The tenants came to a settlement. This was one of the key blocks to a final resolution on the property that had us thinking it would be late next year "at best", but given this settlement, I think it is safe to say that a final resolution by year-end 2013 could even be labeled "likely" at this point. This is definitely a positive for bondholders.
The only negative I can see, is that the rent-controlled units must stay rent-controlled until 2020 to comply with the original J-51 tax abatement and rents are now set through 2020. This obviously crimps potential revenues, but it makes sense that they would have this as a condition. After all, the only way Tishman got the numbers to work in the first place was to mark-to-fantasy, ignore rent control, evade taxes, and team up with the dumbest lender available (yes, I'm talking about you CMBS Market). Also, it is offset by the fact that it allows them to raise revenues
The settlement works out in favor of Wolf Haldenstein Adler Freeman & Herz, the firm representing the tenants, second place prize goes to Venable LLP, counsel for CW Capital. Everyone else lost. The tenants lost and the lender lost. In lawsuits, everyone is a loser except the attorneys.
Interesting side note, I was going through prior posts on this property and all the action seems to happen in October and November. There are some rare August and March posts, but things seem to happen in October and November. Based on this non-scientific analysis, I'm going to go ahead and call it - PCV/ST will get worked out by November 30th, in fact, on November 30th, 2013.
Friday, November 30, 2012
Thursday, November 29, 2012
Saturday, November 24, 2012
The WSJ reported last week that it's getting frothy out there again, and I agree. They highlight the Retail Fashion Outlets of Las Vegas deal which went from a 58% senior mortgage to a 58% Senior mortgage plus a 26% junior mortgage (which could be mezzanine debt, it's not clear because the author of the article believes junior mortgages and mezzanine debt are the same thing...).
The article goes on:
The article goes on:
Some owners are taking cash out of their properties. For example, the owners of Extended Stay—Centerbridge Partners, Paulson & Co. and Blackstone Group BX +1.01% —plan to borrow $3.5 billion by selling a combination of commercial-mortgage securities and mezzanine debt. They would put about $700 million of the proceeds in their pocket and use the rest to replace existing debt.You'll recall that just two years ago ESH was mired in bankruptcy, in-fighting amongst special servicers, and a year-ago attempting a $2 billion takeout financing to buyout Centerbridge and Paulson. Today, nearly twice that is apparently available from the market and at much lower costs to the borrower.