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The Next Shoes To Drop In Commerial Real Estate - Part 1

Tyler Durden's picture




 

Everyone is now well aware of the plight of Stuy Town, which has become a set fixture on the front page of the daily press, and is expected to default on its underlying borrowings within a few months at the most. What will happen to the controlling equity, and the tenants at the multiapartment complex, is unknown. It is no surprise that this will be yet another epic failure for the existing owner, Tishman Speyer, which after gobbling up property after property at the peak of the housing market, is all too aware that it is only a matter of time before control is wrested from it not only in the case of Stuy Town but many of its other properties.

And even though everyone "knows" the state of commercial real estate is in free fall, few have been able to pin it down to specific buildings, as property-level data is still very expensive and more often than not, proprietary. In order to bring the full degree of CRE collapse closer to home, and to provide some leads to our MSM-originating readers, we present a detailed analysis of some of the most impacted CRE properties that have yet to make headline news. For that purpose we combed through BarCap's CMBS remittance data for CMBX 4 (2007 vintage), which is broadly considered the peak year for commercial real estate deals and also the very peak of the housing bubble. We expected to find some of the juiciest CRE failures to be in this loan set. We were not disappointed.

In addition to presenting the property, we highlight the specific loan amount within any given CMBS deal, as well as the property's most recent DSCR (Debt Service Coverage Ratio - comparable to a Free Cash Flow to Interest ratio: anything below 1.0x means the property does not cover its debt service and is a flashing sign of an impending default), complete with any detailed delinquency or special servicer notes as collected by BarCap. Notable in the commentary are numerous tidbits about prevailing rents as well as less than public negotiations between various stakeholders which disclose just how impacted CRE across the country really is.

So without further ado...

 


 

Mandarin Oriental - New York

1. CMBX 4 deal: CSMC 07-C3

2. Current loan balance: $135 million, matures March 2012

3. DSCR: 0.42x (down from 2.19 at 2007)

4. Number of units: 264

5. Occupancy: 64%, down from 75% at inception

6. Loan comes out to $544,354.84 per unit

7. Watchlisted for past two reporting periods

8. Servicer Watchlist Comment: (11/01/2009) - "concerned on Dubai exposure and mezz. mezz could take over and keep the loan. however, it is likely that it’d default." - BarCap

9.BarCap estimated loss: 10%

 

 

 


666 Fifth Avenue - New York (Home of Citigroup Private Wealth, Orrick Herrington (not for long) and Izzy Englander's Millennium Partners)

1. CMBX 4 deal: WBCMT 07-C31

2. Current loan balance: $395 million, matures Feburary 2017

3. DSCR: 0.57x (down from 0.65 at U/W)

4. Total sq. footage: 1,454,110

5. Occupancy: 90%

6. Loan comes out to $271.64 per sq. foot

7. Watchlisted for past year

8. Servicer Watchlist Comment: (10/01/2009) - 10/13/2009: - Structured Debt: $1.215B Whole Loan split btween 8 Pari Passu loans. Q2-2009 NCF DSCR is 0.57x with an occ of 90%; NCF, as compared to stabilized U/W NCF, is not yet stabilized. Ann. Q2-09 shows a 4% drop from YE 08, & a 38% drop from U/W; YE 2008 showed a 5% EGI drop from YE 07, & a 36% drop from U/W. The EGI drop from ann 09 & YE 08 is a result of an occ decline in 2008. Total vacant sf as of 09/09 RR is 195,520. Current asking rates range from $60- $82 PSF. TI’s range from $50-$60 for new leases, & $25-$30 for renewals. The 09/09 leasing report shows total lease rollover of 242,479 sf during the next 12 months with 63,122 SF of leases out for signature for 10 yrs at rates ranging from $35.20-$100 PSF. Bwr has a proposal out to 2 prospects totaling 267,000 sf for 10 & 15 yrs at rates of $63 & 66 PSF. There were 5 lease renewals totaling 48,304 sf with rates ranging from $60-$240 PSF; & 3 new leases totaling 19,533 sf with rates $65-$165 PSF signed during 2009. Per a late 08/2009 update, Orrick (232,000 SF or 16% of NRA) will be vacating upon their 03/31/2010 lease expiration. Per Bwr, there are no firm prospects for the Orrick space but they are in proposal stages with 3 different potential tenants for all or a portion of the space. Current asking rates as per Bwr for the Orrick block is roughly $70/sf (Note: Orrick was paying $45 per SF) - midtown asking rents are avg $60/sf. [TD:Good luck] Space will be adv through Co-star, web site & through advertisements. Bwr leasing team is also doing direct telephone mkt to significant brokers & specific tenants in the mkt. Ann Q2-2009 Oper Exp show a 3% drop from YE 08 & a 26% increase from U/W; & YE 2008 Oper Exp showed a 13% increase from YE 2007 & a 32% increase from U/W. The increased exp are due to higher than normal UTIL, RM, & GA exp. Reported exp appear to be recurring in nature. The ongoing reserve bal for the loan is $74,956,986.40 as of 10/06/09.

9.BarCap estimated loss: 40%

 


 

5 Times Square (Ernst & Young building)

1. CMBX 4 deal: WBCMT 07-C31

2. Current loan balance: $536 million, matures March 2017

3. DSCR: 0.98x (down from 1.01 at U/W)

4. Total sq. footage: 1,101,779

5. Occupancy: 99% (even at full occupancy the building can not cover its debt service!)

6. Loan comes out to $486.49 per sq. foot

7. Watchlisted for past year

 

8. Servicer Watchlist Comment: Servicer Watchlist Comment: (10/01/2009) - 8/10/09: With the execution of the Sephora lease, the property is now expected to cashflow in September 2009. The debt service reserve as of 8/10/09 is $10,477,942.25. 4/14/09 - Comcast Shared Services has leased floors 9, 10 & 11 through a partial termination of the E&Y lease for the same space (94,441sf). Represents increased cash flow to the property that will be realized after approximately $8.1MM is used for TI/LC and free rent period. In addition a new retail lease with Sephora was entered into with an expected commencement date of September 09. Per FYE08, DSCR was 0.96x and occupancy was 99%. Per FYE2007 OSAR, DSCR was 0.94x. Variance in DSCR due in part from annualized Statement from 320 days to 365 days based on loan Origination Date 02/15/2007. The property is 100% leased to a total of four tenants. Five Times Square is 97% occupied by Ernst & Young whose lease expires in 2022 with 2 10yr extension options. The current base rental rate paid by Ernst & Young is $43.87 / SF (approx. $46.7 mm annually). Contractually, the Ernst & Young base rent bumps to $48.62 / SF (approx. $51.8 mm annually) beginning on May 1, 2012. The underwritten average base rental rate is well below current market levels. Underwriting assumes a weighted average rental rate through the 10-year loan term based on below market rents and credit quality of largest tenant. At loan closing a Debt Service reserve also was required ($17.8MM), which will support the total mortgage and bring the DSCR to 1.0x for 5.5yrs. The current bal of the debt service reserve as of 4/14/09 is $9,961,337.45.

