Moody's Nukes 163 CMBS Classes Due To Maguire Toxic Exposure

Moody's has placed the following CMBS Classes on Downgrade review due to Maguire Properties Exposure:

• 15 CMBS Classes of WBCMT 2006-C28
• 10 CMBS Classes of MSC 2004-TOP13
• 14 CMBS Classes of WBCMT 2005-C18
• 14 CMBS Classes of JPMCC 2006-LDP8
• 14 CMBS Classes of GSMS 2005-GG4
• 17 CMBS Classes of GSMSC II 2007-GG10
• 19 CMBS Classes of CSMC 2007-C4
• 7 CMBS Classes of GCCFC 2003-C2
• 18 CMBS Classes of CSMC 2007-C3
• 12 CMBS Classes of BACM 2005-3
• 11 CMBS Classes of BSCMS 2004-TOP14
• 12 CMBS Classes of BACM 2006-6

And here is the reason why there is nothing to worry about in CRE, with or without the upcoming bailout.

Maguire continues to experience ongoing levels of high effective leverage, declining operating performance, and an inability to cover dividends from operating cash flow. Currently, Maguire has a low fixed coverage ratio of 0.87x (recurring EBITDA as a percentage of interest expense plus deferred dividends and capitalized interest) as of June 30, 2009, as well as high leverage (debt plus preferred equity as a share of gross assets) of 96.2% and high secured debt as a share of gross assets of 91.2%.

As part of a plan to put the company back on track with a focus on a smaller core portfolio, Maguire announced on August 10, 2009 that they had disposed of one property and its associated debt from their wholly owned portfolio. In addition, Maguire announced that they had contacted the master servicer for six mortgage loans in commercial mortgage backed securities ("CMBS") transactions and advised them that they would no longer fund cash shortfalls associated with the respective mortgages. The aforementioned loans are not part of this transaction.

Most Maguire properties are located in California in either Los Angeles or Orange Counties, both of which have experienced significant rent and occupancy declines over the last year. Over the next two years, Torto Wheaton Research ("TWR") has forecasted Los Angeles County office rents to decline from $26.67 per square foot ("PSF") to $23.85 PSF and vacancy rates to increase from 14.4% to 19.0%. A similar outcome is forecast for Orange County where average rents are expected to decline from $25.10 to $20.75 PSF and vacancy rates are expected to increase from 19.1% to 20.2%.

Mr Pink's long time buddy, Jon Brooks, can not be too happy.

Comments

[mgarrett84]

How is this impacting Credit market?  CDS LIBOR OIS???   Been wondering how the expiration of a lot of the fed facilities will impact these markets as well.  Interesting to hear FOMC on this. 

[Miles Kendig]

Anyone remember the history behind the great Galveston Hurricane of 1900?

The dark clouds are beginning to form.

http://www.eyewitnesstohistory.com/galveston.htm

http://en.wikipedia.org/wiki/1900_Galveston_hurricane

[Gilgamesh]

Ah, this would explain the steady buying of REITs since 11:15...

http://finance.yahoo.com/echarts?s=SPG#chart7:symbol=spg;range=1d;compare=bxp+mac+vno+^gspc+cli+dre+vtr;indicator=split+volume;charttype=line;crosshair=on;ohlcvalues=1;logscale=on;source=undefined

[Milton]

PNC and USBank (another Buffet p.o.s.) going down for the count due to CRE. From Bloomberg TV:

http://www.clipsyndicate.com/video/play/1052379/commercial_real_estate_hurts_banks

[robe4 (not verified)]

Earlier this year, China put to death Wang Zhendong, chairman of Yingkou Donghua Trading Group Co.

We just can not compete with the vast amounts of money being used to

influence decisions. The Rich says"

good articles;

href="http://www.iamned.com" target="_blank">my newest bookmarked finance website

[Anonymous]

"The seven buildings, with 4.2 million square feet, make up about 20% of Maguire's portfolio. ... The company still has $3.5 billion in debt, and some analysts say that amount exceeds the value of its remaining properties. "Almost every building in [Maguire's] portfolio is under water," says Michael Knott, an analyst with Green Street Advisors."

[Jim_Rockford]

http://www.bambinomusical.com/Scollay/Madisonanim1.gif

[deadhead]

wonder if they'll pull an s&p and reverse in a few days.......

[wolphkaat]

Did we say downgrade review? Well that was a typo... were upgrading to AAA.

[Anonymous]

Uncle Sam loves the idea of bailing out CRE because it lets them continue to bail the banks out (indirectly) while appearing to dole the money out to some other distressed industry...

Watch for the coming spin: "We're saving your Main Street". "We're protecting the local business infrastructure". Etc.

CRE is the great crash of the future... and at this rate it always will be.

[deadhead]

TD....for you from RAN squawk...

08-11 15:43: S&P says commercial loans casts a long shadow over US banks

that must be the sun is shining, eh??

[Gilgamesh]

That's a green shoot for the banks, which are sorely missing banking in the shadows.

[Fear of the Dark]

I think JMB sold out awhile back.

[br8kedown]

Interesting referencing Mr Pink, who was outed as Daniel Loeb here:

http://www.deepcapture.com/daniel-loeb-is-mr-pink-and-more/

[Anonymous]

a rel="" href="http://www.bloomberg.com" target="_blank">bloomberg futurtes sho

[Anonymous]

Brooks remains on the BoD