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

Cantor 2011-1 - $1 billion

Cantor is putting together a $1 billion CMBS loan with Wells Fargo.

More than $3 billion in Loan Sales Coming...

Also on the CRENews website, from last week:

Since the beginning of September, loan-sales advisers have taken offers on some $1.5 billion of loans that they have been marketing on behalf of their bank, special servicer and government-agency clients. And the expectation is that substantially more loans - as much as $3 billion or more - will be offered in the coming weeks.

...
Among special servicers, LNR Partners, CWCapital Asset Management, C-III Asset Management and Midland Loan Services are each said to be preparing the sale of loans.

LNR will be offering $200 million of hotel loans through Jones Lang LaSalle and another $100 million of small-balance hotel loans through an auction venture of JLL and REDC. It will also be offering roughly $150 million of additional loans through DebtX.

Earlier this year, it [LNR] orchestrated the sale of a $1 billion portfolio that was comprised largely of small-balance loans. Those loans were sold through Eastdil Secured to four investor groups. But instead of going the bulk-sales route this time around, the Miami company is looking to sell loans individually.

CWCapital, meanwhile, will take bids for $207 million of loans later this month through Mission Capital. It has also offered loans through CB Richard Ellis and Eastdil.

The very excellent article goes on to list a number of other coming sales from banks including M&I, BB&T, KBW (for a third party) together are expected to sell another $2-3 billion in portfolio loans.

As previously noted, everyone was waiting to see how these late summer CMBS sales ($1.5 to $2 billion was CMBS loans via Eastdil and Mission Capital) went in order to judge what to do with the other $80 or so billion on special servicers' desks. At the end of the day, the big $1.04bln LNR package of small balance CMBS loans exceed expectations and were mostly bought up by a large financial institution and financed by another large financial institution (both household names) at higher than expected prices.

I don't know what that does to the market - so many buyers have to deploy capital or lose it, so maybe they acquiesce now that a high watermark has been set and they just keep bidding up prices. Surely sellers like the execution and will start flooding the market just as Orest Mandzy notes in the above article.

At the very least CMBS credit IO holders should probably start shortening their expected workout periods on the aged REOs. The LNR sale was officially announced on 4/29/2010 (there were some early looks in mid-April) and the losses were reflected on the loans on 7/21/2010. That seems pretty quick to me.

Wells Fargo/Principal teaming up again

Wells has both been hiring and originating in recent months to come to market with a deal, one would presume, in the not-so-distant future. Earlier today Bloomberg had a story linked to CRENews (subscription required) that Principal was coming back and would originate deals for the new Wells shelf.

Historically Principal and Wells, pre-Wachovia, co-contributed to the PWR, TOP, and IQ brands.