Tuesday, June 29, 2010

757 Third Ave - LBUBS 2004-C8

Moved to special servicing. There was a write-up on Bloomberg (no link, sorry), but unclear what's going on here. The 1Q 2010 DSCR was 2.22x with a 42% OLTV. There could be Mezz on the property, but even then, take the OLTV to 100% at the same coupon, it still, almost, cash flows. It's structured as an ARD, so soft maturity at 8/11/2014...

Something is fishy about this one. I suspect either the reported numbers are wrong, or the sponsor is attempting a losing battle at the special.

Let's sit back and watch.

Holding owned (in part or whole) by the same sponsor (RFR):
Grammercy Park Hotel
Lever House
40 Bond Street
Seagram Building

Thursday, June 24, 2010

SL Green wins suit against Mazal

SL Green announced last August that they had agreed to sell their 49.5% portion of 485 Lexington Ave to Mazal 485 (a partnership between Gilmore USA and Israel-based technology company Optibase) that valued the building about 21% lower than where SL Green had invested in 2007. Well, CWCapital, the special, apparently was not okay with the deal.

SL Green (and most other REITs) were sucking wind last summer, and then all of a sudden every REIT was able to go out and raise as much money as they needed and everything got better (still blows my mind).

So, Mazal cries foul, and says that in fact SL Green changed their mind once the market "improved" and their stock price went up. They claim it was a result of the deal, but all REITs were behaving similarly insane during that time period. Further, Mazal somewhat ludicrously claimed that SL Green should have fought the Special harder, and therefore now owes them damages. They wanted the damages reflected as a lower sales price on the same building and a $20mm option to buy the remainder of the building at similar terms all without lender consent, and asked a judge for as much.

Well, the court dismissed the claims today. The loan cash flows and doesn't mature until 2017. Citibank and Travelers are the big tenants, both expiring just before maturity. I think we can declare SL Green the winner, but 2017 looks like it's going to be a tough year to refi in.

Wednesday, June 23, 2010

Stuy Town foreclosure, Outstanding CRE debt declines, delinquencies increased, prices increased

The headline kind of covers it, but yesterday we all heard the judge approved the Stuy Town foreclosure, and reiterated that it might go in either one or two pieces.

Also, outstanding CRE debt declined by 0.9% in the first quarter.

Moody's noted that both delinquencies and CRE prices increased, in separate, unrelated releases.

Monday, June 21, 2010

Running Aground

The BOAT (aka One Bryan Park, Bank of America Tower) debt is finally being marked by BAML and JPM as a $650mm 10-year pass-through. They'll also issue a $650mm 2010 Liberty Revenue Refunding Bond split into a $351.6mm Class 1, $87.1mm Class 2, and a $211.3mm Class 3.

It's structured as an ARD, and refinances the existing debt + $25mm that's being used for "general corporate purposes (but don't focus on that, just trust us)"

Friday, June 18, 2010

Phew - it's all over, nothing else to worry about... Everyone get back to work...

Reuters.com reports.

Wells Fargo & Co (WFC.N) is one such bank, and has begun expanding its commercial mortgage-backed securities business, or CMBS, by tapping former employees of Wachovia Corp -- one of the segment's most prolific lenders before the crisis.

"I see lots of friends who used to be employed, and weren't for a while, and are now being rehired by institutions," said Jonathan Strain, head of debt capital markets for JPMorgan Chase & Co's CMBS division.

Wednesday, June 16, 2010

Western Michigan - Bottomed Out?

I wouldn't even click the link to this story, the site is worse than the story.

The guy being interviewed is saying there is a bottom, now's a good time to buy real estate in Western Michigan (I know, I threw up in my mouth a little too), and most CMBS loans are five year loans. That's the gist of the article.

So... There's around $2 billion in properties with outstanding CMBS debt in Western Michigan. I'm defining that as the big cities including Lansing, Kalamazoo, Grand Rapids, and Muskegon - not scientific, but a decent sample. These range from a Taco Bell in Muskegon in a Franchise deal from a 1998 deal, to a $25mm office building in Kalamazoo in a recent vintage deal.

5-year loans?

The weighted average term of these loans was almost exactly 10 years. Just 5.19% of the loans had terms of less than 10 years, and 4.53% had terms from 12 - 15 years. I'm not sure where the 5-year loans he's referring to are, but not in the sample I looked at.

Most maturing in 2012?
3.72% mature in 2012. Two are seven year loans, the remainder are 10 year balloons. No five year loans in this group.

23.59% mature between now and the end of 2014. All but 5 are 10 year loans, meaning they were underwritten quite some time ago, before the peak, and are likely not even underwater even though they are in Michigan!

