Special Servicer

Eight Takeaways on the Current State of Distress Opportunities

by on August 25, 2010

Since the start of 2009, buyers and sellers have transacted about $16.5 billion in distressed commercial real estate sales. Certainly more are expected to follow. Banks and CMBS special servicers are currently dealing with nearly $290 billion in distressed…

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Eight Takeaways on the Current State of Distress Opportunities

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Apollo, Centerbridge Said to Bid for Stuyvesant Town Servicer CW Financial

by on May 13, 2010

By Jonathan Keehner and Dan Levy May 13 (Bloomberg) — Buyout firms Apollo Global Management LP and Centerbridge Capital Partners LLC made competing bids for CW Financial Services, parent of the second-largest manager of delinquent U.S. commercial real estate loans, according to two people with knowledge of the offers. Berkadia Commercial Mortgage LLC, a partnership between Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. , was also weighing a bid for the New York-based company, said a third person familiar with the matter. The people asked not to be identified because the auction is private. CWCapital Asset Management, a unit of CW Financial , is the special servicer of $143 billion of securitized real estate loans, including more than $18 billion that are delinquent, according to data compiled by Bloomberg. It has access to valuable pricing and payment information, said Ben Thypin , an analyst at researcher Real Capital Analytics Inc. in New York. The new owner would be “in the driver’s seat on a lot of troubled loans,” Thypin said. CW Financial may fetch more than $200 million in the auction, which is being run by Beekman Advisors, said one of the people. Officials at Apollo and Centerbridge, both based in New York, declined to comment, as did representatives for CW Financial, Horsham, Pennsylvania-based Berkadia and Beekman in McLean, Virginia. CW Financial, a commercial real estate finance and investment company, is majority owned by a unit of Montreal- based Caisse de Depot et Placement du Quebec, Canada’s largest pension fund manager. Optimism Rises “The sale is in process and we have no announcement at this time,” Francois Gaboury, a spokesman for the Caisse’s Otera Capital subsidiary, said in a telephone interview. Commercial Mortgage Alert reported in March that Beekman had been hired to find a buyer. Private-equity real estate funds, which have $80 billion to invest, are increasingly optimistic that deals will pick up, London-based researcher Preqin Ltd. said April 30. The outlook is “improved” after U.S. commercial values rose 5 percent last month from March, according to Green Street Advisors Inc., a real estate research firm in Newport Beach, California. When commercial mortgages are packaged into securities, a special servicer is assigned to manage the assets and help direct a restructuring if the loans become troubled. LNR Partners Inc. of Miami Beach, Florida, the largest special servicer, has been assigned about $181 billion of securitized debt, including almost $24 billion of delinquent assets, according to Bloomberg data. LNR Property Corp., the unit’s parent owned by Cerberus Capital Management LP, hired Lazard Ltd. to help restructure as much as $1 billion of debt, people familiar with the matter said on Jan. 14. Stuyvesant Town CWCapital would be the third special servicer to change hands since December. Berkadia bought Capmark Financial Group Inc.’s loan-servicing and mortgage-lending business for $468 million in December. Island Capital Group LLC, the New York- based firm run by real estate investor Andrew Farkas , agreed in March to buy the special-servicing and debt-fund unit of Centerline Holding Co. for about $50 million in cash and $60 million in assumed debt. CWCapital’s largest troubled loan is $3 billion of debt on Stuyvesant Town-Peter Cooper Village, Manhattan’s biggest apartment complex, according to Bloomberg data. The 80-acre property, which is facing foreclosure, was purchased for $5.4 billion by Tishman Speyer Properties LP and BlackRock Inc. near the top of the market in 2006. The firm also handles about a combined $940 million of troubled debt on Manhattan office towers at 1775 Broadway, 620 Avenue of the Americas, 575 Lexington Ave. and 119 West 40th St., and a $425 million loan on the Four Seasons Resort on the Hawaiian Island of Maui, according to Bloomberg data. ‘Short-Term Opportunity’ “CW may be the last major, independent special servicer to go on the market,” said Mohsin Meghji , a principal at New York- based restructuring firm Loughlin Meghji & Co. and chief restructuring officer of Capmark Financial. “There’s a short- term opportunity in servicing fees and gaining a window into so many commercial real estate restructurings has a lot of long- term value.” Leon Black , the former head of mergers for Michael Milken’s Drexel Burnham Lambert Inc., co-founded Apollo in 1990. The firm managed $53.6 billion of assets as of Dec. 31, according to a regulatory filing. The firm’s Apollo Commercial Real Estate Finance Inc., a real estate investment trust, raised about $200 million in an initial public offering last year. Centerbridge, Extended Stay Apollo in March agreed to buy Citigroup Inc.’s real estate investment unit, adding 65 investments in 26 countries with a net asset value of $3.5 billion, a person with knowledge of the deal said at the time. Centerbridge, with hedge-fund manager Paulson & Co. of New York, is leading a group that is bidding for hotel chain Extended Stay Inc. The Centerbridge-Paulson team, which also includes Blackstone Group LP , has committed to invest as much as $905.4 million in Extended Stay, which filed the largest bankruptcy case by a U.S. hotel owner in June. To contact the reporters on this story: Jonathan Keehner in New York at jkeehner@bloomberg.net ; Dan Levy in San Francisco at dlevy13@bloomberg.net

