Monday, December 27, 2010

Comings and Goings

This regular update has become quite irregular, but there has been somewhat of a lull in action now that "everything is better and prices can only go up" again...

-Aegon said it will start contributing loans to BAML deal.

-Barclays is updating the Lehman Agg with a CMBS 2.0 group of indices meant to reflect the post-crash CMBS issuance.

-Are things better or worse? It depends on who you ask:
  1. Ratings Downgrades slowed at the end of 2010 (S&P) - they include RMBS in the report too.
  2. Moody's downgrades Billions of CMBS. (However, the author of this one also describes the downgraded transactions as "structures where the bookrunner is passing through mortgage payments to investors")
-Trepp had some comments out last week regarding the risk surrounding front-pays now that they are mostly trading above par while at the same time loans are being worked out more quickly resulting in some unexpectedly fast pay-downs, and losses to investors. They highlight the CSFB 2005-C2 WAMU Irvine Campus loan (Maguire) that was recently modified with a 45% write down, wiping out classes up into the G class. That same deal also has a $142mm Tri-County Mall Loan that is expected to further wipe out classes up into the C class. They go on to highlight the Springfield Mall ($156.9mm), which is expected to get sold at just $42mm (to its current owner, Vornado. It appraised in January 2010 at $31mm). Springfield Mall was split equally between CMAT 1999-C1 and NASC 1998-D6.

-Freddie Mac is reportedly planning to double it's K series issuance to more than $10 billion in 2011. K10 is expected in the first quarter, expected average size to be $1.2billion, 50-80 mortgages, include a B class. (source: Real Estate Finance & Investment; no link)

Thursday, December 16, 2010

353 N. Clark trades at $320 psf

From Globe St.:

Tishman Speyer has completed the acquisition of 353 N. Clark for $385 million, about $35 million less than it cost seller Mesirow Financial to build the tower that was finished in October 2009. Mesirow had owed roughly $374 million from construction loans that were coming due.

Tishman is making inroads into investing in Chicago, already owning One North Franklin, 161 N. Clark, 10 & 30 South Wacker, the Civic Opera Building and 30 N LaSalle. The company is the largest owner in the city of Class A buildings, said Casey Wold, senior managing director with the company. “This property is a great addition to our world-class office portfolio and the acquisition demonstrates our confidence in the Chicago market,” he said in a statement Wednesday.

Wednesday, December 15, 2010

GSMS 2010-C2 (876.45MM) *Launch*

Tranche M/F Size ($mm)
WAL Subordination
A1 Aaa/AAA 347 4.87

A2 Aaa/AAA 376.072 9.84 17.50%
B Aa2/AA 26.293 9.95 14.50%
C A2/A 29.58 9.95 11.13%
D Baa3/BBB- 47.11 9.95 5.75%
E Ba2/BB 12.051 9.95 4.38%

F B2/B 9.86 9.95 3.25%

G NR 28.485 9.95 0.00%

Seniors are a little wider than talk, subs are on the tight end.

Monday, December 13, 2010

1225 Connecticut Ave NW trades @ $900 PSF

Brookfield sold 1225 Connecticut Ave. NW to The World Bank for $900 psf last week, the highest price ever paid in DC according to several news outlets (sorry can't confirm - but it was in the news, so it must be true).

This building was bought by Brookfield and Blackstone as part of the 2006 Trizec transaction and serves as collateral in COMM 2007-FL14 and MLFT 2006-1, along with other properties. They immediately began a $32mm renovation which was mostly completed in 2008, but finalized in 2009, and signed The World Bank as the sole tenant of the 240,000 square feet in 2008.

Jones Lang LaSalle took the property to market several months ago, but The World Bank has had an option to buy it that originated with the 2008 lease. Also, the CMBS loan matured in 10/2008, and the fully extended maturity is now 10/11/2011.

Someone made money - both deals saw some LCF and front-pays trade recently.

Two California Plaza - Update your models to "PENDING MODIFICATION"

Located in the heart of the U.S.'s former subprime operations headquarters (#3 tenant was Aames), Two California Plaza ($470mm senior in GSMS 2007-GG10 representing 6.30% of the deal) long ago depleted debt service reserves and was coasting on cash from the sponsor (Maguire/MPG). As of the end of the first half of this year, it's NCF DSCR was at 0.92x with 84% occupancy - not horrible, considering, but most investors have been angling for this property to get modified.

Earlier today David Weinstein (MPG CEO) stated
Two California Plaza as part of its core set of assets, and expects to have the opportunity to explore various potential options for doing so once the asset is transferred into special servicing. At this time, we do not believe that funding current and projected operating deficits at this asset with the Company’s precious unrestricted cash is in the best interests of our stockholders.

It originally traded at the peak at a 5% cap rate, roughly. If you apply that same cap rate to today's cash flows, you get a value of $507mm, still above the senior. That is too optimistic a view, in my opinion, but it's not horribly off either for a trophy asset like this. A 6% cap rate dings the first mortgage.

The maturity date is not until 2017, and the coupon is 5.5%. Not clear on what type of modification they are after, but it is definitely headed that way.

