New York Suburban Office Loan Worth Watching as Lead Tenant Announces Departure

The CD 2006-CD3 deal has had its share of problems over the last seven years. To date, losses have exceeded 7% of the pool balance and the G class (the 25% that remains) is the first loss bond. Over 8% of the pool has been modified and about 9% is delinquent as of November. Given all that, it is with great reluctance that we add another loan to the list of assets worth watching.

This one is the $80 million White Plains Plaza note. The loan makes up 3.2% of the deal and has never been delinquent. However the DSCR ratio has been very skinny over the last three years: 1.13x in 2011; 1.00x in 2012; and 1.06x for the first half of 2013. The collateral is a pair of buildings in the New York City suburb of White Plains. The two addresses are 445 Hamilton Avenue and One North Broadway. Together the offices total just over 700,000 square feet.

What caught our eye was a small piece in the New York section of Monday’s Wall Street Journal that noted that the lead tenant – law firm Jackson Lewis – would be taking new space at a separate White Plains location. (A press release on the matter is here).

Jackson Lewis currently occupies about 62,000 square feet at the One North Broadway address. The footprint represents about 9% of the space in the two buildings. The lease ends in September 2014. The buildings were reported to be 79% occupied per the latest servicer data. Given the narrow DSCR, the note bears watching for the moment. The loan does not mature until September 2016.

Compliments of Trepp, LLC – a EACCNY Member