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Apollo, Centerbridge Said to Bid for Stuyvesant Town Servicer CW Financial

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Commercial Mortgage Debt Rallies as TALF Draws to a Close: Credit Markets

March 14, 2010

By Sarah Mulholland March 15 (Bloomberg) — Commercial mortgage-backed bond returns are accelerating as the Federal Reserve ends support for the $700 billion market, showing growing confidence that loan defaults won’t derail the economic recovery. The securities, derived from debt on skyscrapers, shopping malls and hotels, returned 7.41 percent through March 12, compared with 2.55 percent in the fourth quarter, according to a Barclays Capital index . Top-rated securities are yielding about 3.03 percentage points more than Treasuries, the lowest spread since August 2008, according to Morgan Stanley data . Commercial mortgage-backed securities are rallying as the Fed’s Term Asset-Backed Securities Loan Facility to buy older debt draws to a close. The jobless rate is holding at 9.7 percent, indicating employment may be stabilizing. Bond prices were pummeled during the credit crisis and even in “pretty upsetting” scenarios, the safest debt isn’t likely to lose money, said Scott Simon of Pacific Investment Management Co. “CMBS has been doing well on its own, and it’s not on the back of TALF,” said Simon, managing director and head of mortgage- and asset-backed securities at Pimco in Newport Beach, California. “The program had more of a psychological impact rather than brute force.” TALF provides Fed loans to purchase top-rated securities, enabling investors to boost returns with the borrowed cash. About $11.4 billion of older commercial real estate debt has been bought through TALF since the program started in July, according to Morgan Stanley. So-called legacy bonds are those that were issued before Jan. 1, 2009. Delinquency Rate The delinquency rate on commercial real estate loans bundled and sold into bonds rose 31 basis points to 5.73 percent in February, lower than the average increase during the previous five months of 44 basis points, Moody’s Investors Service said March 12 in a report. The delinquency rate a year ago was 1.32 percent, according to the New York-based ratings company. Elsewhere in credit markets, the extra yield investors demand to own company bonds rather than government debt fell 5 basis points last week to 158 basis points, or 1.58 percentage point, as of March 12, according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. Average yields are 4.04 percent, the data show. Corporate bond sales worldwide totaled $79 billion last week, the most since the period ended Jan. 15, bringing the March total to $130 billion, according to data compiled by Bloomberg. Companies have sold $580.6 billion of debt this year, compared with $810.7 billion in 2009. Leveraged Loans Prices on the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index , which tracks the 100 largest dollar-denominated first-lien leveraged loans, ended the week at 90.23 cents on the dollar, the highest since July 7, 2008. The index’s total return was 2.9 percent for the year. The cost to protect against defaults on U.S. corporate bonds fell for a second week as retail sales climbed last month, signaling consumers will contribute more to economic growth. Credit-default swaps on the Markit CDX North America Investment Grade Index Series 13, which is linked to 125 companies and used to speculate on creditworthiness or to hedge against losses, was unchanged at 83.2 basis points on March 12, after falling 2.1 percentage points for the week, according to CMA DataVision. The index declined 6.2 basis points in the week ended March 5. Retail Sales Shoppers braved blizzards in February, as purchases increased 0.3 percent, the fourth gain in the past five months, U.S. Commerce Department figures showed. Results for the prior two months were revised lower. Sales excluding autos rose 0.8 percent, exceeding all economists’ estimates . In London, credit swaps on the Markit iTraxx Europe index of 125 companies with investment-grade ratings fell 2 basis points to 73.75 basis points, the lowest since Jan. 18, JPMorgan Chase & Co. prices show. The indexes typically falls as investor confidence improves and rises as it deteriorates. Credit-default swaps pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent. A basis point is 0.01 percentage point and equals $1,000 a year on a contract protecting