Wednesday, December 3, 2014

just in time for Xmas - another $200MM goes into special

Transaction: JPMC 2007-LDP10Property: Lafayette Property TrustCity/State: Alexandria, VAProperty Type: OfficeBalance: $203,250,000Percentage of Deal: 7.0%Maturity Date: 3/1/2017MS: Midland Loan Services, Inc.SS: C-III Asset Management, LLCReason for Transfer: Imminent Monetary Default

Of course, the ratings agencies and issuers would have you think that legacy CMBS are behaving just peachy, with delinquency rates below  6%.  Let me ask you this: if a loan has had an A//B note modification, and as is typical the B note pays nothing, isn't that loan partly delinquent?  I would say so, because the trust is not receiving its contracted cashflow from that loan.  But, they don't want to include B-notes in their delinquency numbers because that would just be "bad news" 

Saturday, November 15, 2014

JPMCC 2006-LDP7: top loan Westfield Centro = 8% of the pool goes delinquent

Borrower wants a mod ... that's SO 2012.  What's $240,000,000 between friends?

At a Glance
Note StatusSpecially Serviced
Current Balance persf$101.52
Last Payment Date9/1/2014
% of Pool7.81%
Property TypeRetail
Number of Properties5
Securitization NameJPMCC 2006-LDP7

Wednesday, November 5, 2014

MSC 2007-HQ12: Who is Parkoff?

Transaction: MSCI 2007-HQ12
Property: Parkoff Portfolio
City/State: New York, NY
Property Type: Multifamily
Balance: $170,000,000
Percentage of Deal: 13.5%
Maturity Date: April 1, 2017
MS: Wells Fargo
SS: CWCapital Asset Management, LLC
Reason for Transfer: Imminent Monetary Default
On Servicer Watchlist Prior to Transfer: Yes
Previously in Special Servicing: No
Previously Modified: Split into A-Note and B-Note prior to securitization

Thursday, October 30, 2014

One Congress Street: I'm baaack!

Even though it was on the tape as an office property it's mostly a parking garage.  Any ideas for an alternative use for a parking garage?

Transaction: WBCMT 2007-C30
Property: One Congress Street
City/State: Boston, MA
Property Type: Mixed Use
Balance: $190,000,000
Percentage of Deal: 2.80%
Original Maturity Date: March 11, 2014
MS: Wells Fargo
SS: CWCapital Asset Management, LLC
Reason for Transfer: Imminent Monetary Default
On Servicer Watchlist Prior to Transfer: No
Previously in Special Servicing: Yes
Previously Modified: Yes; Maturity extended to February 2016 and interest rate reduced

Wednesday, October 22, 2014

Babcock & Brown: one mod wasn't good enough?

Transaction: CSMC 2006-C4
Property: Babcock & Brown FX 3
City/State: Various
Property Type: Multifamily
Balance: $90,037,030
Percentage of Deal: 2.78%
Original Maturity Date: January 11, 2016
MS: Berkadia Commercial Mortgage
SS: Situs Holdings, LLC
Reason for Transfer: Material default
On Servicer Watchlist Prior to Transfer: Yes
Previously in Special Servicing: Yes
Previously Modified: Yes; Maturity extended to February 2017 and principal forgiveness
Also, the October remittance cycle was pretty ho-hum.  Biggest move I saw was 400mm in 60 day dq in MLMT 2007-C1 on two Ezra Beyman loans which had already benefited from a 70/30 A/B note mod, but apparently that was due to a late payment being applied by the servicer.  We shall see.

Monday, October 20, 2014

Stuy Town appraised at 3.5bln ... so what?

People are besides themselves that Stuy Town has been reappraised for $500mm more than the senior loan balance, as a potential sale approaches early 2015 (which is also not going to happen without a co-op conversion plan).  So what???  At least that amount has been advanced by the servicer, and they are at the front of the line to get repaid upon loan liquidation.

Friday, October 17, 2014

Another $200mm goes to special ... whoop whoop!

CSMSC 2007-C5
Property: Jericho Plaza I & II
City/State: Jericho, NY
Property Type: Office
Balance: $163,750,000  
Percentage of Deal: 8.65%
Maturity Date: June 11, 2017
MS: Berkadia Commercial Mortgage
SS: C-III Asset Management
Reason for Transfer: Imminent Monetary Default
On Servicer Watchlist Prior to Transfer: Yes
Previously in Special Servicing: No
Previously Modified: No

Transaction: WBCMT 2005-17
Property: Great Wolf Resorts Pool
City/State: Traverse City, MI and Kansas City, KS
Property Type: Hotel
Balance: $38,992,732
Percentage of Deal: 2.65%
Maturity Date: January 11, 2015
MS: Wells Fargo
SS: Midland Loan Services
Reason for Transfer: Imminent Maturity Default
On Servicer Watchlist Prior to Transfer: Yes
Previously in Special Servicing: Yes
Previously Modified: No

Wednesday, October 15, 2014

GSMS 2007-GG10: oops

" Per the Borrower, all three of the largest tenants will be vacating their space upon their lease expirations (American Express this month, International Paper in 2015, and UBS in 2018)."

