Google offers to buy 111 8th Avenue for $1.9billion

This has a $500mm pari passu senior split up between GCCFC 2004-GG1, GSMS 2004-GG2, MSC 2004-IQ7, MSC 2005-HQ5, and GMACC 2004-C2. It was appraised at $800mm in '04. Current debt matures in April 2014 and carries a 5.78% coupon. It is not clear if they're assuming the debt or working out some new financing. Based on YE '09 numbers that represents a 4.1% cap rate (I realize the WSJ quoted some odd "yield" at the bottom, but I don't know what they're talking about - they don't either)


The WSJ reports:

Google occupies about 500,000 square feet in the building and earlier this fall was reported to be a front-runner in the bidding for the property. The company won partly because it knew the building well and was willing to close the deal before the end of the year, according to people familiar with the matter. While the deal could still fall apart, that is unlikely because the contract is binding and Google has put down a large deposit, these people said.

GGP Defaults on CMBS loans

Again, others follow GGP more closely than I, but it would be remiss of me not to send you today's headline story. GGP had a maturity default (or near-maturity in 1 case) on three (3) CMBS loans in two different deals, S&P & Moody's quickly downgraded the company to C, multiple executives were changed out, and they face a 5pm (today) deadline on debt unrelated to the CMBS deals.

The kicker on the CMBS deals, is that the malls are performing wonderfully (even though they ARE malls). Here are the numbers:

LBUBS 2004-C4

• Town East Mall
• $105mm outstanding sr. mtg.
• Matures 4/11/09
• 3Q 08 NCF DSCR 2.45 and Occupany at 99%
• 3 Major Tenants: Sears, Dillard's, JCP
• Next Pay Bond: A2 - $185mm outstanding. Likely to extend in foreclosure.

GCCFC 2004-GG1

• Southland Mall
• $81.3 outstanding
• Matured 3/1/09
• 3Q 08 NCF DSCR 2.69 and Occupany at 98%
• 3 Major Tenants: Sears, Macy's, JCP

• Deerbrook Mall
• $73.8 outstanding
• Matured 3/1/09
• 3Q 08 NCF DSCR 2.55 and Occupany at 99%
• 3 Major Tenants: Dillard's, Sears, Macy's

• Next Pay Bond: A3 - $54mm outstanding. Likely to extend in foreclosure.
• Remaining partially pays down A4 - $296mm outstanding

These two deals are likely to face extensions, and there might be some plays around timing that extension - the near-pay bonds are all trading with high-teen yields; and the b-pieces are likely trading for next to nothing. The more interesting CMBS trade would be to pick up near-pays on other CMBS deals with GGP exposure; these would pay off early if GGP has to sell assets. People have already piled in on this trade, though, so you'd be arriving fashionably late.

GGP's maturing CMBS debt by year:

Mat. Year	Curr. Balance	Num. Loans
2009	1,540,257,761	16
2010	3,780,728,494	37
2011	5,233,299,013	39
2012	1,521,498,883	16
2013	1,001,499,652	15