5.47% have already matured, are in default, or have been modified.

A lot of the points in the article are spot on. The sponsorship in CMBS deals is all over the map - it's not like a local bank where most of the CRE is transitional, short term, and sucking wind; nor is it like the insurance co. portfolio loan which is typically high quality - CMBS is a mix of both. The proverbial shoe has not dropped yet in CRE to his point, however, let's give it a little more time.

The property types in these cities are heavily focused on MF and anchored retail. Over half the properties were built between 1891 and 1989. 29.69% of them are on the watchlist, 5.12% are with the special (half the national average), and 5.43% are delinquent (again, nearly half the national average). They know their local market better than I do (I've never even stepped foot in the entire state - so I know nothing), but I tend to interpret these numbers as pointing to a late comer that has more pain to be felt, rather than one that is rebounding or bottoming out...

US Airways - Liars

Everything else aside, it's just awesome when your flight gets delayed and you miss dinner and end up home after midnight.

But, US Airways repeatedly assured all the passengers last night that the flight was delayed due to weather, and many passengers who missed their late night connections had to pony up for a hotel room or sleep in a chair at the airport - what they don't know, is that the passengers who did get on the late flight heard the following "This is the captain folks, I apologize for the delay but we had a mechanical failure and had to swap out planes..."

So, the 10 mile visibility, 0 precipitation, 64 degree average weather, and 5 mph NE, at the time of the incident must have caused a substantial and previously undocumented mechanical failure. If weather like that is causing delays, and apparently mechanical failures, then we need to ground all flights immediately.

/end sarcasm

Tuesday, June 15, 2010

"That's why extend and pretend isn't so bad."

$45mm development loan for condo/retail in Manhattan to Related by Deutsche...

Some stuff is getting done, but they lost me at the end of the article.

Monday, June 7, 2010

397 reasons why CRE prices are still too high

CREbeat notes that Prequin is tracking 397 funds with $$149.8 billion that are going after "distressed" CRE properties, loans, and bonds...

They also remind us of the $25 billion in REIT money waiting to do the same thing...

JPMCC 2010-C1 $716.3mm

- wavgs: 36 loans/96 properties; WAM 79mos/orig 80mos; 1.64x DSCR; 61.5% LTV; Top 10 55%; Wavg rate 6.4%

- Property Types: Anchored Retail 69.7%; unanchored retail 1.3%; Industrial 11.8%; Suburban Office 10.1; CBD Office 1.5%; Mixed Use office/retail 2.5%; Self Storage 1.8%; Manufactured Housing 1.4%

- Top 5 States: CA 16.1%; TX 14.5%; UT 14.1%; MI 9.3; WI 9.2%

- 1 proforma'd loan; 1 IO, 1 5yr reset partial IO, 1 ARD, the rest are amortizing balloons.

- 79.7% refis

- Inland sponsor on at least 28.5% of the pool.

Class ($MM) Moody's C/E WAL

A1 $416.1 AAA/Aaa 15.00% 4.53
A2 $131.3 AAA/Aaa 15.00% 6.76
A3 $61.5 AAA/Aaa 15.00% 9.53
B $16.1 AA/Aa2 12.75% 9.98
C $26.9 A-/A3 9.00% 9.98
D $14.3 BBB/Baa2 7.00% 9.98
NR $11.6
XA $608.9 AAA/Aaa
XB $107.5 NR/Aaa

Thursday, June 3, 2010

More Servicers getting the boot

Bloomberg reports:

Guggenheim Structured Real Estate replaced Bank of America Corp. as the servicer...

The commercial mortgage fund operator, a unit of Guggenheim Partners LLC which has more than $100 billion in assets under supervision, took over management of the $284.5 million loan two weeks ago, according to people familiar with the transaction. The New York-based firm joins Green Loan Services LLC, a unit of SL Green Realty Corp., in using its position as a junior debt holder to name itself to oversee troubled loans.

...Debt holders have replaced special servicers 35 times this year, compared with 44 in all of 2009, according to Moody’s Investors Service.
The MeriStar debt, composed of 18 hotel properties, financed Blackstone Group’s acquisition of the hospitality firm in 2006. Blackstone is trying to extend the maturity of the debt, said one of the people, who declined to be identified because the information isn’t public.
Guggenheim Structured Real Estate, based in New York, owns a junior slice of Blackstone’s debt sold as part of a $1.8 billion commercial-mortgage backed bond in March 2007. Blackstone owes an additional $249.1 million in mezzanine debt, the person said.
Green, which became a special servicer of commercial mortgage-backed securities loans in May 2009, is the junior lender on about half of its $1.3 billion of its assignments on mortgages bundled into bonds, said Andrew Falk, senior director of the unit of New York’s biggest landlord. Green Loan Services has completed $4.8 billion in loan workouts and restructurings during the past 10 years, he said in an e-mail.

