything else - it's got like 5 loans, 2 property types, and 5 states - when did that become a conduit deal?

Bloomberg Radio Sucks

It's 50% advertisements (on Sirius/XM no less), 25% sports, 10% weather, and like 15% news - on a good day. I'd pay twice as much for one channel that was 100% news with a business slant - I thought that was their business model?!?

On a bad day, starting today at 2pm ET in fact, they're switching to 100% sports - golf no less. I'm not a golfer, so I'm biased - the last time I played was on the gulf coast in the 90s and I really enjoyed the cute girl who brought me beers, but that was it. That being said - HOW does one enjoy a good game of golf over the radio?

I spend more each month to receive Bloomberg information than any other news-like service, from various inputs including their desktop software, radio, and DirecTv for the office TV. I spend more on them than a lot of Americans take home in salary each month, and they deliver me Golf? Further, they no longer hire cute sales reps to deliver the message (much less a beer) - for whatever reason our Bloomberg sales reps are now just a rotating door of young guys fresh out of college. Something's got to give - bring back the old sales rep hiring model, get rid of golf and the deluge of book advertising on my f'in business news radio that I pay hard dollars for, or I'm going to quit paying so much to your firm!

Wednesday, April 7, 2010

Race to win "Worst RE Investor" is on...

Maguire, TishmanSpeyer, Lichtenstein/Lightstone are all in the running. I've already invested in a trophy that we're going to send to the finalists...

Lightstone's latest contribution from CRENews:

Lightstone Group said it has stopped making debt-service payments on a total of $563 million of mortgages. That's up $253 million of defaults from a year ago and doesn't count the $7.4 billion of debt on the Extended Stay Hotels chain, which became delinquent last November. The company bought many of its properties near the market's peak, using heavy doses of leverage. ...

Most recently, the company's Prime Group Realty Trust affiliate started talks to give up the Continental Towers, a 932,854-square-foot office building at 1701 Golf Rd. in Rolling Meadows, Ill., which serves as collateral for a $115 million securitized mortgage.

Meanwhile, Lightstone said it expected to lose, likely through foreclosure, four malls that secure $88.8 million of debt, including $73.2 million that was securitized through JPMorgan Chase Commercial Mortgage Securities Trust, 2006-CIBC15. The four properties, Martinsburg Mall with 552,212 sf in Martinsburg, West Va.; the 507,836-sf Shenango Valley Mall in Hermitage, Pa.; the 476,778-sf Mount Berry Square Mall in Rome, Ga., and Bradley Square Mall, with 406,845 sf in Cleveland, Tenn., have been in receivership since last year.

Foreclosure proceedings will also likely begin soon against the two shopping malls, the Macon Mall, with 1.4 million sf in Macon, Ga., and the Burlington Mall, with 419,000sf in Burlington, N.C., that serve as collateral for $164.6 million of debt, including $137.7 million that was securitized through Wachovia Bank Commercial Mortgage Trust, 2005-C20. Wachovia owns a $17.3 million mezzanine loan, while Presidential Realty Trust owns a $9.5 million loan.

Lightstone also said it will lose to two regional malls in Lake Jackson, Texas, and Shawnee, Okla., to foreclosure. The $47.2 million of debt, including $7.7 million of mezzanine debt, on the properties matures in January. The Texas property was scheduled for a foreclosure sale last week.

Thursday, April 1, 2010

RBSCF 2010-MB1 - $309.7mm Large Loan Fixed

Should price middle of April...

Realpoint rated...

JOINT LEAD : Natixis

A1 18.700 Aaa/AAA 2.48 5/10-2/15 22.25 41.5 20.3
A2 222.091 Aaa/AAA 4.93 2/15-4/15 22.25 41.5 20.3
B 18.575 Aa2/AA 4.98 4/15-4/15 16.252 44.7 18.9
C 20.900 Aa2/A 4.98 4/15-4/15 9.504 48.3 17.5
D 29.434 Baa3/BBB- 4.98 4/15-4/15 0.000 53.4 15.8

6 loans, 81 propertys. 66.3% Retail, 32.7% office, 0.9% industrial

37.8% TX, 23.4% NY

2.4x DSCR