against default on $10 million of debt for five years. Two corporate-debt issuers, one in Canada and the other in Argentina, defaulted last week, raising the global total to 19 for the year, according to Standard & Poor’s. The 12-month trailing rate for high-yield, high-risk global defaults was 9.2 percent as of March 11, S&P analysts led by Diane Vazza in New York wrote in a report. The U.S. rate was 10.9 percent, which the analysts predict will fall to 5 percent by yearend, though they said that doesn’t mean that corporate default risk is permanently lower. Fannie Mae Spreads on Fannie Mae and Freddie Mac’s benchmark corporate notes widened 2 basis points last week to 24 basis points, according to Bank of America Merrill Lynch index data. The spread has widened from 17 basis points, the lowest in at least 10 years, in October. It reached a record 183 basis points in November 2008. The most “likely” reason the yield gap has widened is that “spreads had simply reached levels that were too tight, especially given the prospect of the Fed’s exit” on March 31 from a program in which it’s buying $175 billion of the debt, Rajiv Setia and James Ma , analysts in New York at Barclays Capital, wrote in a March 12 report. Lyondell Chemical Lyondell Chemical Co. seeks $2.25 billion of notes and a $1 billion six-year term loan to help it emerge from bankruptcy, according to people familiar with the request. The chemical and fuel company also wants a $1.75 billion asset-based revolving line of credit that won’t be funded at closing, said one of the people, who declined to be identified because the discussions are private. It also seeks a European securitization facility, the people said. Prices on top-rated commercial mortgage-backed securities have soared to about 92.5 cents on the dollar from 61.7 cents in March 2009 before the Fed committed to financing the securities through TALF, according to Barclays Capital data. Spreads have narrowed from 12.3 percentage points a year ago, according to data from Morgan Stanley. “While the rally was seemingly ignited by the introduction of governmental plans to reintroduce leverage into the system, its longevity was fanned by investors’ continually improving view of the world, albeit from an exceedingly dismal starting point,” JPMorgan analysts led by Alan Todd in New York said in a March 5 report. The U.S. unemployment rate held at 9.7 percent in February and the economy lost 36,000 jobs, fewer than economists anticipated, a Labor Department report showed on March 5. Lack of Sales There have been no new sales of commercial-mortgage backed securities this year. The portion of TALF for newly issued commercial mortgage-backed securities was extended through June. The final round of a separate TALF program for asset-backed securities, or bonds tied to consumer and small-business loans, was held earlier this month. Sales of commercial mortgage-backed securities plummeted to $11.15 billion in 2008 from a record $232.4 billion in 2007 as the credit market seized up, Bloomberg data show. Even with U.S. government aid, only $3.04 billion of the bonds were sold last year. The lack of transactions chokes off funding to borrowers with maturing debt. About $28 billion in commercial mortgages packaged into bonds mature this year, according to Credit Suisse Group AG data. Even as economic concern abates, Barclays Capital analysts said the delinquency rate will continue to climb as borrowers struggling with debt loads hand over loans to special servicers, firms that handles troubled loans. A $3 billion mortgage on the Stuyvesant Town-Peter Cooper Village apartment complex in Manhattan, the largest loan in the commercial-mortgage bond market, was transferred to a special servicer in late January, and isn’t yet classified as delinquent, the analysts said in a March 3 report. To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

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Easton Lynd to Manage Distressed Properties for Warren Buffet-Owned Berkadia Commercial Mortgage First Assignment Is

January 29, 2010

of The Lynd Company, has been tapped by Berkadia Commercial Mortgage LLC to manage a portion of its distressed property portfolio throughout the United States. Berkadia, based out of Horsham, Pennsylvania, is a top-rated, special servicer of commercial

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Easton Lynd to Manage Distressed Properties for Warren Buffet-Owned Berkadia Commercial Mortgage