GSMS 2007-GG10
Property: 400 Atlantic Street
City/State: Stamford, CT
Property Type: Office
Balance: $265,000,000  
Percentage of Deal: 5.26%
Maturity Date: June 6, 2017
MS: Wells Fargo
SS: CWCapital Asset Management, LLC
Reason for Transfer: Imminent Monetary Default
On Servicer Watchlist Prior to Transfer: Yes
Previously in Special Servicing: No
Previously Modified: No

For all of you avid CMBS fans, GG10 is supposed to be the benchmark issue ... super-senior spreads on A4 are considered the level where super-seniors should trade.  But, lo and behold, this deal is looking like a POS.  AJs are getting shorted interest, and with this transfer, is the AM not far behind?

Tuesday, October 14, 2014

MSC 2007-HQ13 top loan to be sold at an estimated 133% loss

Pier at Caesars is under contract to be sold for $3mm.  Well, it had to get resolved at some point.  A colleague who had visited the place once said, "Everyone I saw there looked lost."

Two aspects of this property's story point to how the special servicer was negligent. 

First was when, soon after Hurricane Sandy, they issued a bulletin relaying that damage was minimal and tenants were being allowed back into their premises.  A few months later, Sandy-related damages of over $10mm were reported.  Huh? 

Second, as pointed out by Barclays, the special rejected a $25mm bid when the property was put up for sale on about 3 years ago.  So, the special managed to subtract $7mm/year in value, yet will still collect their fees.

By the way, the HQ in HQ13 stands for "High Quality" 

Tuesday, October 7, 2014

Bad CMBS deals only get worse

From the deal which brought you the dark Bank of America Tower in Atlanta comes this:

Transaction: JPMCC 2006-CIBC17
Property: Westfield Shoppingtown Independence
City/State: Wilmington, NC
Property Type: Retail
Balance: $110,000,000
MS: Wells Fargo
SS: CWCapital Asset Management, LLC
Reason for Transfer: Monetary Default


Friday, September 12, 2014

BSCMS 2007-PW15 AJ and AJFL take a 16% writedown

That's one $200MM B-note we won't have to worry about any more.

Wednesday, September 3, 2014

Solana resolves

from Barcap:

CMBS: $360mn Solana sold for $180mn, 66% loss; loss recoupment
for LDPX subordinate bonds (BACM 07-1, LDPX)
The Fort Worth Star Telegram reported Tuesday that the Solana mixed use office, retail,
and hotel complex was liquidated for $180mn in a sale to Blackstone Group. The property
backs a $360mn loan split between a $220mn loan in BACM 2007-1 and a $140mn loan in
JPMCC 2007-LDPX, which had been in special servicing since 2009 and in REO since the
beginning of 2014. The sale price was below the latest appraisal of $184.9mn in March 2014.
The liquidation will repay sizeable advances and ASER accumulated for each deal after
repaying selling costs and lead to principal losses of about 66%.
Question for my CMBS brethren: is there an issuer who stands out as worse than the others?
Almost every one has toxic deals under their belt with shortfalling AJs or AMs; BACM, COMM,
GMACC, GSMS, JPMCC, MLCFC, MLMT, MSC, WBCMT.  I believe who the originator is makes a
difference.  What about you?

Thursday, August 21, 2014

A hidden pearl

I wonder how many of you have ever faced the situation of being without Intex, Trepp or Bberg and need to look up some bond, or a loan in a deal just to know what deal it's in, what its balance is and so on. is free, and it's easy to use.  Where it says "find bonds", you can put in a deal using Bberg nomenclature or even a subset of the deal name.  So putting in "2008-c2" will find that most wonderful deal, JPMCC 2008-C2. 

You can see the capital structure and the underlying loans.  OK, you cannot run yields, but it sure costs a lot less than Trepp!

Wednesday, July 30, 2014

Why is this?

According to Morningstar, based on June data:

"the delinquent unpaid balance for commercial mortgage-backed securities, or CMBS, continued its decline to a trailing 12-month low of $32.48 billion (4.32%)"

CS and Barclays both say it's over 8%.

