It may not be the Powerball, but the ship has come in for those who bet that the $3 billion Peter Cooper Village and Stuyvesant Town would pay off in full in January 2016. Ever since the sale of the complex was announced in late 2015, CMBS investors knew this day was coming; the only question was “when?” A lawsuit from a lender of mezzanine debt, followed by the trustee asking for clarification on the exact distribution for the repayment proceeds cast some doubt on precisely when the payoff date would come.
The first deal with StuyTown exposure to post its remittance report was MLCFC 2007-6. The report showed that the $202.2 million piece of the note had been passed through, repaying that sum to the A-1A class. The piece represented 69% of the A-1A class’s remaining balance and 11.3% of the entire deal.
For investors in the mezzanine classes, there were sizable repayments of prior interest shortfalls. For example, the C class in that deal received interest exceeding 20% of the class’s face amount.
So what are the ramifications? First of all, the CMBS market will see a huge drop in the overall delinquency rate and a huge reduction in the multifamily rate. Second, many of the mezzanine classes should see a sizable re-pricing of their values. As much of the accrued interest shortfalls put a floor price under many of these classes, the flushing through of that money will require everyone to reset their expectations.
All that said, there are still questions surrounding the distribution. Wells Fargo put out this notice with its remittance for MLCFC 2007-5 this morning:
“The attached notice (the “Trustee Notice”) is being sent to you solely from U.S. Bank National Association, as Trustee (“U.S. Bank”). Please be advised that Wells Fargo Bank, N.A., as Certificate Administrator (“Wells Fargo”), (i) makes no representations or warranties about the accuracy, completeness, truthfulness, and/or genuineness of any of the information provided by U.S. Bank in the Trustee Notice, (ii) shall have no responsibility, and shall incur no liability, relating to the accuracy, completeness, truthfulness, and/or genuineness of any of the information provided by U.S. Bank in the Trustee Notice, and (iii) makes no recommendation as to any particular response to the Trustee Notice. Please be further advised that Wells Fargo’s delivery of the Trustee Notice is not, and shall not be deemed to be, Wells Fargo’s agreement with any of the statements, allegations, or positions asserted, taken, or otherwise provided by U.S. Bank in the Trustee Notice.”
All five of the deals with StuyTown exposure should roll over the next few days. So before trading, please make sure that the data you are looking for is as of January, not December. Congratulations to all those that saw this coming five years ago and held on for the ride.
Compliments of Trepp, LLC – A member of the EACCNY.