9.BarCap estimated loss: 25%

 


Shutters On The Beach and Casa Del Mar

1. CMBX 4 deal: CSMC 07-C4

2. Current loan balance: $310 million, matures May 2014

3. DSCR: 0.88x (down from 1.29 at U/W)

4. Number of units: 327

5. Occupancy: see below

6. Loan comes out to $948,012.23 per unit

7. Watchlisted for past year

8. Servicer Watchlist Comment: (11/01/2009) - 10/30/2009 Lender approval is required for any lease affecting more than 3,500 SF. 10/30/2009 This loan maintains a Furniture Fixture and Equipment Reserve with a current balance of $563,906.07 and a monthly constant of $179,739.21. 10/28/2009 Nothing new to report. 10/13/2009 Both Shutters on the Beach and Casa Del Mar are compared to several different market segments in their 8/31/2009 Star Reports. Shutters is compared to the Beverly Hills set of hotels, the greater Los Angeles Luxury Class hotels, and Southern California Luxury Beach Resorts. Casa is compared to the Beverly Hills set of hotels, the Santa Monica Upscale Hotels, and the greater Los Angeles Luxury hotels. Both Shutters and Casa are market leaders for all market sets. 10/13/2009 Per the Star Report dated 8/31/2009, Shutters on the Beach for the 31 days preceding 8/31/2009 had occupancy of 87.8% while the competitive set had occupancy of 60.6%. The ADR at Shutters on the Beach was $522.68 while the ADR for the competitive set was $518.82. The RevPar at Shutters on the Beach was $458.73 while the competitive set had a RevPar of $314.64. 10/13/2009 Per the Star Report dated 8/31/2009, Casa Del Mar for the 31 days preceding 8/31/2009 had occupancy of 81.6% while the competitive set had occupancy of 60.6%. The ADR at Casa Del Mar was $440.19 while the ADR for the competitive set was $518.82. The RevPar at Casa Del Mar was $359.29 while the competitive set was $314.64. 10/13/2009 The borrower attributes the hotels impressive STAR Report statistics to two factors. First, the hotels enjoy clearly superior locations compared to their  competition. Secondly, the hotels management has been very aggressive in current marketing efforts, which has resulted in significantly superior occupancies, while being flexible on rates. 10/13/2009 This is a multi-property loan with both Shutters on the Beach (property 1, 59.88% loan allocation) underperforming with an individual NCF DSCR of 1.03 and Casa Del Mar (property 2, 40.12% loan allocation) underperforming with a NCF DSCR of 0.65. The weighted average NCF DSCR is 0.88 which is a 31.8% decrease from underwriting. 10/13/2009 Shutters on the Beach (property 1), NCF DSCR has decreased from underwriting due to other income decreasing 89.6%  ($3,688,000  -$385,000), 27.8% ($533,000-$385,000) from prior year, room revenue decreasing 16.3%  ($27,396,000 - $22,937,000), 16.6% ($27,486,000 - $22,937,000) from prior year, and food and beverage income decreasing 15.1% ($14,994,000 - $12,726,000), 9.8% ($14,103,000 - $12,726,000) from prior year. 10/13/2009 Expenses at Shutters have decreased 9.0% ($30,328,000 - $27,590,000) from underwriting, 10.8% ($30,921,000-$27,590,000) from prior year. 10/13/2009 Shutters on the Beach (property 1), occupancy was 92.4% at 8/31/2008, decreased to 54.55% at 12/31/2008, increased to 71.21% at 3/31/2009, and has increased to 87.8% as of 8/31/2009. ADR was $436.92 at 12/31/2008, decreased to $414.55 at 3/31/2009, and has since increased to $522.17 as of 8/31/2009. RevPar was $238.96 at 12/31/2008, increased to $296.22 at 3/31/2009, and has since increased to $458.28 as of 8/31/2009. 10/13/2009 Casa Del Mar (property 2), NCF DSCR has decreased from underwriting due to other income decreasing 84.1% ($1,977,000-$318,000), 2.1% ($325,000-$318,000) from prior year, room revenue decreasing 27.5% ($17,622,000-$12,768,000), 19% ($15,759,000-$12,768,000) from prior year, and food and beverage income  decreasing 25.8% ($11,882,000-$8,816,000), 19.7% ($10,976,000-$8,816,000) from prior year. 10/13/2009 Expenses at Casa have decreased 4.0% ($18,927,000-$18,163,000) from underwriting, 14.9% ($21,343,000 - $18,163,000) from prior year. 10/13/2009 Casa Del Mar (property 2), occupancy was 82.9% at 8/31/2008, decreased to 46.51% at 12/31/2008, increased to 59.69% at 2/28/2009, and has increased to 81.4% as of 8/31/2009. ADR was $419.78 at 12/31/2008, decreased to $379.81 at 3/31/2009 and has since increased to $441.26 as of 8/31/2009. RevPar was $193.88 at 12/31/2008, increased to $272.68 at 3/31/2009, and has since increased to
$360.16 as of 8/31/2009. 10/13/2009 Per borrower on 9/30/2009, both hotels other income line item is comprised of all miscellaneous hotel income and interest on retained earnings. Other income is where all small commissions are coded, such as taxis, limos, movies, as well as one time charges. Per the borrower, these revenue items have decreased as a result of decreased room revenue and occupancy. 10/13/2009 Per borrower on 9/30/2009, market is slow but showing signs of improvement. Subject occupancy and rental rates are both above the market. In efforts to increase NCF DSCR, borrower has reduced staffing and overhead which has allowed them to maintain their operating margins on lower revenues. 10/13/2009 Per borrower on 9/30/2009, advertising is done through internet advertising, banner ads, and their Web Site.

9.BarCap estimated loss: 55%



One Park Avenue (Lorrilard Building) - New York

1. CMBX 4 deal: BACM 07-2

2. Current loan balance: $187.5 million, matures March 2012

3. DSCR: 0.98x (down from 1.16 at U/W)

4. Total sq. footage: 924,501

5. Occupancy: 97% however tenant Segal (154,947 sq. feet) is bailing

6. Loan comes out to $202.81 per sq. foot

7. On Special Servicing, Default Imminent

8. A. Servicer Delinquency Comment: (10/01/2009) - 09/30/09 One Park is 924k SF office building in Midtown, Murray Hill, Manhattan. The occupancy is 97%. The loan was transferred into Special Servicing due to an imminent default. The borrower has requested a restructure of the mortgage loan due to the weakening office market. Lender engaged Dechert and has hired an appraiser to assets with the market analysis.

8. B. Servicer Watchlist Comment: (07/01/2009) - 1E - DSCR < 1.10. Loan is secured by a 924,501 sf 20-story office bldg in New York, NY, built 1925/renovated 2000. The 02/25/2009 inspection rated the subject in Fair condition. Debt consists of a $483MM whole loan split btwn a $187.5MM A-1 Note (BACM 2007-2) & a $187.5MM A-2 Note (BACM 2007-3), which are Pari Passu, & two Mezz loans totaling $108MM. Q1-09 NCF DSCR is 1.08 with an occ of 97.90%; YE 2008 NCF DSCR was 0.88x with 97.1% Occ. Based on ann Q1-09 figures, EGI has increased 5% from YE 2008, but is still not at anticipated U/W levels & shows a 6% decline. The YE 08 NCF decline was due to low Rental Income due to abatements, combined with an increase in A&M from PYE, & a 25.26% rise in R&M Exp. The 2008 Budget projected Base Rents of $34.88MM, 1% higher than reported 2008 Base Rents of $34.49MM. 2009 Budget is projecting base rents of $35MM, a 1% increase compared to ann. 2009 base rents. At U/W the Property was 98% leased, with office space having 100% Occ and avg rents of $35 psf. U/W cited avg asking rates increased > 40%. Tenant Segal, who occupies 157,947 sf (19% NRA), has a 12/2009 lease exp. Segal pays $38 psf; Per Bwr, Segal is scheduled to move out upon lease exp. Bwr is still actively mkt the space, and stated that there has been traffic to tour the space; however, no firm prospects to date. At closing, a DS Reserve & a TI/LC reserve were required as add’’l collateral; DS reserve bal is approx $4.5MM & TI/LC reserve bal. is approx $3.3MM as of 06/04/09. Per Bwr, there are 19,272 vacant sf available for lease (9500 sf in sub-basement & 9773 sf on concourse level) as of 1/2009. Bwr stated that they have not been actively mkt these spaces in order to keep available for the tenant takes occ of the former Segal space. Bwr’s asking rates are $30 psf/concourse and $25 psf/sub-basement, $2 - $3 above Market, per Bwr. Bank of America will continue to monitor loan.

