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.

Astounding! Rare! May be in Jeapordy!

Big impact words used in multiple articles about loan that sells for more than it's outstanding mortgage balance:

The DJ News headline characterizes it as "rare",

CMBS Investors Get Rare Payoff On '07 Loan

DB says,

Harris Trifon, a commercial mortgage bond strategist at Deutsche Bank, characterized the sale as "astounding"

DJ states,

By actually turning a profit on the loan, which it has been trying to resolve for three years, troubled-loan specialist firm CW Capital Asset Management has demonstrated that in some cases, patience pays.

It sure does! They charged $10.6mm in fees! That is like 14.5% of the loan's balance - not only did they manage to not get sued by the CMBS trust holders, support their own weakened B-Piece position, make a great deal with BlackRock and Korman (the buyers), but they completely ripped the face off the sponsor while he was down. Awesome! Riveting!


Do you know what else is rare and astounding? The Ossabaw Island Hog. Pig roast anyone?

Two California Plaza - Update your models to "PENDING MODIFICATION"

Located in the heart of the U.S.'s former subprime operations headquarters (#3 tenant was Aames), Two California Plaza ($470mm senior in GSMS 2007-GG10 representing 6.30% of the deal) long ago depleted debt service reserves and was coasting on cash from the sponsor (Maguire/MPG). As of the end of the first half of this year, it's NCF DSCR was at 0.92x with 84% occupancy - not horrible, considering, but most investors have been angling for this property to get modified.



Earlier today David Weinstein (MPG CEO) stated

Two California Plaza as part of its core set of assets, and expects to have the opportunity to explore various potential options for doing so once the asset is transferred into special servicing. At this time, we do not believe that funding current and projected operating deficits at this asset with the Company’s precious unrestricted cash is in the best interests of our stockholders.

It originally traded at the peak at a 5% cap rate, roughly. If you apply that same cap rate to today's cash flows, you get a value of $507mm, still above the senior. That is too optimistic a view, in my opinion, but it's not horribly off either for a trophy asset like this. A 6% cap rate dings the first mortgage.

The maturity date is not until 2017, and the coupon is 5.5%. Not clear on what type of modification they are after, but it is definitely headed that way.

Hotel Burnham defaults

Crain's reports (sorry no link) that the Chicago Hotel Burnham missed it's July and August payments.

“We’re not in a desperate situation here,” Mr. McCaffery says. “There’s no intention on my or Barry Mansur’s part to let this hotel go.”

The problem, according to Mr. McCaffery, is that he can’t start restructuring negotiations until the loan falls into default. A CMBS borrower typically can seek relief only after a loan is transferred to a so-called special servicer hired to work out problem loans in the pool. That hasn’t happened yet with the Hotel Burnham loan.

The hotel could cover its monthly payments if necessary, Mr. McCaffery says, but “you can’t get their attention until you default.”

The loan is in GG10 and has a 0.81x NCF DSCR (despite what the story says about the "Bloomberg data" where the property is cash flowing) - the NOI DSCR is 1.01x for the 1Q 09 TTM.