January 29, 2010

of The Lynd Company, has been tapped by Berkadia Commercial Mortgage LLC to manage a portion of its distressed property portfolio throughout the United States. Berkadia, based out of Horsham, Pennsylvania, is a top-rated, special servicer of commercial

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Ross May `Go All the Way,’ Buy NYC’s Stuyvesant Town With Control in Limbo

January 26, 2010

By Oshrat Carmiel and Sharon L. Lynch Jan. 26 (Bloomberg) — Billionaire investor Wilbur Ross said he and partners including developer Richard LeFrak may consider buying the Stuyvesant Town-Peter Cooper Village apartment development after its owners cede control to lenders. “We are not really capital-constrained, so we can put up whatever is needed,” Ross, 72, said in a telephone interview. “We’re prepared to go all the way.” The future ownership of the 80-acre property, Manhattan’s biggest apartment complex, was put in question yesterday after owners Tishman Speyer Properties LP and BlackRock Inc. said they will turn over the buildings to lenders following a missed debt payment. Creditors with a claim include Fannie Mae and Freddie Mac and holders of so-called mezzanine debt including a Winthrop Realty Trust affiliate and Gramercy Capital Corp. CW Capital is the special servicer for the senior portion of the debt. New York-based Tishman and BlackRock bought the development in 2006 from insurer MetLife Inc. for $5.4 billion with plans to remodel and raise the prices of rent-regulated units to market rates. Those plans were challenged by a recession, slackening demand for rentals and a legal victory for tenants who claimed some rent increases were illegal. Tishman said yesterday it wouldn’t consider a long-term contract to manage Stuyvesant Town that doesn’t involve ownership. WL Ross is working with both the LeFrak Organization and Centerbridge Partners LP on a management proposal for the complex, Ross and LeFrak said yesterday. LeFrak is prepared to manage the property, Chairman and Chief Executive Officer Richard LeFrak said. Time to ‘Surface’ Stuyvesant Town “seemed like it was an accident waiting to happen,” Ross said yesterday. “And now with the default, the court’s decision, and the decision by Tishman to step down as manager, it seemed like a good time for us to surface.” The process for picking a property manager to replace Tishman is “not clear,” LeFrak said in a telephone interview. “We’re going to come forward,” LeFrak said. “The group has fantastic experience to operate this property both for the benefit of the bondholders and the tenants and the required capital to help in a recapitalization if that’s what’s done.” Winthrop’s group of senior investors wants a voice in any management change, Chairman and CEO Michael Ashner said. “Any voluntary change in control or management at Peter Cooper Village-Stuyvesant Town to someone other than the affiliate of Tishman Speyer requires the consent of the lending group,” Ashner said in an interview yesterday. “It’s an issue which our group intends to participate actively in.” Related Talks Related Cos., the New York-based developer and property manager of projects such as the Time Warner Center in Manhattan, is among companies in talks with CW Capital about managing the complex, a person familiar with the situation said. The talks are preliminary and CW is reaching out to all firms capable of taking on the property, the person said. A Related representative declined to comment. Beth Orcutt, a spokeswoman for CW Capital, also declined to comment yesterday. “There has to be a global solution,” Ross said. “The tenants’ litigation claims have to be satisfied, someone has to figure out what’s the value, and what should be the new capital structure.” Tishman Speyer and BlackRock each invested $112.5 million out of total equity financing of $1.9 billion. They took out a $3 billion mortgage from Wachovia Bank and $1.4 billion of mezzanine debt. The mortgage was packaged with other commercial- property loans and sold as securities. The biggest holders are Fannie Mae and Freddie Mac, the U.S. government-owned home-loan finance companies. Fannie Mae spokesman Brian Faith declined to comment yesterday on Tishman’s move. Freddie Mac spokeswoman Patti Boerger also declined to comment. Veteran Housing Stuyvesant Town was built in 1945 as an affordable housing complex for World War II veterans and was governed by strict rent regulations. MetLife owned the property, comprised of modest red-brick buildings, for six decades before selling to Tishman and BlackRock. It’s now home to about 25,000 tenants. The LeFrak partnership’s involvement could range from managing the property, owning a stake, or buying it outright, depending on the outcome of discussions with bondholders and tenants and the property’s need for capital, Ross said. “There are a lot of constituencies here and all of them need to be addressed in order to have a happy outcome,” Ross said. “This is a place where thousands of people live so it’s much more important than a real estate property. It’s home for a lot of people.” Real Estate Investments Ross , the chairman, CEO and co-founder of WL Ross & Co., is looking for real estate opportunities in the declining U.S. market after successful turnarounds in the steel and textile industries. He said in a Jan. 15 interview with Bloomberg Television that it’s “logical” to look at a possible purchase of GMAC Inc.’s mortgage-servicing business. He teamed up with LeFrak and Starwood Capital Group LLC in a successful bid in October to buy $4.5 billion of real estate assets from the failed Chicago-based lender Corus Bankshares Inc . The LeFrak family built LeFrak City in Queens, an affordable housing complex with about 5,000 units, and is the biggest developer in Jersey City, New Jersey, where it built and manages high-rise rental apartments, condominiums, office buildings and retail shops on the site of an old rail yard. The company also has interests in California and Florida. A message left with the public relations office of Centerbridge, a New York-based investment fund, wasn’t returned yesterday. To contact the reporters on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net ; Sharon L. Lynch in New York at sllynch@bloomberg.net