9.BarCap estimated loss: 35%



575 Lexington Avenue (SkyGrid Building) - New York

1. CMBX 4 deal: BACM 07-2

2. Current loan balance: $162.5 million, matures October 2013

3. DSCR: 0.65x

4. Total sq. footage: 637,685

5. Occupancy: 88%

6. Loan comes out to $254.83 per sq. foot

7. Watchlisted for past year

8.Servicer Watchlist Comment: (10/01/2009) - 1E - DSCR < 1.10; 1F - DSCR < 1.40 & < or = 75% U/W. Loan is secured by a 637,685 sf office bldg in New York, NY, built 1958/renov 1990; inspected 2/24/09 and rated in Fair condition. Debt consists of a
$325MM whole loan split btwn a $162.5MM A-1 Note (BACM 2007-1) & a $162.5MM A-2 Note (BACM 2007-2), Pari Passu. Q2-2009 NCF DSSCR is .65 with 88% Occ; YE 12/31/2008 NCF DSCR was 0.63x with 89.9% Occ; YE 12/31/2007 NCF DSCR was 0.62x with 92% Occ. NCF decline is due to lack of loan stabilization as of Q2-2009 & YE08. Stabilized rents per U/W: Floors 2-9, $62.50 psf; Fls 10-20, $67.50 psf; Fls 21-28, $71 psf; Fls 29-35, $75 psf; Garage, $35 per space; Street Retail, $125 psf; and Ave Retail, $180 psf. Bwr rep’s update on tenants whose leases expire in the next 12 months: Kodashana will vacate upon 4/30/09 lease expiration; Mid Town Parking’’s lease expires 8/31/09; and 575 Lex Garage LLC has signed a 10-year renewal at a rate of $28.70 psf for the first 3 years. Regent’s lease will expire 12/31/09, however, Bwr does not yet have a renewal proposal out to this tenant. As per the 06/30/09 rent roll, there are 77,921 sf sitting vacant at the Property. Bwr rep further stated that these vacant spaces are being actively and aggressively marketed. Asking rates: $70-72 psf for years 1-5; $76-79 psf for years 6-10; per the Bwr rep, rates are comparable to market and most new leases or proposed renewals have rent steps every 5 years. Bwr’s $10MM Guarantee was required to cover future DS shortfalls/mitigate below-mkt rents. Bank of America will continue to monitor the Loan.

9.BarCap estimated loss: 45%

 


100 Wall Street

1. CMBX 4 deal: LBUBS 07-C6

2. Current loan balance: $117.4 million, matures June 2012

3. DSCR: 1.01x

4. Total sq. footage: 482,404

5. Occupancy: 85%

6. Loan comes out to $243.36 per sq. foot

7. Watchlisted for past year

8. Servicer Watchlist Comment: (11/01/2009) - 7/13/09- Per the FYE 2008 OSAR, DSCR was 1.01x and occupancy was 85% as of 12/31/08. Per Property Management, overall leasing strategy is to meet market demand for smaller tenants as the demand for big tenants has decreased significantly. Their 2009 strategy is to capture renewals. They have about a 90% renewal rate overall. There are no concerns over meeting debt service obligations at this time. Servicer added this loan to the watch list due to the fact that the bridge mezzanine financing had a maturity date of May 2009. Lehman initially gave the borrower a 30 day extension to try to restructure the loan. Lehman also extended the forbearance agreement that was set to expire on 6/10 until 6/29. Servicer has now received notice of the following events: NOTICE OF TRANSFER OF THIRD MEZZANINE LOAN NOTICE OF EQUITY COLLATERAL ENFORCEMENT ACTION UNDER THIRD MEZZANINE LOAN  DOCUMENTS NOTICE OF AGREEMENT TO MODIFY SECOND MEZZANINE LOAN AND THIRD MEZZANINE LOAN Wachovia along with counsel has confirmed that the above referenced events did not need Senior Lender consent and were accomplished in accordance with the related Intercreditor agreement. The 100 Wall Street loan is secured by a 482,404 square foot office building located in New York, NY. The 5 year, interest only loan was funded in June 2007 with a 47% loan to value and 1.17X debt service coverage. The Sponsor is Broadway Real Estate Partners, LLC. As part of the loan closing, the Borrower obtained $62,491,102 of senior mezzanine and $50,513,622 of Aggregate Bridge Mezzanine financing provided by Lehman Brothers. The senior mezzanine financing is secured by a pledge of the ownership interest in 100 Wall Street and is co-terminus with the first mortgage. The bridge mezzanine financing is secured by a pledge of the senior mezzanine interest in the 100 Wall Street Mezzanine Borrower and the interests in several other assets including 3 Trust assets known as One Sansome Street, Greensboro Park and One Fair Oaks. The bridge mezzanine financing had an initial term of 15 months with a 3 month and 6 month extension option with a maturity of May 2009. A debt service reserve of $4,004,167 to cover the debt service forr the first and both mezzanine obligations was funded at closing and has been drawn down too approximately 500,000. The Borrower’s business plan was to increase the net cash flow at closing from approximately $8.7MM to an estimated $11.7MM as tenants are rolled to market.

9. BarCap estimated loss: 20%

 


Westin Casuarina Resort & Spa (Cayman Islands)

1. CMBX 4 deal: WBCMT 07-C32

2. Current loan balance: $182.15 million, matures May 2017

3. DSCR: 0.66x

4. Total # of units: 594

5. Occupancy: N/A

6. Loan comes out to $306,645.7 per unit

7. 30 Days Delinquent

8. Servicer Watchlist Comment: (10/01/2009) - NOI dropped significantly in T12 June 09. Sponsor has other hotel exposures. concerns on default. lower the valuation. W court in NY sold for $250k/key in Nov 2009. not necessary the best comp.

9. BarCap estimated loss: 60%

 


 

US Bank Tower /Tabor Center (Denver, Colorado)

1. CMBX 4 deal: MSC 07-IQ14

2. Current loan balance: $180 million, matures April 2012

3. DSCR: 1.11x

4. Total sq. footage: 696,027

5. Occupancy:NA

6. Loan comes out to $258.61 per sq. foot

7. Transferred to Special Servicing

8. Servicer Delinquency Comment: (11/01/2009) - The Mortgage Loan was transferred to Special Servicing effective 10/7/2009 as a result of the Borrower sending three (3) letters dated 09/04/2009, 09/21/2009 and 09/30/2009 requesting a modification of the Mortgage Loan due to operating shortfalls at the Property. A "Hello" letter was sent to the Borrower on 10/16/2009 and Trust counsel was engaged on 10/20/2009 to assist with any work-out negotiations and, if  necessary, the preparation of a pre-negotiation letter. Borrower’s request for a five (5) year extension and priority repayment of future equity investments is under review.

