138 Spring Street (WBCMT 2007-C32) sells at a 3% cap rate?

Rivercrest Realty Investors apparently sold the property for $48.5mm, over twice the outstanding CMBS note of $23.5mm (0.78% of WBCMT 2007-C32). The property has retail at street level and offices upstairs. The DSCR for 1Q 2013 was 1.07 with 85% occupancy. It is not clear if the loan is to be assumed or defeased, but it is in defeasance for the next 45 months.

I suppose this shouldn't be too much of a surprise. SoHo's average retail rents were up substantially during the first quarter with average rents of $850 just 1 block north of this location on Prince Street. And, $850 is old news. In February Prada paid $1,000 psf for the 100 Prince Street 10,000sf store, and at 120 Prince Street, asking rents are purportedly going up to $1,200 psf by end of the year.

Beacon and Seattle

Deutsche Bank had an article out early this morning (I was actually at my desk when it hit, which is unusual in and of itself, and it scared me when I got an email) on Beacon and Seattle.

It was very detailed and well done, and I'm not going to do it proper justice, but the basic premise was that the senior bond holders are not getting a fair shake - this loan in particular spans 6 different CMBS deals with projected shortfalls breaching the AJs on two of the deals. Noting in the conclusion that the sales prices on the released properties have exceeded $1.1billion, while less than $840mm of the senior debt has been retired.

Market Square sold for $615mm

I know, I know, I'm a little behind, but late is better than never.

The trophy DC office property located on the 700 and 800 blocks of Pennsylvania Avenue was part of the Beacon Seattle Portfolio in WBCMT 2007-C31, WBCMT 2007-C32, BSCMS 2007-PW16, BACM 2007-2, MSC 2007-IQ14, and MSC 2007-HQ12. The $905 psf price implies an approximate cap rate of 4.22%.

Note that the $2.644b loan (20 properties) was extended from a May 2012 maturity to a 2017 maturity, and this should result in a partial and substantial release from the loan.

I'd definitely keep an eye out on any current- or next-pay bonds on these deals. For example, it represents 15.66% of the collateral behind the WBCMT 2007-C31 A2 that is currently offered at 255 $104-11 - all else equal, if you assume the full sales price is released, you lose nearly 100 bps of yield and your bond shortens by over 1 year. And, as Barclays pointed out earlier this week, or maybe last week, the reserve requirements are likely to go down as well resulting in further releases.