2600 Michelson - CSMC 2007-C4

CMA reported today that 2600 Michelson was acquired for $70mmand the loan assumed, but modified into a $70mm A note with IO payments at 5.33% and a $25mm B note. The new sponsor put in $9.5mm to partially pay down the A note balance (by $3.5mm) and $6mm went to reserves. Any profits are split in some fashion to send equity back to the new sponsors and hyper-Am down the B note.

It also noted that KBS Real Estate Investment's $15mm mezz note on the property was worthless.

Comings and Goings

• In new issue we have snow, snow, and more snow. I heard one report this morning on the radio that every state except Florida had snow on the ground - even Hawaii!

• In all seriousness, the mainstream media and sell-side research continues to kick out articles on the new issue resurgence expected in 2011 in CMBS. See here, here, and here.

• Trepp came out last week noting that delinquencies were at an all-time high at 9.2%.

• 245 Fifth is on the market looking for a $170mm transaction price, and they'll probably get it given the upside in rents that is going to start being realized immediately as rent-free periods ended in late-2010 and rolling leases are below current market rates. The 310k sq ft office building is in CSMC 2007-C4 with a $140mm senior mortgage, 95% occupancy, 1.05x NCF DSCR, and a declining $2mm reserve balance (down from $3.6mm in April 2010). Citibank occupies 15% of NRA, Datamonitor has 9%, and Beth Israel Medical has 5% (had free rent through the end of 2010!). The mortgage is due on 5/11/2012.
  

Calendar:

The Golub Program

Cuomo has loaded his 50cal and has the sights squarely aimed at Vantage Properties for the whole kick out the pesky rent control tenants and replace them with market-paying tenants strategy.

Vantage & Apollo (aka AREA) Multifamily + CMBS Loan deals:
Esquire Portfolio (1.49%; CSMC 2007-C4)
Broadway Portfolio (2.13%, CSMC 2007-C2)
Savoy Park (6.25%, CSMC 2007-C1) (fka Delano Village)

"Vantage's business plans refer to this strategy of removing tenants from rent-regulated apartments to convert them to market rate apartments as the company's 'Golub program,'" the New York Attorney General's letter states. "Vantage's business plans highlight its Golub program as a means of generating tenant turnover. As reflected in Vantage's annual reports to investors and business plans, Vantage's business goals are to "generate unit turnover through active management of the Golub program and other legal efforts."

"The investigation revealed that Vantage often failed to exercise due diligence prior to serving tenants with Golub notices or other legal termination notices," the letter continued. "Vantage often commenced Housing Court proceedings seeking to evict tenants from homes in which they had lived for decades based on little more than database reports, which were often incorrect, or contradicted by other evidence in Vantage's possession."
..."Any experienced commercial real estate operator in New York would know better than to engage in the practices alleged in the AG's letter," said Charles Cecil, partner and CEO of Opin Partners, a CMBS and real estate investment advisor and investment management firm in New York.

The "Golub Program" is not a new movie in the Bourne series, but I liked it as a headline. It is just what Vantage termed it's strategy in reference to the "Golub Notice" that is required to be delivered to the tenant 90-150 days prior to eviction/removal from stabilized rent.

I'll update these as I discover more. Cuomo also took out a GBU-24 Paveway III and aimed it Ken Lewis and BOA this morning, and took off his white glove and smacked Moynihan across the face several times and challenged him to a pissing contest. Very busy over at the AG office today.