9. BarCap estimated loss: 10%

 

 

 


 

Meyberry House New York (220 East 63rd Street aka The Blake)

1. CMBX 4/5 deal: CSMV 07-C4

2. Current loan balance: $90 million, matures September 2016

3. DSCR: 0.78x

4. Total sq. footage: 717,339

5. Occupancy: 97%

6. Loan comes out to $292.75 per sq. foot

7. Special Servicer - 30 Days delinquent

8. A. Servicer Delinquency Comment: (11/01/2009) - 11/12/2009 Per ING Clarion 11/12/09: Loan was transferred due to the Borrower’s inability to fund the debt service reserve with $1 million as required by the loan documents. Borrower has sent a loan modification request which the Special Servicer is currently reviewing. The Loan defaulted on the October 2009 debt service payment. In addition, cash flow sweeps from the lockbox bank to the Lender’s Cash Management Account have ceased. Special Servicer is exploring this situation as well as collecting due diligence. 1/30/2009 Per borrower, market is stable, occupancy is above the market, and rental rates are in line with market rates. Borrower stated that increased utilities is due to the increased cost of energy along with increases in occupancy. Increased professional fees are due to legal fees associated with litigation over the termination of the garage tenant’s lease when the borrower purchased the building. 1/13/2009 Per ING Clarion 1-12-09: Loan returned to the master servicer effective 1/2/2009.

8.B. Servicer Watchlist Comment: (09/01/2009) - 9/9/2009 Key has contacted borrower regarding market conditions, increased expenses, efforts to increase NCF DSCR, advertising, and concessions; Key is awaiting a response. 9/9/2009 NCF DSCR has decreased from underwriting due to base rent decreasing 13.7% ($8,940,000 - $7,712,000), increasing 40.9% ($5,473,000-$7,712,000) from prior year, property taxes increasing 40.7% ($1,202,000-$1,691,000), increasing 90% ($890,000-$1,691,000) from prior year, utilities increasing 58.5% ($455,000-$721,000), 27.3% ($567,000-$722,000) from prior year, and general and administrative expenses increasing 0.1% ($118,000-$119,000), 77.6% ($67,000-$119,000) from prior year. 9/9/2009 Per borrower reports, occupancy has increased from 55.9% as of 12/31/2007 to the 97.36% as of 6/30/2009 and average rental rates have increased from $2,362.58/unit as of 12/31/2007 to $3,438.33/unit as of 6/30/2009. 8/31/2009 Lender approval is required for all new leases which account for greater than 10% of the gross income from operations. 8/31/2009 This loan maintains an Immediate Repair reserve with a current balance of $6,369.84 and no monthly constant, an Interest Reserve with a current balance of $23,599.27 and no monthly constant, and a Renovation reserve with a current balance of $208.36 and no monthly constant. 7/9/2009 Increased utilities is due to the increased cost of energy along with increases in occupancy. 1/30/2009 Per borrower, market is stable, occupancy is above the market, and rental rates are in line with market rates. Borrower stated that increased utilities is due to the increased cost of energy along with increases in occupancy. Increased professional fees are due to legal fees associated with litigation over the termination of the garage tenant’s lease when the borrower purchased the building. 1/13/2009 Per ING Clarion 1-12-09: Loan returned to the master servicer effective 1/2/2009

9. BarCap estimated loss: 40%



Developers Diversified Portfolio (CA, IN and FL)

1. CMBX 4 deal: COMM 07-C9

2. Current loan balance: $221.25 million, matures July 2017

3. DSCR: 1.43x

4. Total sq. footage: 7,239,096

5. Occupancy: NA

6. Loan comes out to $30.56 per sq. foot

7. Watchlisted

8. Servicer Watchlist Comment: (09/01/2009) - 8/27/2009 There are three Circuit City locations related to this loan - Hilltop Plaza (Richmond, CA), Skyview Plaza (Orlando, FL), and Highland Grove (Highland, IN). 8/27/2009 Hilltop Plaza - Circuit City vacated this location on 12/31/08. They are marketing the space and have had initial contact with Big Lots and Fresh Market. They believe that this is good real estate and expect additional interest from national tenants. They continue to market this space to national tenants. Their leasing and tenant coordination groups are evaluating interest from CitiTrends for approximately 12,000sf of the box. 8/27/2009 This would still leave enough remaining space for a national anchor tenant. Skyview Plaza - Circuit City is still open at this location and is conducting a going out of business sale. They anticipate they will be vacating in the next 30-60 days. Their leasing team is marketing this space both as a whole unit and as a potential split into two jr. anchors. Bed Bath & Beyond has expressed interest in the space. The tenant is currently reviewing a proposed letter of intent.

9.BarCap estimated loss: 15%

 


520 Broadway Santa Monica

 

1. CMBX 4 deal: CSMC 07-C3

2. Current loan balance: $51 million, matures April 2012

3. DSCR: 1.09x

4. Total sq. footage: 111,583

5. Occupancy: 87.3

6. Loan comes out to $457.06 per sq. foot

7. Watchlisted

8. Servicer Watchlist Comment: (11/01/2009) - 11/2009: The Property, which is located in downtown Santa Monica, CA, is a 6 story/20 unit/111,532sf mid-rise office building, that is 87.3% occupied as of 10/1/09. The Property was buit in 1983 and per the latest inspection (4/9/09), is in above average condition. The YE 08 NCF was $2,864,822 with a 1.00x DSCR. The 2Q09 NCF is $3,137,754 with a 1.09x DSCR. The drop in DSCR is due to a couple of factors. The Lender included credit taken for the $900,000 Interest Reserve collected at closing. The Interest Reserve is recourse to a Fund and subject to 1.20x condition for release. Also, the effective rent at UW was $50.55/sf and has since dropped to $45.39/sf as of 2Q09. Per REIS, 3Q09 effective rent and vacancy for the Santa Monica submarket is $42.32/sf and 10.5%, respectively. The Property is currently being marketed to address vacancy issues and a new management company has been hired.

9.BarCap estimated loss: 25%



Allanza At The Lakes (Las Vegas)

1. CMBX 4 deal: CSMC 07-C5

2. Current loan balance: $85 million, matures June 2014

3. DSCR: 0.90x

4. 896 units

5. Occupancy: 90%

6. Loan comes out to $94,866.07 per unit

7. In Foreclosure

8. Servicer Delinquency Comment: (11/01/2009) - The Mortgage Loan was transferred effective 07/17/09 as imminent default a result of a letter from the Borrower dated 07/09/09 that it would not be curing the non-monetary default (i.e., the failure to complete required renovations by 06/30/09) and will no longer be funding operating shortfalls. The 07/09/09 letter from the Borrower was prompted by the Master Servicer sending a default notice as a result of Borrower’s failure to complete the required renovation of the Property by the 07/01/09 deadline. Previously, the Borrower stated that the Property had adversely impacted by the severe economic decline in the Las Vegas market and for the past eight (8) months the Property had not generated sufficient net cash flow to cover debt service which was historically covered by the TIC investors. Counsel was engaged on 07/23/09. The Mortgage Loan is hard cash-managed with debt service originally paid prior to funding operating expenses. Accordingly, the cash management waterfall was modified to ensure tenant services are provided and Property is protected. Because the Mortgage Loan is in monetary default, Trust counsel sent a formal demand and acceleration notice to the borrower on 10/19/09. Because the default was not cured, Trust counsel recorded a notice of default on 10/22/09 to start the foreclosure process. Third party reports have been ordered accordingly.

