An article in Crain’s New York Business on Friday stated that Tishman Speyer and Related Cos. are each trying to lure Deutsche Bank to forthcoming developments in Hudson Yards on Manhattan’s West Side. If the bank chooses to pursue a deal with either firm, CMBS investors should take note of three 2007 deals that would be affected by a move.
Deutsche Bank is the majority tenant at 60 Wall Street in lower Manhattan. The 1.6 million square-foot property backs $540 million of CMBS debt spread across three 2007 deals. A $285 million piece backs 11.6% of COMM 2007-C9, a $130 million slice represents 6.7% of CSMC 2007-C5, and a $125 million portion that counts as 5.8% of MSC 2007-IQ16.
At securitization, Deutsche was the sole tenant in the building. According to original deal docs, the firm was granted options to shed 150,000 square feet in the 6th and the 11th year of the lease. The Crain’s article notes that the firm gave back more than 100,000 square feet in 2012. It also mentions that “[t]he bank’s lease [at 60 Wall] stretches until 2021, but it has the option to downsize there three years from now in 2017, just enough time to deliver a new tower at either development for its occupancy.”
Upon our review of the deal documents, it appears that Deutsche’s lease goes until 2022 and the company can only turn over another 150,000 square feet in 2017. We will look to confirm that with Crain’s. The loan is current and matures in 2017.
Two Big Manhattan Loans to Refinance, 2006 Deal Could See Big CE Boost
According to Commercial Mortgage Alert, both 520 Madison and Roosevelt Hotel will be refinanced in the near future. Tishman Speyer is seeking $675 million on 520 Madison, which currently carries a $475 million loan securitized as 20.6% of LBUBS 2006-C7. The borrower behind the Roosevelt Hotel has agreed to a deal with JP Morgan to pay down a $75 million floating loan that backs 17.4% of JPMCC 2012-FL2.
A prepayment of 520 Madison would be a huge boost for mezz bondholders in the LBUBS deal. The note matures in late 2016 and is locked out for another two years, which means a big defeasance could be in the cards for the deal. The property is an almost one million square-foot office building in midtown Manhattan. Jeffries is the primary tenant with 35% of space. Year-end 2013 DSCR was a healthy 1.94x on 91% occupancy. The CMA article also mentions a $125 million mezzanine loan on the office building. The loan Tishman is looking for implies a valuation of around $1.35 billion. LBUBS 2006-C7 currently carries shortfalls all the way up to the AJ tranche and has taken 6.5% in cumulative bond losses to date.
The Roosevelt Hotel is a 1,015-unit hotel built in 1924 that is located just a few blocks south of 520 Madison. The $75 million loan is the second largest in JPMCC 2012-FL2. According to CMA, there is another $56.5 million in mezzanine debt on the building. The loan is due to mature in October of this year, holds three one-year extension options, and is now freely prepayable.
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