Skyline officially goes to Special

As Vornado reported in February they let the Skyline portfolio transfer to special servicing yesterday. They blame the drop in occupancy (74%) on BRAC, which has caused havoc in some submarkets (i.e. for Falls Church VA it has been negative, but in markets such as Huntsville, AL it's been positive). They also noted that another 157k sf could be lost in 2012 and a total of 408k sf could be lost by 2016, all related to BRAC.

h/t crabsofsteel

350 Park Avenue Refinances

Vornado refinanced the $430mm loan on 350 Park Avenue, which represented 5.59% of the collateral in WBCMT 2007-C30, into a new $300mm senior mortgage and the remainder was paid down in cash.

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

Bank of America Center Refied

This $845mm loan refied last week - BACM 2004-4 ($150mm senior, $103mm rake legs), BACM 2004-5 ($137mm), MLMT 2004-BPC1 ($130mm), and $230mm in Mezz.

The new debt ($600mm) was provided by Pac Life and Met Life, carries a 5.1% coupon, 10 year balloon, amortizing structure.

This 1.8mm square foot office is 93% leased at an average rate of $56.35/sf with the major tenants being BofA (659k sf), Kirkland & Ellis (125k sf), and UBS (107k sf).

Vornado purchased a 70% stake of this property and 1290 Avenue of the Americas in 2007.

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.

New Issue - Vornado $600mm+

Coming soon. Will update with details when known.

Rally fizzled on Friday - as it should...

The looser guidance of the IRS drove a rally initially, but I think the market will back up. It's like the market found out a girl that it was hot for had just decided to become a prostitute, and it got excited about the imminent action, but after a roll in the hay has realized it can never take her home to see the parentals. She'll still come in useful in the future though.

Things simply aren't good either.

• CRENews.com had an article out summarizing the rating actions year-to-date: 3,405 CMBS Downgrades, Only 82 Upgrades. Keeping in mind that rating agencies are extremely reactionary by nature (rather than making calls on the future - just wait until we actually have widespread problems).
• PCV/ST is defaulting imminently, along with a number of other high profile loans that are not cashflowing. I'm calling for a December default on PCV/ST with an over/under of 1 month - bets are now being taken.
• European CMBS loans were structured in an inherently weaker fashion in many regards, but also have additional covenants that lead to defaults faster (to protect the investor). That market is unraveling a little ahead of the domestic market. Not too mention there was ruling recently in France that allowed a Lehman-owned office building to pursue a workout strategy - DESPITE the fact that the bondholders wanted to take over the already defaulted loan as would normally happen. They're rewriting contract law everywhere, to the detriment of real estate investors, it is not just a domestic issue!
• The IRS changes its mind all the time. I'll bet a small sum that 10-years down the road we'll be able to look back and talk about a REMIC that was broken up because of some loan mod they decided they didn't like.
  
• Not to mention that some current- and next-pay AAA bond holders are going to be up in arms over the new IRS guidance - They already are.
  
• Will TALF new issue be successful? It has some draw backs that make it even less interesting to investors than the legacy TALF, which frankly hasn't seen much demand because it was structured so poorly (on purpose) by NYFRB.
  
• If new issue TALF isn't successful, we're going to have problems. The first new issue TALF deal should be DDR's - they have $900mm CMBS loans maturing next year, and another $500mm in 2011.
  
• CMBS maturities are nothing compared to banks/thrifts, but some REITs have a lot of CMBS mortgage debt to roll (I still can't believe that idiot, Cramer, would tell you to buy REITs right now). The ones with the largest maturities (all are >$500mm) next year are, in order, GGP, Vornado, DDR, Simon, Colonial, and Regency.
• Looking at REIT CMBS loan maturities over the next 3 years that exceed $1 billion, you end up with a similar list: GGP, Vornado, DDR, Simon, Regency, and Brookfield. Brookfield is an addition to the list, and has the second largest maturity schedule ($3.6billion) due the mortgages it used in the Trizec acquisition back in 2006. It has another $2 billion or so of CMBS loans due after 2012 as well.