Servicer Watchlist Comment: (04/01/2009) - The Allanza at the Lakes is secured by a 896 unit Multifamily property located in Las Vegas, NV. 1.22x UW DSCR NCF as compared to 0.97x for YE07 and 1.14x as of 9/08. The occupancy at UW was 90% vs. 90% for YE07 and 86% as of 9/08.

9. BarCap estimated loss: 45%



Irvine Company EOP San Diego Portfolio

1. CMBX 4 deal: CWCI 07-C3

2. Current loan balance: $145 million, matures July 2017

3. DSCR: 0.66x

Total sq. footage: 380,954

5. Occupancy: 69%

6. Loan comes out to $359.63 per square foot

7. Watchlisted

8.Servicer Watchlist Comment: (10/01/2009) - 10/09: Loan is secured by 7 properties, 6 Class A and Class B office bldgs and 1 single-tenant restaurant, all located in San Diego, CA with an aggregate SF of 380,954. The portfolio was part of a 14 property, 1.9MM SF portfolio of office properties that The Irvine Company purchased from EOP. At origination a $1,854,551 Debt Service Reserve was established (current balance is $0). A TI/LC Reserve of $3,960,433 and a CapEx Reserve of $900,498 were also established, both of which could be used to fund DS after the DS Reserve was exhausted; both of these reserves are exhausted also. UW was based on a stablized vacancy and assumed all leases rolled to market. Occupancy at the property has deteriorated-at origination (July 07) it was 89.9%, as of June 08 it was 88% and as of June 09 was 69%. The largest tenant, occupying 33.6% of GLA at property ID #2.02, vacated its space upon lease expiration 3/08. The second largest tenant, occupying 33.3% of GLA at the same property, vacated its space on lease expiration 11/08. Prospective tenants for the other units include: Law Firm with LOI for 24,073 SF, suite 200, Technology Co. with LOI for 23,859 SF, suite 300 & Research Firm with LOI for suite 350.

9. BarCap estimated loss: 40%

 


1745 Broadway Avenue (Random House Building) - New York

 

1. CMBX 4 deal: LBUBS 07-C1

2. Current loan balance: $340 million, matures January 2017

3. DSCR: 1.18

4. Total sq. footage: 636,598

5. Occupancy: N/A

6. Loan comes out to $534.09 per sq. foot

7. Transferred to special servicing November 6, 2009

8. Servicer Delinquency Comment: (11/01/2009) - Loan transferred to special servicing effective November 6, 2009. The Borrower has requested a forbearance while it negotiates a forbearance/standstill with the Homeowners Association. A pre-negotiation letter has been sent to the Borrower by the SS for signature, and it is expected that a meeting will be held with the Borrower within one week.

9. BarCap estimated loss: 5%

 

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Sun, 12/06/2009 - 16:11 | 154584 George the baby...
George the baby crusher's picture

Nice work.  Getting a glimps of the commercial sunami to come.

Sun, 12/06/2009 - 17:01 | 154609 Anonymous
Anonymous's picture

Are we expecting the stock market to behave like it did in the beginning of the year?

Sun, 12/06/2009 - 21:21 | 154795 Anonymous
Anonymous's picture

Is it okay to say DUMB bankers and DUMBER Banks....stupid is just a fact of life life with this subspecies.

Sun, 12/06/2009 - 16:15 | 154586 bugs_
bugs_'s picture

Incredible TD thanks.

Contemplate this on the Tree of Woe.

Wed, 12/29/2010 - 11:43 | 835646 jiniwaq
jiniwaq's picture

This is really helpful.custom software development Setting goals is something which I often struggle with, as I tend to make them either unachievable or I don’t make any at all.Business gifts It’s easy to think about what you want to achieve,but unless you write it down and make some solid goals with time periods, it is unlikely that they will ever be achieved. Thanks a lot.Tanzania Safari

Sun, 12/06/2009 - 16:23 | 154587 Careless Whisper
Careless Whisper's picture

Real Estate has always been a game of Staying Power. This shakeout will get rid of the weak players.

Sun, 12/06/2009 - 19:45 | 154708 MsCreant
MsCreant's picture

Hi Careless,

I think this one is called deflation.

Tue, 12/08/2009 - 04:03 | 156289 delacroix
delacroix's picture

weak players? you,re talking about half the team.

Sun, 12/06/2009 - 16:25 | 154590 Shameful
Shameful's picture

Great to see a face put on one of the waves of desolation crashing in!  Though part of me started thinking "Hmmm, does this mean mean that property in NYC will priced more reasonably?"  I had to quickly banish that thought, I forgot how much I hate tiny roach infested coffins.  I figure I'll rot in one when I'm dead, why rush it?

Sun, 12/06/2009 - 16:30 | 154592 Chopshop
Chopshop's picture

Sensational synthesis/ work, TD !!  Thank you very much for sharing it. 

Gonna be a very dirty floor to clean once they take their haircut.

Sun, 12/06/2009 - 16:36 | 154597 Rainman
Rainman's picture

Most startling are some of the fairly solid occupancies on this list.

This all circles back to the pressures of short term debt refinancing in the face of declining value. And the leasing concessions must be no fun either.

Excellent work, Tyler. I hope future updates will be frequent, even though the list is sobering.

Sun, 12/06/2009 - 16:44 | 154602 deadhead
deadhead's picture

Tyler:  Excellent analysis and thank you for putting this together....wow.

I was at the Westin in Grand Cayman...it is absolutely a gorgeous place and clearly is on the most magnificent stretch of Seven Mile Beach, one of the most beautiful beaches in the world in my view.

Sun, 12/06/2009 - 21:09 | 154782 Anonymous
Anonymous's picture

hello dh. i always enjoy reading your posts. this zh post should serve well as a checklist going forward as these properties explode in the coming months. td would be wise to update it periodically with his typically eloquent commentary. lol

Sun, 12/06/2009 - 21:09 | 154783 calgaryschmooze
calgaryschmooze's picture

Sunday brunch is decidedly nicer at the Ritz a few feet away.

Sun, 12/06/2009 - 22:45 | 154848 deadhead
deadhead's picture

last time i was there they were just finishing the Ritz...I would love to see the completed property.

Sun, 12/06/2009 - 16:53 | 154606 Anonymous
Anonymous's picture

I keep reading all the issues with CRE. I live in the Chicago area and it is very apparent that retail spaces is abundant. I guess the local rats will to spend the winter in comfort.
As a novice, will somebody explain why the REITS are all running north on a daily basis!!? The SRS are moving to reverse split territory ATR of 10% to 20% on a daily basis.

Sun, 12/06/2009 - 18:21 | 154653 Dr o love
Dr o love's picture

This same thing happened to the home builders...  Just before they crashed.  I remember KBH levitating in the mid $50's in early 2007 before crashing to $7.  My guess is momentum players and those who think they can squeeze shorts forever.  The last of these standing always get slaughtered.  Won't be "different this time."

Sun, 12/06/2009 - 18:42 | 154670 deadhead
deadhead's picture

he who panics first, wins.

 

Tue, 12/08/2009 - 15:24 | 156818 Anonymous
Anonymous's picture

REITs have shot up because of their ability to raise capital and renegotiate & retire debt on their balance sheet. For example, in q3 Macerich raised 1.12 billion in new capital and retired 1.10 billion of debt. Every REIT out there was doing this.

My apologies if someone already answered this.

Sun, 12/06/2009 - 16:54 | 154607 spekulatn
spekulatn's picture

Fine job, TD. Nicely done.

