Downtown, Revisted

We recently covered an area of downtown New York that got roughed up during Superstorm Sandy.  This past week, the NY Times and WSJ caught up with some of the aftermath and today's post will cover 4 New York Plaza and 199 Water Street.

The news for 199 Water Street isn't all that great.  NYT tries to mollify the status of the building but here are some facts gleaned from the article.

1. Wells Fargo isn't rolling the lease when it expires in 2015.  They are currently taking up 325K square feet out of 1.1M which is about 30%.
2. Clean-up and repairs will cost around $50M
3. The space needed to host the electrical switchboards (replacing the ones damaged from the flood) will cannibalize space that could be used for leasing.
1. The building is currently 94% occupied so it's not like there's much room to stuff the electrical boards into.

Mind you, the building represents a hefty chunk (~11%) of the collateral in MSC 2007-HQ11.

As for 4 New York Plaza, the 1M square-foot building bought in 2012 for $270M by a joint-venture that includes HSBC, has yet to see it's main tenants move back into the building.  Overhauling the building is likely to cost around $60M.  Concrete Jungle covered some of the aspects of this building this past summer.

The articles try to provide a positive spin on the situation, but as far as I'm concerned, until Flavors Cafe at 175 Water Street is up and running again, this area is a long ways away from it's former glory.

~-Jingle Male

Guess Who's Back

Today seems like an odd day for the fringes of the credit markets.

1. First you have Hunter at Distressed Debt Investing who is basically decrying the current state of the HY markets as "out of control".
2. Second, you have Bloomberg writing a piece on CRE CDOs making a comeback.  But don't call it a comeback!  And honestly, don't you dare call it a CRE CDO neither, call it a "collateralized loan obligation".   
3. And then, like a phoenix rising from the ashes, the WSJ prints a piece that symbolizes the return of the B-piece buyer.  He's not trying to repack his residual holdings into a CDO anymore though; those days are long gone.  Eric Hillenbrand and his crew have turned a new leaf.  Welcome back gents and if anyone knows where Andy Stone has gone to, please tell him he is missed.

Usually my first instinct is to take the opposing view when the mainstream media prints stories of how a certain asset class is "toppy" but I just don't know what to believe anymore.

~Jingle Male

Best Bye Bye

More talk about Best Buy today:

1. RetailTraffic Blog's Elaine Misonzhnik examines how unlikely a buy out is. You should click through - we're big fans of her over here.
2. The WSJ article is patently absurd and suggests that it will be problematic hiring a CEO because the majority stockholder and founder remains as Chairman and keeps a tightened grip on the company. That is exactly what we need to change with CEOs (and Presidents) in this country, ones that do what the majority owners want them to do and they need to be able to share power with other executives. If I wasn't stealing access to the WSJ, I'd probably cancel my subscription over such hogwash. However, given my grey market access, I shall not complain too loudly and will likely continue reading it if is so that I may act defiantly stunned at their frequent misconception of the issues!

GGP Spinoff, Rouse, to be a B-Mall Consolidator

WSJ reports:

"Rouse is being created to be a B-mall consolidator," Mr. Mathrani said in a December interview at General Growth's Chicago headquarters. "They can actually be a viable, strong B-mall company. We're putting assets into this business that are good assets."

Brookfield to shore up Rouse:

As a 40% shareholder in General Growth, Brookfield will own 40% of Rouse upon the spinoff. Brookfield also has pledged to backstop a $200 million secondary offering of shares by Rouse early this year, meaning Brookfield will purchase any shares not bought by other investors.

Innkeepers sues Cerberus and Chatham

Dealbreaker - with nice imagery
WSJ - more detail

Innkeepers USA Trust said Cerberus Capital Management LP abandoned a $1.12 billion deal to buy the hotelier as part of a ploy to pay a lower price and must close the transaction or pay "substantial damages."

In a lawsuit filed Monday in a federal bankruptcy court in New York, Innkeepers said the two sides "stood at the goal line" Aug. 5 to consummate the deal when the private-equity firm told the hotel owner it wouldn't close, offering "no explanation." The decision upended plans by Innkeepers to exit bankruptcy protection, where it has been since July 2010.

Cerberus, which had agreed to buy 64 Innkeepers hotels with partner Chatham Lodging Trust, terminated the deal earlier this month, saying a "material adverse effect" had occurred that gave it permission to walk away. The buyout firm has since asked for a $20 million deposit on the deal to be returned.

510 Madison trades at $1,000 psf

BXP buys from Macklowe the WSJ reports. On the one hand, that's the richest price we've seen since this little journey into the fourth circle of our own little CRE inferno, but at the same time BXP speculates in the article that Macklowe probably lost all his equity and they're basically buying the debt.