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The Alter Group Forms Alter Asset Recovery

January 25, 2010

The Alter Group, one of the country’s top five real estate developers, announces a major new affiliate, Alter Asset Recovery (http://alterassetrecovery.com/), to provide expedited solutions for lenders and special servicers holding distressed properties.

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Equity One named The Piers receiver

December 11, 2009

R Us and Target. It was 30% occupied as of Sept. 30. We are pleased to enter the distressed real estate market through offering our leasing, redevelopment and management platform to the special servicers, said Jeff Olson, chief executive officer. We view

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Tishman BlackRock Near Restructuring or Sale of New York’s Stuyvesant Town

November 9, 2009

By Hui-yong Yu, Jonathan Keehner and Oshrat Carmiel Nov. 9 (Bloomberg) — Tishman Speyer Properties LP and BlackRock Realty , the owners of Manhattan’s Stuyvesant Town- Peter Cooper Village, moved closer to restructuring $3 billion in debt on the apartment complex as the property verges on default, Fitch Ratings said. The companies turned the loan over to mortgage servicer CW Capital on Nov. 6, Fitch said in a statement. Fitch said the property doesn’t produce enough income to pay the debt and a reserve fund probably will be depleted by year-end. A sale is more likely than a restructuring because the complex has lost so much value, said Kevin O’Shea , managing partner and head of the real estate practice at the law firm Allen & Overy. “We requested that the joint venture’s loan be moved to special servicer in order to facilitate negotiations on a restructuring of the debt load,” said Bud Perrone , a Tishman Speyer spokesman. “The loan is not in default.” The biggest holders of the securitized mortgage are Fannie Mae and Freddie Mac, the government-owned home-loan finance companies. Freddie Mac has said it doesn’t expect to lose money on the bonds backed by the property. Tishman Speyer and BlackRock paid $5.4 billion for Stuyvesant Town in November 2006, near the top of the market, in the biggest deal in New York residential real estate history. They counted on increasing rents but were blocked by a tenant lawsuit and rising costs. Since 2007, U.S. commercial property values have fallen about 40 percent and apartment rents declined nationwide. The drop in prices and the credit freeze have made refinancing many loans impossible. Wiped Out Stuyvesant Town’s worth has plunged to $1.8 billion, according to Fitch. This means that all the investors besides the senior bondholders are probably wiped out. BlackRock wrote its investment to zero at the end of last year, spokesman Brian Beades said. Beades referred all further questions on Stuyvesant Town to Tishman. The Florida State Board of Administration also wrote off its $250 million investment. Transferring a loan to a servicer means “the occurrence of a default is considered to be imminent,” said O’Shea , who represented the lenders in foreclosures of Boston’s John Hancock Tower and New York’s Sheffield57 condominium. A loan modification is far less likely in this case, said O’Shea. “The borrowers’ equity is currently so far underwater, there’s not much point in extending the loan in the hopes that the market will recover quickly enough to service or repay the debt,” O’Shea said. “You’d probably be just delaying the inevitable.” Loan Transferred The transferring of the loan to special servicing means holders of the $1.4 billion of mezzanine debt, including Fortress Investment Group Inc. and SLGreen Realty Corp., may have lost their money. CW Capital, Tishman and BlackRock are likely to begin talks soon. Among the scenarios that could be pursued include an outright sale, a debt restructuring, and the conversion of bondholder stakes to equity. In a case like this, bankruptcy is another possible path. The resolution could take a different turn should city or state officials get involved. A group of Stuyvesant Town tenants made their own bid for the complex in 2006. The property has about 25,000 residents. Eric Bederman, a spokesman for the city’s department of housing preservation and development, declined to say if the city is in discussions with anyone on the apartment complex. “We’re keeping an eye on it,” said Bederman. Talks Welcomed “We would be glad to talk with the officials in hopes that the debt can be restructured with the special servicer and the residents have affordable places to live,” said