 

Sun, 12/06/2009 - 17:05 | 154610 Anonymous
Anonymous's picture

But... but.... b-b-b-b-b-b-b-but Jim Cramer said 3 days ago that commercial real estate is doing great, and 52-week highs in REIT stocks show that?

Sun, 12/06/2009 - 17:08 | 154611 Anonymous
Anonymous's picture

Face it, the shorts have been dead wrong on commerical real estate ever since the bottom in March. All the bearish etf's have been bloodied so badly there is virtually nothing left of them. If you've listed to the Gerald Celentes of the world and put your wallet where his mouth is you've been destroyed. The one thing about shorts is that they are "perma pessimists" and that is why they are in a world of hurt right now. The world didn't end. The US still has an economy, and the REITS were a steal back in March. Even now, many up over 400% many are still off over 50% of their 2007 all time highs. The scared money sold all the way down to March (that Cramer scared by saying "get out of the market for the next 5 years") has been replaced by new money and it ain't coming out. The "generational buying opportunity" as Dougie Kass termed it has come and gone.

Sun, 12/06/2009 - 18:07 | 154637 lizzy36
lizzy36's picture

If you think the "new money" of 2009 won't become the "scared money" of 2010 then you haven't being paying attention to the last ten years. 

Cheap money and massive mispricing of risk can obscure fundamentals for only so long. 

Sun, 12/06/2009 - 18:47 | 154673 deadhead
deadhead's picture

Well stated and quite true Lizzy.

The only thing I might add as a thought is that one could substitute "100" for the "ten" in the comment about folks not paying attention to the last ten years.

We Americans are number one in terms of burying our heads up our asses and refusing to recognize history.

boom.bust.boom.bust.

"Cheap money and massive mispricing of risk can obscure fundamentals for only so long." 

The quoted comment of yours is worth more than the 50 grand one might spend to get an MBA.  I would strongly recommend that people repeat that sentence as a mantra for their financial well being.

on a personal note, looking forward to seeing you when the USA invades Canada....first Pakistan, then Iran, then Canada.

 

Sun, 12/06/2009 - 19:20 | 154689 lizzy36
lizzy36's picture

Hmmm, Pakistan may take a while (over/under 50 years).  I will be an old lady and DH, you @ 104,  well on a long enough timeline.......

Sun, 12/06/2009 - 19:27 | 154697 deadhead
deadhead's picture

i don't know lizzy, i think obama made it clear the other night that the u.s. and paki has a deal for the u.s. to go into paki...heck, all those troops aren't going to sit on the border and just wait for the tali and al q to come across waving white flags...  Hillary added to the fray today as well by talking about the "shift" in Paki thinking, to me suggesting that the Pakis will welcome the u.s. involvement..... i'm guessing the u.s.a. will be supplementing the drones with boots on the ground in the spring...

love the re-quote of the ZH motto, lol!

I can say with all sincerity that I hope that i do not make it to 104, lol!

 

 

Sun, 12/06/2009 - 19:04 | 154686 Shameful
Shameful's picture

Okay In the shorts defense not everyone know the Fed was willing to destroy the dollar to keep the ball rolling.  Sure I knew, but then I'm a big fan of Jim rogers and he flat out said they would.  It's telling to me when a guy like Jim Rogers is seeing a wave of destruction coming and won't short anything.  Insane monetary polcy has made the market harder to play, you think that SHLD is a good buy at 150P/E?  I don't, but I wouldn't short it either because Zimbabwe Ben is pushing out money as fast as he can to gun this bitch.  Shit I'm pulling for DOW 100,000!  Granted I'm also expecting Oil at $800 a barrel.

Sun, 12/06/2009 - 20:41 | 154755 Anonymous
Anonymous's picture

And you think the bond market will sit still for that?

Remember, the bond market trumps all.

Sun, 12/06/2009 - 21:56 | 154820 Shameful
Shameful's picture

Yes?  When you have a printing press and you are willing to use it you don't need to float bonds to investors, the central bank will buy them.  America will never have an unplanned failed auction as long as we have the Fed Reserve.  Simple as that.  Do you think that yields are going to go up any time soon?  Do you think that investing in a 30 bond at these yields is a smart call?  Would you buy a 20 year bond from the US at these yields?  Now maybe yields would go up but remember the Fed is in the market, so it's not a true market.

The foreigners are still in our bonds because we are the sheriff from Blazing Saddles, we are threatening to kill ourselves.  When they have braced for impact they will sell and let the Fed buy all the bonds and we to can experience the wonders of mysterious Zimbabwe from the comfort of our own homes!  Or they will join us in a hellish death spiral of debt, both work for me, but I'd like to think the Asia's will not kill themselves to try to prop us the US.  But I haven't talked to them so I could be wrong, maybe they do really love America that much.

But you are right if we actually get a Fed audit and kill the fed, then market discipline would step in. But as it stands now we have the personification of moral hazard, Zimbabwe Ben at the helm so no chance of us changing course.  And we are not Japan, Americans with their next to no savings will not be funding this deficit.

Sun, 12/06/2009 - 20:21 | 154734 Anonymous
Anonymous's picture

Anonymous #154611 said: "Face it, the shorts have been dead wrong on commerical real estate ever since the bottom in March."

Face it? Face *what*? Face the largest and most unsustainable stimulus effort in the history of finance? Face changes in accounting regulation which allow for short-term hiding of losses? Face the clear and uncomfortable reality that despite plunging the nation into the deepest pit of debt in its history, the losses continue to accumulate? Face the fact that equity values are becoming increasingly disconnected from plummeting fundamentals?

Who exactly is "dead wrong" here?

You're effecting 'final judgement' based on a short term trend, when anyone who can read a balance sheet can tell you that what we are witnessing is unsustainable.

And as for the "bearish etf's": Everyone (well, except for the mathematically challenged among us) knows they're not supposed to track their relative long-indexes over time. A very poor "proof" of your position, my friend.

Sun, 12/06/2009 - 21:45 | 154812 Spitzer
Spitzer's picture

Your wrong.

The generational buying opportunities come at the end of a credit contraction, not the very start.

Sun, 12/06/2009 - 22:38 | 154845 Anonymous
Anonymous's picture

ok, keep taking advice from Nissim Taleb and Nouriel Roubini and never make a dime!

Tue, 12/08/2009 - 04:12 | 156290 delacroix
delacroix's picture

this is not a credit contraction, its a credit collapse

Sun, 12/06/2009 - 23:47 | 154898 RatherBFlying
RatherBFlying's picture

Oh yeah... that Gerald Celente... what a tool... years ago, he told eveybody who would listen to get in to gold. Yeah... they've been utterly destroyed!

Oh... wait... No.

 

 

Sun, 12/06/2009 - 17:19 | 154616 Anonymous
Anonymous's picture

Simply another green shoot or new normal?

Sun, 12/06/2009 - 17:30 | 154622 lizzy36
lizzy36's picture

I read this and can't help but speculate on how large the Fed/Treasury CRE bailout is going to be.

I look forward to part 2-infinity. 

 

Sun, 12/06/2009 - 17:38 | 154625 Reductio ad Absurdum
Reductio ad Absurdum's picture

Some other items not mentioned above:

"August 19, 2009: Tishman in default on CarrAmerica portfolio" (collection of properties in Washington, D.C.)