None of the above report non-paying B-notes as delinquent but that's maybe 0.5%

4% versus 8%.  What am I missing?

Friday, June 27, 2014

et encore! another $150MM goes to special

Transaction: GECMC 2006-C1 & GMAC 2006-C1
Property: James Center
City/State: Richmond, VA
Property Type: Office
Balance: $150,000,000
MS: Berkadia Commerical Mortgage LLC
SS: LNR Partners, Inc.
Reason for Transfer: Potential/ Imminent Default

Wednesday, June 25, 2014

Hey now! Another $150MM in loans transfer to special servicing in one day

Transaction: MLCFC 2007-9
Property: 300 Capitol Mall
City/State: Sacramento, CA
Property Type: Office
Balance: $104,330,000
MS: Wells Fargo
SS: LNR Partners, Inc.
Reason for Transfer: Imminent Maturity Default

Transaction: BSCM 2006-PWR13
Property: First Industrial Portfolio
City/State: Various, GA
Property Type: Industrial
Balance: $47,497,720
MS: Wells Fargo
SS: Situs Asset Management
Reason for Transfer: Imminent Monetary Default
Fitch recently released their "new" loss estimate of 15.7%
for the 2007 vintage. Who wants to bet that will change 
within three months?  It's subprime all over again!

Sunday, June 22, 2014

CMBS Repurchase claims

Hello once again.

We know that a lot of sketchy loans went into legacy CMBS.  Often, the special servicer delights in pointing out how actual performance differs from predicted performance (even though they bought the at-risk B pieces).  The sole recourse left to the trust is to sue the originator for a breach claim.  This has happened before but seldom.  Orix took Nomura to the cleaners for Doctor's Hospital at Hyde Park (ASC 1997-D5) to the tune of $65MM including legal costs but it took over five years to resolve.   I am aware of only one repurchase claim in the current market, City View Center in MSC 2007-IQ14.  The story here is that a shopping center was built on top of two landfills in a suburb of Cleveland, with a methane remediation system to vent gas through lighting posts in the parking lot.  Wal-mart moved in, decided it stank of fart gas, and moved out, triggering co-tenancy clauses.  MSC is being sued for a breach claim for not having adequately disclosed environmentals.  The loan has been declared non-recoverable and shortfalls are hitting the AJ class.  Any others you know about?

Monday, June 9, 2014

CMBS University: What is the difference amongst CMBS 1.0, 2.0 and 3.0?

Dear CMBSers,

The question you were afraid to ask is answered here.

In CMBS 1.0, also known as legacy CMBS, payments of interest are senior to payments of principal.  Thus, when a deal had shortfalls due to delinquency and there was a sale of property which did not result in loan liquidation (e.g. Beacon Seattle in GECMC 2007-C1, or West Hartford Portfolio in BACM 2007-5), proceeds would be applied to paying off prior interest shortfalls in lower-rated classes rather than being applied to paying down principal in the front-pay higher-rated classes.

Understandably, this got AAA investors upset.  Why were lower-rated bonds receiving any sort of cashflow when they were not?  What were the ratings agencies thinking?  Thus, in CMBS 2.0 starting with the JPMCC-initiated deals in 2009, all cashflow is directed at the senior-most classes.  This means that if a class suffers an interest shortfall, that shortfall is permanent until that class becomes a front-pay and becomes eligible for recoveries.

What makes CMBS 3.0 any different?  As far as I can tell, the difference is that 3.0 deals include an operating advisor (e.g. Pentlalpha) as a party to the transaction.  The operating advisor does not seem to have any fiduciary role and seems to exist for the sole purpose of gathering fees as an advisor to the special servicer, but hey, we're all friends here so why not.

Can anyone shine more light on this?  What do you think?

Friday, June 6, 2014


Roger (who I assume you all know) says it best:
On Tuesday, CWCapital Asset Management, on behalf 
of the trusts it represents, formally took ownership 
of Peter Cooper Village and Stuyvesant Town, via a 
deed in lieu of foreclosure. This action means that
the properties are now REO assets of the trusts.
In addition, as result of the change in ownership, 
the foreclosure auction, of the top three layers 
of mezzanine debt, planned for next week, has been 

Thursday, June 5, 2014

Trepp to deliver Morningstar CMBS surveillance reports


This is good news for those of you who subscribe to both services, provided that Trepp doesn't tack on the Mstar subscription fee (around 60K per year for each service).  Although I think Morningstar is dreadfully slow in putting out their monthly surveillance reports, they are generally pretty good in providing accurate loss estimates.

