Member News

TREPP LLC Trading Alert: Wall Street Property Behind Previously Modified Loan Sold

According to a story by Lois Weiss of the New York Post100 Wall Street has been sold for $275 million, or $528 per square foot, to Cornerstone Real Estate Advisors. The property backs a $115.8 million loan that makes up 6.3% of LBUBS 2007-C6. For CMBS investors, the takeaways are that the credit enhancement for the deal will improve and that the loan can prepay freely now, 13 months before its June 2016 maturity date. The article states that the deal will close this summer.

The A-4 bond will be the one to watch when trading. Assuming the 100 Wall Street loan pays off in July and all other loans run out to maturity, the average life of the A-4 drops from 1.54 years to 1.41 years. The last time we saw the bond on a bid list was in March when it was talked at 190 over. That level gives the bond a high $104 handle using the same spread and current rates. The bond loses 30 basis points of yield between the 0/0 scenario and the prepay-100-Wall-Street-in-July scenario.

In 2011 the loan was sent to special servicing after its DSCR fell below 1.0x. Later the loan was modified, which included the borrowers receiving a four-year extension. DSCR for the note has increased from 0.64x in 2013 to 0.81x in 2014. According to the New York Post report, current owner Savanna has recently signed five new leases that have brought occupancy up to 97%.

The property is a 482,000 square-foot office in lower Manhattan that was built in 1969.  Broadway Partners sponsored the loan. The property changed hands multiple times since securitization and at one point included a default on the mezzanine loan. Savanna bought the property in 2011 for $120 million.

Value of NJ Office Drops Sharply After Sony Departure

About a year ago we noted that the New Jersey Economic Development Authority was processing a grant for Sony Music to bring the company from Manhattan to Rutherford, New Jersey. At the time, there were rumors that the firm might move its staff from a Lyndhurst, New Jersey location. Sony did end up leaving Lyndhurst and the loan we were concerned about, the $14.5 million 210 Clay Avenue note, is now going through the foreclosure process.

Sony occupied over 80% of the 121,203 square-foot New Jersey office with a lease that ended in December 2014. The loan represents 1.1% of WBCMT 2006-C26 and matures in May 2016.

When the loan was made in 2006, the property was valued at $21.5 million. This month the property value was reduced to $6.1 million. Prior to this month, the loan had been carrying the standard 25% appraisal reduction haircut. The reduction has now been upped to $7.8 million. Special servicer comments indicate that the property is only 13% occupied.

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