"Tishman is facing stress from its other top-of-the-market acquisitions including Archstone-Smith, a high-end apartment real-estate investment trust..." ("Archstone ... is the third largest United States REIT")

"June 25, 2009: Tishman Speyer may lose land after default. Tishman Speyer Properties LP may lose a plot of land in California’s Silicon Valley to Bank of America Corp. after defaulting on an $86.2m loan used to buy the site"

------------------

The data clearly shows stress in CRE, but what is the real significance? Are we about to see a domino effect or is Tishman just going to take a 10% haircut (in which case, big deal).

Sun, 12/06/2009 - 17:56 | 154630 Harbourcity
Harbourcity's picture

Seeing as the Fed is a private corporation that can go bankrupt, do you think they'll still let us audit the Fed after they collapse it? 

Sun, 12/06/2009 - 17:56 | 154631 carbonmutant
carbonmutant's picture

In a normal market all of these properties would deflate to more affordable pricing.

But in the current market they all end up as toxic assets on the FED's balance sheet... unless we have a moratorium on commercial real estate foreclosures.

 

Sun, 12/06/2009 - 18:04 | 154632 AN0NYM0US
AN0NYM0US's picture

Columbia Sussex owns the Westin Casuarina along with 88 other Hotel Properties mostly under the Marriott, Starwood and Hilton brands -

 

http://www.columbiasussex.com/cscbybrand.lasso

 

related

Brascan 2005-2 is a $300 million CRE collateralized debt obligation (CDO) managed by Brookfield Real Estate Financial Partners, LLC. The transaction has a five-year reinvestment period that will end in December 2010. As of the October 2009 trustee report and per Fitch categorizations, the CDO was substantially invested as follows: CRE mezzanine loans (58%), B-notes (31.2%), A-notes (4%), a defeased CRE loan asset (0.9%), and cash (5.9%). All overcollateralization (OC) and interest coverage ratios are currently in compliance.

 

Under Fitch's updated methodology, approximately 58.4% of the portfolio is modeled to default in the base case stress scenario, defined as the 'B' stress. In this scenario, the modeled average cash flow decline is 11.1% from either year end 2008 or second quarter 2009 trailing 12-month cash flows. Fitch estimates that average recoveries will be low at 21.7%, due to the highly leveraged and subordinate nature of the assets.

The largest component of Fitch's base case loss expectation is Columbia Sussex, a mezzanine loan (11%) secured by an interest in 14 full service hotels with a total of 5,821 rooms. The hotels are branded under the Sheraton, Westin, Hilton, and Marriot flags. The borrower recently exercised the final extension remaining on the loan. While performance of the portfolio has been stable, the portfolio is highly leveraged.

The next largest component of Fitch's base case loss expectation is Peter Cooper Village/Stuyvesant Town, a mezzanine loan (8%) secured by an interest in 56 multi-story buildings, situated on 80 acres, and includes a total of 11,227 apartments located in New York City. Cash flow generated from the property remains significantly below what is needed to service the current outstanding debt, and the borrower continues to use debt service reserves to cover operating shortfalls.
The balance of the debt service reserve as of October 2009 was $24.4 million and is unlikely to cover debt service payments past year end.

http://www.pr-inside.com/fitch-downgrades-brascan-2005-2-assigns-r158286...

 

Sun, 12/06/2009 - 18:11 | 154642 Miyagi_san
Miyagi_san's picture

The story of David vs Goliath...TD your David with your words of wisdom but please let me unwind my long Reits. So do as Cramer and pump till I dump

Sun, 12/06/2009 - 18:12 | 154644 Anonymous
Anonymous's picture

"I recognize the paw of the lion", Reggie is that you?

Sun, 12/06/2009 - 18:14 | 154646 Anonymous
Anonymous's picture

Once again TD--Eating the breakfast, lunch and dinner of the mainstream media that is supposed to be keeping the public informed~~

Kudos to you for giving the public the information they want and need to stay ahead!!

Listen to CNBC at your own peril..what a bunch of CRAP they spew!--(Might as well turn on Tele-Tubbies)--

Sun, 12/06/2009 - 18:14 | 154647 msorense
msorense's picture

Here is man we all remember as an arrogant pompous ass back in late 2008 early 2009.  He saw the horror to come first hand and it must have shaken him to his core.  Now it looks like he is getting ready for the coming apocalypse:

http://www.washingtonpost.com/wp-dyn/content/story/2009/12/04/ST2009120402037.html?sid=ST2009120402037

Sun, 12/06/2009 - 19:00 | 154684 Rainman
Rainman's picture

That's the ticket. Hide out in the Sierras with 2 Newfies and a few guns.

If I was party to pissing away $700B of taxpayer-borrowed bux I'd hide out too.

Big mistake letting WaPo know the general location, though. 

Sun, 12/06/2009 - 18:31 | 154663 RobotTrader
RobotTrader's picture

Wonder what this thing is going to do??

Sun, 12/06/2009 - 18:51 | 154677 deadhead
deadhead's picture

I fell apart laughing on this one Robo...you are a piece of work!

Sun, 12/06/2009 - 19:57 | 154718 Screwball
Screwball's picture

Funny as hell Robo, but I'll believe that when I see it.  I think they will find a way to bailout the REIT's, front door or back.

Sun, 12/06/2009 - 20:42 | 154757 Anonymous
Anonymous's picture

The REIT's are the mega-banks. The mega-banks are the REITS. Everything is connected.

No REITS will be allowed to fail.

Sun, 12/06/2009 - 20:19 | 154733 Anonymous
Anonymous's picture

Good synopsis of servicer notes and financial stats, but I have to disagree that this is either startling (Rainman) or sensational (Chopshop). All of it is priced in to the market, and more. CMBS AAAs have had a strong rally as liquidity gaps were filled by consumers, but below that spreads are still pricing in a greater than the Great Depression scenario and more than four times worse than the late 80s/early 90s dip. REITs (equity & debt) seem pretty rich at 9-13% yields, but selective recent vintage CMBS deals still seem cheap.

Meyberry House has been in trouble for well over a year (wrote about in February 2009, http://thecrereview.blogspot.com/search/label/Meyberry, but it had been having trouble for some time then). Same story with the others, they've been on the default track for more than a year in nearly every case - 666 Fifth Ave won't default until maturity due its large reserve accounts, but even it won't surprise anyone who has been paying attention.

-Dark Space (thecrereview.blogspot.com)

Sun, 12/06/2009 - 20:22 | 154736 geopol
geopol's picture

Bob Chapman: 2035 Banks in Serious Danger, FDIC to End, Dollar Devaluation by 2010 2035 banks are in immanent danger, not 552; FDIC to be officially ended by end of this year, or by end of 2010; Banks told to make room for new currency, and dollar devalued by end of 2010

http://www.youtube.com/watch?v=bPkmP8Utirs&feature=player_embedded

 

Sun, 12/06/2009 - 20:33 | 154744 Anonymous
Anonymous's picture

note. i was told by a rich old commercial real estate guy from Atlanta that there was 1.2million ft2 coming up open space on the market there. conditions are awful and getting worse by the day.....

Sun, 12/06/2009 - 20:37 | 154750 harveywalbinger
harveywalbinger's picture

Blame excepts no one

New York default comedy

Hahvahd Business

Sun, 12/06/2009 - 22:23 | 154800 AN0NYM0US
AN0NYM0US's picture

Paradise Lost for Wealthy Resort Novice


ANGUILLA, British West Indies -- Robert Sillerman amassed a billion-dollar fortune buying and selling media and entertainment companies. Among his most successful deals: the purchase of television franchise "American Idol."

Mr. Sillerman's winning streak ended on an alluring stretch of beach on this tiny Caribbean island.