Tuesday, June 3, 2014

CMBS University: why credit support levels differ depending on where you look

According to the remittance from Wells Fargo on WBCMT 2007-C30, credit support on class G is 5.84% which will match Trepp.  However, that same c/s level will be different should you consult it on Bloomberg or Intex.  Why?

The main culprit are WODRAs.  For those of you who have not had the pleasure, WODRAs represent servicer recoveries of advances from principal as opposed to interest cashflow.  In the case of C30 as of May 2014, $6.813MM of bonds are supported by $6.807MM of collateral.  This $0.06MM principal shortfall can only be recovered if REOs are sold for more than their loan balance, which is usually not the case.

What does Trepp do? They match the trustee remittance, which totals all bond balances inclusive and subordinate to the given bond and divides that by the total bond balance.  To Trepp's credit, they also report an ARA-adjusted c/s level which takes into account B-notes (which are usually 100% loss) and appraisal reductions (although surprisingly, not loans declared non-recoverable which have a 95% loss severity on average, last time I looked).

What does Bloomberg do?  They total all bond balances inclusive and subordinate and divide by the total collateral (as opposed to bond) balance.  Better, but still incorrect since B-notes, appraisal reductions, and non-recoverable loans are considered money-good.

Finally, we consider Intex.  Although they do not adjust their c/s levels for B-notes or ARAs, they do back out under-collateralization resulting from WODRAs from collateral balance as their denominator.  And they provide forbearance and non-recoverable loan data so that the enterprising investor can figure out what real c/s levels are.  All hail Intex!

Monday, June 2, 2014

Willis (Sears) Tower is transferred to special for imminent default

Well, well,  what do we have here?  According to Fitch:

Transactions: LBUBS 2007-C2 ($337.6 million) & LBUBS 2007-C7 ($49.6 million)
Property: Sears Tower (Willis Tower)
City/State: Chicago, IL
Property Type: Office
Balance: $498,885,497 Senior CMBS Debt* ($774,389,429 Total Loan Balance)
*Also includes loan pieces in LBUBS 2008-C1 and JPMCC 2013-WT (Not Rated by Fitch)
MS: Wells Fargo
SS: CWCapital Asset Management
Reason for Transfer: Imminent Monetary Default (Borrower requested a loan modification)

According to the servicer, the borrower anticipates significant 
capital costs going forward in order to secure additional new leases.  
Occupancy has improved to 83.8% as of March 2014, from 75% in December 

One of the co-owners, Joe Moinian, is known for asking for loan modifications (e.g. The Renaissance).  Another co-owner, Joseph Chetrit, has quite a reputation in CRE circles.
It is interesting that LBUBS 2007-C2 AJ is already a first-loss piece (thanks to Orix dumping all the loans they serviced in one single month).  An A/B note modification could make it the first zombie AJ!

Friday, May 16, 2014

Au revoir, JPMCC 2007-LDPX classes E->G

It's not every month that a deal takes $150MM of losses but that was the case for this misbegotten deal.  Stratreal Industrial turns out to be unreal, contributing 30MM+ losses for three months in a row.  Meanwhile, we wait for Solana to resolve.

Monday, April 21, 2014


We've had a good run, but have just gotten too busy to keep posting on a regular basis. So, we're going to shut this blog down.

If anyone wants to take it over, email me at

Monday, April 14, 2014

We have met the Enemy, and He is Us

SEC investigating big players in bond market, but not the biggest:
"The lopsided bond market has caught the attention of the U.S. Securities and Exchange Commission. Not only is the SEC examining whether the biggest players get preferential prices and access because of their influence...Bill Gross and Larry Fink manage a $3 trillion pile of bonds...". What?!?!, the Fed balance sheet just surpassed $4 TRILLION all by its little ol' self. You take Mortgages + Treasuries and you're right around the $30 trillion mark, and the largest investors are the US Treasury and the Fed, and its almost impossible to mark the size of the exposure the US Treasury has but their risk is certainly higher than the Fed, and canyons of risk larger than any group of private funds.

You have to assume the article was written by a comedian, except they're being serious and we really do live in a world where the government creates a false market, private companies change their rules so they can operate in the fake market place, and then the government investigates the private companies for "creating" new risks. "We're going to need new regulations to regulate the private players who adapted to our old regulations, which in hindsight caused more problems than they solved, but, hey, we didn't see that coming". (that isn't an actual quote from the article, it is an attempt at sarcasm)

Here is another one, from the article, "While regulators have looked at the threat to the financial system posed by too-big-to-fail banks, hazard has migrated to money managers." Bless their hearts. They still don't realize they are, themselves, the problem.

