New York Office market sucks wind, the rest of tge economy to follow...

At least that is the opinion of a post on Zerohedge today. They also state that 666 Fifth is 50% vacant - is that right? I can't recall, but that seems high. Regardless, they do continue to lose tenants.

Uniqlo @ 666 Fifth Avenue

Retail Traffic Mag posted some pictures of the new digs for Uniqlo at their two Manhattan locations, including at 666 Fifth Avenue, here.

666 Fifth Avenue Modified

They managed to get 666 Fifth Avenue modified down into senior $1.1 billion senior note and the rest into a hope note, a new maturity date in 2019 (from 2017), and the rate dropped to 4.5% from 6.3% - all according to a Bloomberg article today.

In other news, Kushner was seen outside the Uniqlo store shopping for Christmas gifts for his new kid on CafePress.com

666 Fifth Avenue Workout

The WSJ reports and every dealer on the street reports that Kushner has worked out a deal on 666 Fifth Avenue. They're going to take a 9.5% haircut back as a B note, Vornado is going to be a partner (improving the ownership) and the coupon is going to be reduced.

Boo, for IOs and deep credit, but huge positive for seniors and mezz portions of the CMBS deals: GECMC 2007-C1, WBCMT 2007-C31, and WBCMT 2007-C33. All of which I own some of and two of which I've had heavy reverse inquiry on the last few days.

*So far, I haven't seen any precise information on what the new coupon is or whether the special has formally confirmed the deal.

I wanna piece of dat...

Vornado purportedly is seeking a portion of 666 Fifth Avenue and is looking to spend 9 figures.

For more on 666 Fifth, read our old posts.

666 Fifth Avenue Retail space trades at $8.3k psf

Bloomberg is reporting that Inditex bought the former NBA space (39k sq ft) for $324mm, or $8.3k psf making it the highest retail valuation evah. They're going to put a Zara store there. You'll recall that Uniqlo leased space there approximately 1 year ago at $2k psf (note that in the comments Rational Realist clarified the lease with sources as well).

If you leave 30 Rock and walk through 666 Fifth and come out through the Hickey Freeman entrance, you see the Ermengildo Zegna store in front of you, and this space is on your right at the corner of 52nd and Fifth.

For some price points, the article goes on to note that the 2008 sale of a partial ownership interest in the retail portion of the building (from Kushner to Carlyle and Crown Acquisitions) valued the space at $6,187 psf.

In regards to the CMBS loan, this space was released as collateral related to the aforementioned 2008 transaction with Carlyle and Crowndid not serve as collateral. This space is part of the 95k sq feet of "Fifth Avenue Retail Space", BUT the mezzanine loans must be paid down with any proceeds from a sale of this space. I don't know if they are still outstanding, but I bet they were. BCRE and UBS made the original loans, but I also do not know who the investors were.

The "Other Retail & Storage Space" (69k sq feet) + Office + Parking constitute collateral for the CMBS loan financing original purchase by Kushner and Gellert, which used an $1.215 billion senior note split unevenly between WBCMT 2007-C31, GECMC 2007-C1, and WBCMT 2007-C33, plus $335mm of senior mezz, plus $200mm of junior mezz, for a total financing of $1.75 billion

The irony is not lost on us that precisely 1 year ago, to the day, almost to the hour, we noted that this property was in Special Servicing.

Comings and Goings

The Moody's Real CPPI dropped 2.6% in February - following three months of increases. It's off 41.8% from the peak.

Uniqlo (We'll have to ask my wife what type of retailer they are - ADR FRCOY) got a 1/3 off deal on their rent at 666 Fifth Avenue (several deals) for the street level retail at just $20mm per year (down from $30mm asking). It's being touted as a record breaking deal, but it's not clear which record is being broken - there certainly have been larger over all deal sizes, and the price per square foot doesn't seem like a record breaker... In fact, the square footage must be wrong. It's listed as 89,000 everywhere I look, but that's just $224 psf - there are plenty of leases at $2,000 psf for fifth avenue retail (Abercrombie & Fitch is in the same building at $2+k, although their space is dark). There is an extra zero somewhere in there. Actually, I don't think the floor has that much space available. Abercrombie is out, Brooks Bros. is out. Maybe it stretches up into the office space and actually helps out the CMBS loan (which does not include retail) - the $psf might actually make more sense that way too (assuming the 89k is correct). It could be - I see they have a 51k square foot space at 546 Broadway (JPMCC 2007-LDPX).

666 Fifth Avenue gone to special

666 Fifth Avenue transferred to special seeking modification:

"Since the 666 Fifth Avenue loan does not mature until 2017, the special servicer must believe it is in the best interest of the trust to work with the borrower on a loan modification rather than taking control of the property in a depressed market and declining fundamentals," Mancuso said.

This loan does not cover it's debt service by a long shot, despite being 86% occupied (although a portion of that space is dark and likely at lower leases then today's market - in the $60s for class A in midtown). They're current monthly shortfall amount, is about $2mm, not small, but they do have a $70mm reserve balance - 70/2 equals 35 months until it dies at the current pace. The reserve balance is thanks in part to selling half the equity in 2008 to Carlyle Group, and it's not listed in the reserve report from the servicer (which has got to make you a little uneasy).

The big issue is the Orrick space which accounted for something like 232k sq ft at $45 psf will roll at the end of this month and they are leaving ($10.4mm per year in revenue, roughly). They have no firm prospects, but have 3 proposals out currently asking $70/psf (~$16.2mm revenue). Again, midtown class A is more like $60 psf (~$13.9mm revenue).

Can the servicer even allow a modification if there really is 3 years worth of debt service still in there? Are there any automatic ASERs associated with this event?

The total loan is huge - to quote the article, Kushner defined the top with this deal. $1.215billion is split into 8 different A-notes: Pari Passu loans A-1 & A-2 Notes ($124.5mm each securitized in GECMC 2007-C1), A-3 & A-4 Notes ($197.5mm each, securitized in WBCMT 2007-C31), A-5, A-6 & A-7 Notes ($142.75M each, securitized In WBCMT 2007-C33), and an A-5 Note ($142.75mm). These deals were brought to you by Wachovia and BoA, if anyone is keeping track - blame Charlotte this time.