Wednesday, June 2, 2010

Villas Parkmerced - CD 2006-CD2 - $550mm

h/t crabsofsteel, rw, and sw.

Villas Parkmerced was in the news last week because they are defaulting on their loan. To the point initially made by crabsofsteel, it's Rockpoint and Stellar Management, and they are in second place (behind Lichenstein's Lighstone) for the worst CRE deals. One of their favorite trades was to go after decent multifamily projects in rent controlled municipalities (this one in San Fran, also Riverton in NYC), throw in a ton of leverage, a few upgrades, kick out the pesky rent control tenants, and move in the market paying renters. Vantage Properties and Apollo RE Advisors were another prolific JV in this same space - they're the proud owners of Savoy Park, Broadway Portfolio, Esquire Portfolio, and others.

As if to make the precise point that it's really not any easier in San Francisco than it is in NYC, Villas Parkmerced has been involved in tenant harassment suits going back at least as far as September 2008.

Apparently, they don't believe they'll be able to refinance at maturity (in October of this year) and are now with the Special. They have not missed any payments to date, unless they skipped this month, which really wasn't clear from the article. The senior note is performing fine with a 1.5x DSCR at the end of 2009 - however, the senior is $300mm, and there is an additional $250mm. At 5.65% coupons -- $31.075mm in debt service. They're clearing $30mm in NOI and NCF at YE 2009 at 100% occupancy, but were underwritten to $40mm NOI. Anyways, they're short.

Loan Structure - I may have some of the details off, but here's a rough guesstimate at the loan structure based on the servicer notes, the prosup for the deal, and a few other comments. Not sure who the owners are, but that would be interesting... I believe portions of it, if not all, are in SPAF 2006-1 and PRIMA 2006-1, both CRE CDOs, but I don't really have the details for these.

Loan Part Size Loan Number Location
A1 $300,000,000.00 30252733 CD 2006-CD2 Pooled
B1 $ 50,000,000.00 30254323 CD 2006-CD2 Directed (VPM tranches)
B2 $ 25,000,000.00 30254324 ?
C $ 35,000,000.00 30254325 ?
D1 $ 20,000,000.00 30254263 ?
D2 $ 10,000,000.00 30254262 ?
D3 $ 30,000,000.00 30254326 ?
E $30 ,000,000.00 30254264 ?
MEZZ* $ 50,000,000.00 30252735 ?
*note I saw a few different versions of the capital stack, and changed this slightly since the initial posting.

At a 9% cap, using YE 2009 NOI, it's worth $334mm. At a 5% cap, that shoots up to $602mm. The upside is that the bigger deals seem to be getting financing more easily, and this one has a decent story.

Try to buy the rakes cheap? The AJ traded last week after the news, but no color. The A4 trades relatively tight. The A2 & A3 should be trading wider than they are given the extension risk (but in Bloomberg, anyway, extending this out 24 - 48 months doesn't affect the cashflows - me thinks they have a broken model on this deal. You have to be really careful with their cashflow models in CMBS, they make more mistakes than their more expensive counterparts).

Tuesday, June 1, 2010

HP Job Cuts - 9,000 positions

I know they said 3,000, but at the end of the day they're cutting 9,000 positions in their "Enterprise Services" division and adding elsewhere.

This division is primarily located in the following locations inside the US:
5400 Legacy Drive, Plano, TX‎ (no real exposure, but this is down the street from another HP office that happens to be in CarrAmerica portfolio - CGCMT 2006-FL2)
13600 Eds Drive, Herndon, VA‎ (no CMBS exposure found)
500 Renaissance Center, Detroit, MI‎ (GM Building FUNBC 2001-C4 - matured & paid 10/29/2009)
335 Centennial Parkway, Suite 100, Louisville, CO 80027 (no CMBS exposure found)

Other US locations include:
6901 Windcrest Dr, Plano, TX‎ (no CMBS exposure found)
975 Eastwind Drive, Westerville, OH‎ (no CMBS exposure found)
500 President Clinton Avenue, Little Rock, AR‎ (no CMBS exposure found)
1434 Crossways Boulevard, Chesapeake, VA‎ (no CMBS exposure found)
1800 Southwest 1st Avenue, Portland, OR‎ (SLCMT 1997-C1 - paid off 2/1/06)