 

His luxury hotel, condominium and golf resort here, Temenos, languishes half-built and out of money. "American Idol" creator Simon Fuller and novelist Dan Brown, among others, have put down deposits on million-dollar villas. It's not clear when or if their vacation homes will be completed.

For some ultrawealthy Americans like Mr. Sillerman, trophy hotel investments made during the real-estate boom have turned into major burdens.

Some newly opened properties aren't generating enough cash to cover operating expenses. Construction of others is being halted as lenders and investors pull out. During the first nine months of the year, developers postponed or canceled 43 luxury hotels totaling about 9,300 rooms in the U.S. and the Caribbean, according to research firm Lodging Econometrics.

While veteran hoteliers are accustomed to booms and busts, the newcomers are getting a sobering lesson in the risks of owning and developing high-end lodging, which has been hit hard by the real-estate bust.

An investment group headed by Dell Inc. founder Michael Dell teamed with Rockpoint Capital LLC to acquire the Four Seasons Hualalai in Hawaii in 2006. Since then, the 243-room hotel's annual cash flow has fallen to $7.9 million, from $20.6 million, and its occupancy rate declined by 33 percentage points to 54%, loan documents indicate. A hotel executive says part of the decline was due to a renovation that temporarily closed some rooms. ...

article

http://online.wsj.com/article/SB126014120205579167.html?mod=WSJ_hpp_sect...

slideshow

http://online.wsj.com/article/SB126014120205579167.html?mod=WSJ_hpp_sect...

video

http://online.wsj.com/video/luxury-lost-in-anguilla/C112861F-8678-4648-8...

Sun, 12/06/2009 - 21:59 | 154822 Spitzer
Spitzer's picture

I wonder what will happen to RIET payouts when they get bailed ????

 

I am sure the general population will go insane when Glenn Beck informs everyone that RIETS will pay out 100%. This must be what Gerald Celente keeps talking about.

Sun, 12/06/2009 - 22:24 | 154835 pooplagrande
pooplagrande's picture

Do you not think they will get bailed out?

The game is fixed and everyone not taking unhedged risk is a fucking loser!

Bernake is the backstop to all nonsense and idiocy.

Sun, 12/06/2009 - 23:45 | 154894 Fritz
Fritz's picture

The persistent bid under the REITS should tell you that they are effectively being bailed out right now.

REITS are currently priced for perfection thru 2015.

REIT common equity will mushroom cloud due to the dilutive offerings being priced weekly. It will likely become a big issue in the next few quarters as the fantasy earnings/expectations/outlooks don't materialize.

 

Mon, 12/07/2009 - 01:54 | 154988 Anonymous
Anonymous's picture

I'd say it's as likely as not that they hold the thing together. As was said above, the banks and the REITS are too interconnected. In for a penny in for a pound. They will try and bail the REITS to the extent that the REITS threaten the cap levels at the banks. The only thing that could conceivably stop them short of geopolitical r geological upheaval is if the short maturity rollovers coming up overwhelm the market. E.g. the Chinese balk. Other than that they will move a sufficient number of the REIT debts on to the Fed balance sheet and replace the asset on the banks books with a newly minted long bond and worry about it in 30 when the bond comes due.

Mon, 12/07/2009 - 10:33 | 155165 Anonymous
Anonymous's picture

Meyberry House New York (220 East 63rd Street aka The Blake)

1. CMBX 4/5 deal: CSMV 07-C4

2. Current loan balance: $90 million, matures September 2016

3. DSCR: 0.78x

4. Total sq. footage: 717,339

5. Occupancy: 97%

6. Loan comes out to $292.75 per sq. foot

9. BarCap estimated loss: 40%
___________________
This confuses me guys. Why would lender lose a dime on this loan? Isn't a prime Manhattan apartment building worth $300 per square foot with rents over $3,400 per month?

Mon, 12/07/2009 - 12:47 | 155324 Anonymous
Anonymous's picture

Who the hell pays for these loans per quare foot for property??

I paid $44 / sq ft for my house and I thought it was almost robbery at that point in 2003.

290+ per square foot? That's insane.

Wed, 12/09/2009 - 01:17 | 157576 Anonymous
Anonymous's picture

Gerald celente & Jim rogers aren't wrong in their forecast or assessment. In fact, they are often early, sometimes too early. Its like what they say about golf... Its not how you drive but how you arrive. Whats the point of making profit now only to lose it all later?
As an Asian, I can tell you that the water has gone under the bridge already. Its a matter of when, not if things will start to unravel.
Its almost strange how some people seem to hope, and listen to those who never saw the crisis coming in the first place.
All the talk about recovery now is like...
Oh %^$^& the guy just fell off the 10 storey building!!! (Economy falling off)
Mainstream news: Don't worry, he'll probably land on some roof, and after that some boxes, then some mattress... and get back up after a while. Maybe he'll be hospitalized but he should be up and walking in a few months or a year or two at most. (All the talk about V shape, L shape, U shape, W shape recovery and all the other speculation)
Gerald Celente & Jim Rogers: The guy is dead.
Federal Reserve: Lets hide his body in the morgue and tell people that he's in bad shape. Its going to be extremely challenging and difficult for him to recover, but we're confident he'll make it. He just needs life support for now. (Stimulus)

I can tell you guys that unless the law of gravity has changed the writing is already on the wall. I don't really blame Obama administration for taking the present path. It takes someone with true character during these unprecedented times to make hard choices, like former President Reagan.

When individual prints money in their basement its called fraud and counterfeiting. When governments do it, they call it quantitative easing. This crisis has exposed a serious fundamental flaw in the currency. Its coming to a breaking point. If you are one of the countries holding US dollars, you'd be very concerned. You know the implications that the present administration will cause with their policies but on the other hand you also know that you can't shoot yourselves on the foot. What would you do?

I remembered one article I read where someone said that... "the light at the end of the tunnel is in fact an oncoming freight train"

I'm sure not everyone in the developed countries are dumb and most will have taken the necessary actions in view of what is to come.

The most your administration can do for now is to postpone the inevitable. Every delay is grace from Above. You guys should use the extra time to prepare yourselves. When someone falls off a ten storey building, theres nothing to speculate about. He's dead.

Wed, 12/09/2009 - 18:28 | 158332 MsCreant
MsCreant's picture

Thanks for your post anon.

Mon, 12/14/2009 - 15:06 | 163467 Anonymous
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Sat, 01/23/2010 - 21:41 | 204187 Anonymous
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does anyone know how to figure out what problem loans are in the CMBX.NA.BBB.2 deal. this article has done a great job identifying the cmbx 4 or 5 deals that the properties are in but there doesn't seem to be anything from the other cmbx indices. are any of these same properties possibly in the cmbx 2 indices as well? apparently someone bet big on that deal (cmbx 2) last week and this site reported it but they haven't reported what loans/properties (and related companies) might be the cause of it.

http://www.creditlime.com/2010/01/22/big-bet-in-commercial-mortgage-land...

Tue, 07/27/2010 - 03:39 | 489808 Maud Ockley
Maud Ockley's picture

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In addition to presenting the property, we highlight the specific loan amount within any given CMBS deal, as well as the property's most recent DSCR (Debt Service Coverage Ratio - comparable to a Free Cash Flow to Interest ratio: anything below 1.0x means the property does not cover its debt service and is a flashing sign of an impending default), complete with any detailed delinquency or special servicer notes as collected by BarCap. Notable in the commentary are numerous tidbits about prevailing rents as well as less than public negotiations between various stakeholders which disclose just how impacted CRE across the country really is.

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