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NYC Loan to Be Refinanced – Early Payoff Would Take Out 98% of 2005 Class

If you are not already running the $194.2 million 909 Third Avenue loan to payoff at first open, you probably should, especially if you’re looking at the A-4 class. According to a report in Friday’s Commercial Mortgage Alert, Ladder Capital has been tabbed to refinance the loan. According to the article, it will most likely be securitized as a stand-alone, fixed rate deal over the next few weeks.

The loan’s open period is longer than many: it is slated to mature in April 2015 but can prepay in October. The six month open period compares to three months or less for most loans. We would expect the loan to be defeased in the near term and then payoff in October. The loan makes up over 19% of LBUBS 2005-C2.

The news will be well-received by holders of mezz debt in the LBUBS deal, as the credit enhancement will get a big lift. That deal has already seen over 10% of its collateral defeased. A defeasance of 909 Third would push that up to almost 30%. The risk, however, would be to the A-4 class. A payoff in October would change the A-4 bond from a 0.90 year average life to a 0.62 year average life, as 98% of the bond would get taken out by an October repayment the loan.

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