GSMS 2010-C2 ($876.45mm) *TALK*

Heard the 7th multi-borrower deal of the year priced, but I haven't seen the final levels. I updated guidance below

Tranche M/F Size ($mm)
WAL Subordination Talk
A1 Aaa/AAA 347 4.87
A2 Aaa/AAA 376.072 9.84 17.50% +130-135
B Aa2/AA 26.293 9.95 14.50% +210-220
C A2/A 29.58 9.95 11.13% +280-290
D Baa3/BBB- 47.11 9.95 5.75% +380-390
E Ba2/BB 12.051 9.95 4.38%
F B2/B 9.86 9.95 3.25%
G NR 28.485 9.95 0.00%

HUNDREDS of new leases coming to America!

That's a little tongue-in-cheek, but nonetheless, one of our favorite blogs Retail Traffic, has some interesting links on retailers that are actually adding stores in 2011:

Family Dollar has revealed it plans to double its annual store growth to 300 locations. Japanese apparel retailer Uniqlo reportedly wants to open 200 U.S.

Uniqlo is the retailer that took over the ground level retail at 666 Fifth Avenue for $20mm this past Spring.

Tuesday, December 7, 2010

Ceasar's $327mm deal?

I haven't seen it, but it was referenced in an article from DJs., which called it an "unrated senior mezzanine floating rate real-estate loan".

Ceasar's is the new name for Harrah's, which went through a big LBO for TPG and Apollo at the peak of the market. Ton of CMBS debt.

Who is buying legacy hotel debt right now at such low yields?

GSMS 2010-C2 ($876.45mm)

This deal got announced today. 43 loans, 108 properties, mostly retail & office, 59% average LTV. No talk yet.

Tranche M/F Size ($mm)
WAL Subordination Talk
A1 Aaa/AAA 347 4.87

A2 Aaa/AAA 376.072 9.84 17.50%
B Aa2/AA 26.293 9.95 14.50%
C A2/A 29.58 9.95 11.13%
D Baa3/BBB- 47.11 9.95 5.75%
E Ba2/BB 12.051 9.95 4.38%
F B2/B 9.86 9.95 3.25%
G NR 28.485 9.95 0.00%

Dwight's Norris sees further CMBS gains

I respect the guys at Dwight. That being said, I'm surprised that they're moving down the curve into AMs and AJs stating that the Super Senior trade is done. I'd argue the AM & AJ trade is about over too. AMs are being quoted in spreads now and all the decent ones are 90-above par. AJs seem to be priced pretty far up too. I'd even go so far to argue that the time to buy B - Ds is past, but the run-up is next year (hopefully)!

From Reuters:

Norris said Dwight -- which manages $64 billion in bonds -- is looking at slightly riskier CMBS known as "AM" and "AJ" classes, which have higher yields but less protection from loss. The risk spreads on those could contract another 1 to 1.5 percentage points, he said.

Dwight's portfolios already overweight with CMBS could expand their weightings to as much as 15 percent from about 9 percent, where prospectus allows, he said. Benchmark indexes have about 3 percent CMBS, he said.

I also disagree with their tenant review of Bob's Gun Shop in Texas as not being a desirable tenant - sounds like a perfect tenant for the upcoming revolution!
"There are also some properties that you want to stay away from," he added. "Maybe a mall in Midland, Texas, that's supported by Bob's gun shop."

Sunday, December 5, 2010

Google offers to buy 111 8th Avenue for $1.9billion

This has a $500mm pari passu senior split up between GCCFC 2004-GG1, GSMS 2004-GG2, MSC 2004-IQ7, MSC 2005-HQ5, and GMACC 2004-C2. It was appraised at $800mm in '04. Current debt matures in April 2014 and carries a 5.78% coupon. It is not clear if they're assuming the debt or working out some new financing. Based on YE '09 numbers that represents a 4.1% cap rate (I realize the WSJ quoted some odd "yield" at the bottom, but I don't know what they're talking about - they don't either)

The WSJ reports:

Google occupies about 500,000 square feet in the building and earlier this fall was reported to be a front-runner in the bidding for the property. The company won partly because it knew the building well and was willing to close the deal before the end of the year, according to people familiar with the matter. While the deal could still fall apart, that is unlikely because the contract is binding and Google has put down a large deposit, these people said.

Friday, December 3, 2010

Americold 2010-A

Americold is financing their purchase of the VersaCold acquisition with a $600mm CMBS deal and $375mm of preferred equity. The loan is a 10-year (25 year am) collateralized by 50 fee-owned and 3 ground lease properties, 48.7% LTV, 16.6% debt yield, 2.34x DSCR, 4.85% rate (spread across 6 CMBS classes, floating/fixed, and subordinate).

Class S/F/R Size WAL
A1 AAA/AAA/AAA $158.68 5.52
A2FX AAA/AAA/AAA $148.83 10.08
A2FL AAA/AAA/AAA $87.50 10.08
B AA/AA/AA $60.00 10.08
C A/A/A $62.40 10.08
D BBB-/BBB-/BBB- $82.60 10.08

Americold also has two other large CMBS loans spread across multiple deals in pari passue notes - DB AmeriCold Portfolio is $350mm and is in CD 2007-CD4, JPMCC 2007-CB18, JPMCC 2007-LDPX, JPMCC 2007-CB19, and GECMC 2007-C1; AND THE CGM Americold Portfolio $325MM loan split between CD 2007-CD4 and CGCMT 2007-C6. The two legacy pari passu loans are performing fine looking at YE 2009 data with 2.34x DSCRs being reported on each. Also, they've been doing similarly structured CMBS loans since the late 90s with GS.

hat tip to "Anonymous" for pointing out this deal that I completely missed. Thanks!