Friday, December 28, 2012

Times IS Money

The good folks at the WSJ busted their load over the One Times Square building (1471 Broadway) this past week not once but twice. The $208M IO loan was recently securitized by Goldman into GSMS 2012-TMSQ with Jamestown Properties as the sponsor.

According to the solid presale report put together by Kroll, the history and proceeds are as follows:
  1. Jamestown bought in 1997 for $117M when NCF was ~$6M which compounded annually at ~8.7%.
  2. Another Jamestown investment vehicle bought the building in 2011 for ~$419M and assumed ~$55M in debt.
  3. Proceeds from the deal will return $147M of equity to Jamestown, leaving current equity that Jamestown has in this building is at ~$210M. 
I suggest giving the Kroll report a read because they break-down the valuation of this building which generates most of it's revenue from billboard advertising.  Some facts:
  1. In 2013, One Times Square is expected to generate $24M in advertising revenue which represents ~85% of the base rental income.   The other 15% comes from Walgreens (lease rolls in 2023), which is the only base tenant.
  2. The building hosts the New Years Eve ball drop which generates between $2.5M and $3M in revenue.
  3. Estimated CPM for LED displays on the building is $9.00-$10.75.
    1. CPM = Costs Per Thousand Passerbys.  For every thousand people that walk by the building, that is the rate advertisers are charged to flaunt their wares on the side of the building.
      1. So for every thousand people that walk by Times Square, the building can charge advertisers anywhere between $9.00-$10.75 so their product can touch their eyeballs.
        1. With 1MM people going through Times Square on any given day, the building can charge $193K-$300K monthly and $2.2M-$3.6M annually; depending on the location of the billboard.
The one thing that did catch my eye from the presale report has to do with the special servicer.  It seems that Orix and LNR won't be able to get their hands on this beauty anytime soon:

"However, for as long as the borrower is controlled by the sponsor, neither LNR nor ORIX (nor any of their respective affiliates) is permitted to act as the successor special servicer. In this transaction, the holders of the most subordinate class of certificates outstanding do not have the right to replace the special servicer."

Hm, interesting.  If any of our esteemed commenters know why this is then don't be a stranger.

*No I do not work for Krolls but kudos to them for doing a decent job on the presale.  If you're looking to learn more about a single-borrower deal with the collateral basically being a giant billboard in one of the best locations in the world, then give it a spin.*

~Jingle Male

  1. Kroll BondRatings: GSMS 2012-TMSQ - One Times Square CMBS Presale Report
  2. WSJ Developments Blog: Landlords Have a Ball With Times Square Billboards
  3. WSJ: Ads, Not Tenants, Make Times $quare

Tuesday, December 25, 2012

And MGM/Dubai World Wept (Tears Of Joy?)

"We built in the best of times and opened in the worst of times,” Dennis said in a telephone interview.

For those that follow the saga in Nevada known as CityCenter, a recent transaction reported by Bloomberg may indicate that that this is the beginning of the end.  Either that or Ladder Capital pulled the old Sam Zell and got in at the bottom of this particular market.

1) CityCenter, a $8.5B joint venture between MGM & Dubai World, opens during one of Las Vegas' worst real-estate "downturn".
2) The residential condos at 669 unit Veer Towers initially priced at ~$900+ a square foot.
3) Ladder Capital Finance just bought 427 condos in bulk for $119M, or roughly $300 a square foot.
4) ??????????????
5) Profit

With that being said, the Veer only has about 11 penthouses remaining so make sure you buy before it's too late.

Las Vegas CityCenter Condos Sell in Bulk for $119 Million - Bloomberg

- Jingle Male

Tuesday, December 18, 2012

A Brief Introduction from Jingle Male

My Fellow Americans,

It is an honor to be able to contribute to The CRE Review.  I look forward to helping this fine blog and its readership stay abreast of what's going on in real-estate.

If you need to reach me:

Now let's get back to business.  Here is what has been going in this sphere recently:
  1. Demand for Commercial Real Estate Loans is on the Rise - SoberLook
    1. According to JPMorgan, interest-only loans (equivalent to "balloon" mortgage) are on the rise and average loan coupon has been declining.
  2. Wall Street Sees Promise in Multifamily Loans - WSJ Developments
    1. “Multifamily loans lead the pack in terms of how aggressive the lenders will get” within commercial real estate, said Christopher Haynes...
  3. Germany to Sell Real Estate to Lone Star for $1.4 Billion - Bloomberg
    1. It’s the country’s biggest commercial-property deal of the year.
  4.  Blackstone, Ranieri Betting on Bad FHA Loans: Mortgages - Bloomberg
    1.  The FHA’s recent auction had 13 loan pools that sold for 24.8 cents to 59.3 cents per dollar of unpaid principal balance. The sales prevented $1 billion in fiscal 2013 losses for the agency’s insurance fund, Galante said 
  5. Starwood Books Upgrade as Hotel Demand Slows: Corporate Finance - Bloomberg
    1. The company plans to generate 65 percent of its earnings from fees, Chief Executive Officer Frits van Paasschen said on an Oct. 25 conference call. 

 - Jingle Male