"Investors typically get worse prices when they trade smaller blocks of bonds. One day last month, dealers sold $15,000 of steel company ArcelorMittal SA’s bonds maturing in 2041 for 3.5 cents on the dollar more than they paid to buy $25,000 of the same securities an hour later. By contrast, two exchanges of $100,000 or more of the debt that day were within 0.05 cent of one another, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority." I saw a plus-sized lady just this weekend buying a 12 pack of pepsi with extra sugar and the per can price was far below a single-can price. We need a regulator to start looking at this type of activity at CostCo and Super Walmart, someone call their congressman pronto!

Tuesday, March 25, 2014

CRE NPL Deal in the market - includes some assets from the CWCapital auction

See write-up from Herschmeyer over at Co-Star:

The assets have an aggregate unpaid principal balance (UPB) of $899.3 million, were acquired for $455.8 million...

...The largest portfolio (34%) is comprised of 18 CRE assets that previously served as collateral in various CMBS transactions and were acquired by Oaktree from special servicer CW Capital Asset Management LLC (CW Capital) in February 2014.

Tuesday, February 18, 2014

JC Penney Store Closings

Bloomberg had an article regarding JC Penney closures and their impact on CMBS out last week. It noted that JC Penney is the biggest tenant in the CMBS market (is this accurate?) and the move highlights the "widening chasm" between successful malls and dying malls.

CW Capital Auction

We're starting to see results from the CWCapital Auction trickle out in servicer reports and in the news.

In particular:

  1. 119 West 40th Street (GSMS 2007-GG10) - latest file reflects a $171mm sales price (note this reflects the listed proceeds in the monthly report and is higher than the BBG article estimate). Unlike the other loans in this list, this is a loan sale (the others were REO already). It is 106% of outstanding loan balance, a 40% premium over the 9/2012 appraisal,  and resulted in a 30% loss severity.

  2. Two California Plaza (GSMS 2007-GG10) - CIM purchased. No price or estimate available. Largest asset in the sale. BBG noted that part of the transaction included CIM taking over property at the end of 2014 (REO sale). The most recent appraisal was $343mm in 1/2013 vs a $468mm loan balance outstanding. 

  3. Montclair Plaza (WBCMT 2006-C28) - CIM purchased for $170mm, 89% of outstanding balance, 13% over 2/2013 appraisal, 29% estimated loss severity (after accounting for advances, etc.).

  4. Four Seasons Resort and Club Dallas (WBCMT 2006-C28) - BBG estimates $150.5mm sales price, 86% of outstanding loan value, 12% premium over the 9/2013 appraisal, 28% estimated loss severity (after accounting for advances, etc.).

As an aside, the BBG article mentioned PCV/ST in the context of the $3.4 billion appraisal from 9/2013, and the increasing likelihood of a disposition in the second half of 2014.

Thursday, January 16, 2014

JCP Closing 33 Stores

According to the WSJ, JCP is closing 33 Stores. I'll update this entry with CMBS exposures if/when I get a chance.

Selma Mall
Rancho Cucamonga
Arrow Plaza
Colorado Springs
Chapel Hills Mall
Meriden Square
Lake Square Mall
Port Richey
Gulf View Square
Muscatine Mall
Stratford Square Mall
Hickory Point Mall
Five Points Mall
Marketplace Shopping Center
The Centre at Salisbury
Westwood Plaza
Northland Mall
Singing River Mall
Natchez Mall
Butte Plaza Shopping Center
Cut Bank
Vernon Park Mall
Burlington Center
Phillipsburg Mall
Wayne Towne Plaza
Exton Square Mall
Laurel Mall
Washington Mall
Northgate Mall
Bristol Mall
Military Circle Mall
Fond Du Lac
Forest Mall
Janesville Mall
Lincoln Plaza Center
Rice Lake
Cedar Mall
Wausau Mall

Deal Exposures:

Shopping Center Deal Loan PCT Deal
Military Circle Mall GMACC 2004-C2 9.80%
The Centre at Salisbury JPMCC 2006-LDP7 3.70%
Hickory Point Mall BSCMS 2006-PW11 1.90%
Laurel Mall BSCMS 2007-PW17 1.70%
Wausau Mall WFRBS 2011-C4 1.30%
Marketplace Shopping Center CGCMT 2004-C2 0.90%
Bristol Mall BACM 2006-5 0.90%
Wayne Towne Plaza MSC 2007-IQ15 0.60%
Natchez Mall CGCMT 2006-C4 0.50%
Lincoln Plaza Center GSMS 2006-GG6 0.10%

Source: Credit Suisse.