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

575 Lex negotiations falter...

Nomura and Crain's reported this morning that talks broke down between the owners (CalSTRS and Silverstein) and Rockrose Development and the owners have taken the property off the market.

Our previous posts on the property are here.

I haven't seen the front pays trade in a couple of weeks, but this definitely pushes the BACM 2007-2 A2 out much longer(years, not months) than if the loan had paid off. BACM 2007-1 A2 is a little different with 2 large maturity defaults that could resolve and several large loans due in the 1Q 2013, then the A3 doesn't start getting additional paydowns until late 3015 and mid 2016.

575 Lex Under Contract

Nomura and Barclays both stated this loan is under contract, pointing out that the reported sales price of $370mm is well north of the $257mm loan balance and the most recent appraisal. Nomura referenced a Bloomberg story, but I missed it.

My absence tends to fuel market rallies, based on historical evidence, so I wanted to let everyone know I'm taking off for the rest of the week. You may want to load up on bonds before the day is over.

Various Loan Updates

Barclays cranked out notes on a number of resolutions, modifications, and appraisals the last few weeks. I went back over the last few weeks and updated any that I missed or didn't post from elsewhere:

WBCMT 2007-C31 - Lembi Portfolio $142.5mm 9/14/11
AREA Properties purchased a portion of the portfolio (20 of the 29 properties) for $59.6mm. BCG estimates a 25% severity related to that purchase, and speculates that the purchase covers the 20 REO properties that accounted for $63mm of the original balance.

LBUBS 2006-C7 AJ takes a shortfall 8/17/11

MSC 2006-IQ12 - $250mm RREEF Industrial Portfolio to be sold. BCG anticipates the loan will be assumed. 8/17/11

BACM 2007-1 and BACM 2007-2 -- $325mm 575 Lexington Avenue. new appraisal is up 30%. See additional comments here. 8/16/11

GCCFC 2007-GG9 - $305mm Schron Portfolio appraised at $121.2mm 8/12/11


WBCMT 2004-C10 and WBCMT 2004-C11 - $500mm Starret-Lehigh refinanced. 8/11/11

575 Lexington Foreclosure

Saw a note circulated today, but no additional news since. It's in BACM 2007-1 and BACM 2007-2.

Of course, 11 months ago it was "imminent" too...

575 Lexington Default Imminent - BACM 2007-1, BACM 2007-2

575 Lexington Default Imminent...

Silverstein and Calstrs paid $400 million for the building. The balance on a loan being transfered to so-called special servicing is $325 million, Fitch said.

The CMBS loan is

• split into two $162.5mm pari passu notes.
• LNR is the Special
• YE '09 DSCR 0.71x; Occupancy at 89%; $14.4mm NOI (underwater at even tight cap rates)
  
• 639,685 Square Feet. Includes Cornell University (16.63%; expires 3/2018).
• Special Servicer notes that the Feb 2009 inspection rating was "Fair" and that the borrower is asking $70+psf rents on vacant space. Average Class A Manhattan Office is more like $60-$65 psf.
• Unlike a lot of other NYC Office that is underwater, there is $0 in the Debt Service Reserve on this property. There is a small Replacement reserve ($432k) and a $6.2mm TI/LC reserve account.

Solana in WSJ: BACM 2007-1 and JPMCC 2007-LDPX

Solana was featured in the WSJ today regarding it's request for debt relief, which we commented on in early March, here.

Nothing much new. Noted that Travelocity did not renew it's 145k sq ft lease (they have a total of 540k sq ft), and that revenue was down 60% at the Marriott. Maguire is the guarantor, the person not the company, and has defended the request as just standard paper pushing - it is not standard when you call up the special servicer (unless you work at a distressed debt fund).

I really don't like Travelocity - you can't open your travel plans in different windows/tabs - it will just crash. They went to some effort to make it work in a non-userfriendly way, as evidenced by American Express travel, which uses Travelocity's framework for their website but just brands it as AmEx Travel. The American Express website doesn't have all the non-user-friendly bits. So, my point is that I'm negative on Solana.

Solana Seeks Debt Relief

Solana is a huge multi-use complex in Westlake, TX owned by Robert Maguire (the man, not the company). It was doing fine last year, but something obviously has gone wrong - its not clear what yet. However, we've never been a fan of Maguire's business model with so much exposure to California, and a surprisingly high amount of exposure to mortgage origination and servicer operations, and even more surprisingly high exposure to the subprime variety!

Solana is has pari passu mortgages in BACM 2007-1 and JPMCC 2007-LDPX.

Fitch:

Solana is secured by a 1.9 million square foot (sf) mixed-use property located in Westlake, TX. The property contains office, retail, and hotel components. The loan transferred to special servicing when the sponsor requested payment relief. As of June 2008, the servicer reported a debt service coverage ratio of 1.88 times (x) and occupancy of 98%.