Freddie Mac spokeswoman Patti Boerger . “As a bondholder, we don’t have the legal right to make decisions on the restructurings,” she said. Boerger said Freddie Mac hasn’t been contacted by city or state officials about being part of a new ownership entity. “There will be many factors involved in the workout,” including potential legislative changes to rent-stabilization laws, Fitch said on Nov. 6. The $3 billion mortgage doesn’t mature until 2016 and works out to a “low” $267,213 per apartment, based on 11,227 units, Fitch said. Affordable Housing Complex Officials at CW Capital weren’t available for comment after business hours. CW Capital is a unit of Caisse de depot et placement du Quebec, Canada’s largest pension fund. Stuyvesant Town was built in 1945 as an affordable housing complex for World War II veterans and the development was governed by strict rent regulations. MetLife Inc. owned the property, comprised of modest red-brick buildings, for six decades before selling to Tishman and BlackRock. Since taking over the ownership, the Tishman group has marketed the property as a luxury rental complex offering amenities such as a putting green and concierge service. The new owners had aimed to make a profit by raising rents as old tenants moved out and by converting units to market rates. Tenants sued, claiming the owners illegally increased rents on more than one-third of the units because they had received tax breaks for building upgrades and because the project was built with city assistance. After buying Stuyvesant Town, Tishman Speyer repainted the lobbies, installed new automated door keys and new washers and dryers, among other improvements. Court Decision On Oct. 26, four days after New York State’s highest court upheld the tenants’ claim, elected officials representing Manhattan’s East Side wrote to the chief executives of Fannie Mae and Freddie Mac urging them to protect the tenants in any loan workout. Tishman Speyer and BlackRock each invested $112.5 million in Stuyvesant Town out of total equity financing of $1.9 billion. They took out a $3 billion mortgage from Wachovia Bank and $1.4 billion of mezzanine debt. About half the equity was set aside in reserves to pay interest, property taxes and such. “Cash flow generated by the property remains insufficient to service the debt,” Fitch said. “Debt service reserves are expected to be depleted by the end of December.” The $3 billion mortgage was bundled with other loans that formed five pools of commercial mortgage-backed securities that were sold in 2007 to investors. Fannie and Freddie are the largest holders of the senior-most classes of the loan. Transfer Scenarios One scenario would be that the lenders don’t foreclose, leave the current ownership in place, and collect all of the rental income after paying operating expenses, including a management fee to the owners, said O’Shea. “All the net revenue generated by the property goes to the lenders now anyway,” he said. Stuyvesant Town could be transferred to the lenders through a consensual or a contested foreclosure, although it’s unlikely because Fannie Mae and Freddie Mac aren’t in the business of owning real estate, O’Shea said. As long as the net revenue is being paid to the lenders, there’s little economic incentive for them to take ownership since such a transfer would trigger a tax equal to 2.625 percent of either the debt being foreclosed or the property’s market value, whichever is higher, said O’Shea. Preserving Community Since the debt is $3 billion and the property is estimated to be worth less than $2 billion, the transfer tax would come to $78.75 million, according to O’Shea’s analysis. Any new financing plan “must preserve” the property for middle-class residents and keep it as a single community, said the letter to Fannie Mae and Freddie Mac signed by State Senator Thomas Duane , Congresswoman Carolyn Maloney , Borough President Scott Stringer , Assembly Member Brian Kavanagh and Council Member Daniel Garodnick . The fate of Stuyvesant Town probably won’t be clear for several months. Different classes of bondholders might have competing aims, dragging out any resolution. The senior classes, more insulated from losses, might push for an immediate sale, while more junior bondholders might seek a loan extension in the interests of recouping more value when the real estate market recovers. The legal questions surrounding future rent increases at Stuyvesant Town further cloud the outcome. Jon Searles, a spokesman for Fannie Mae, didn’t immediately respond to requests for comment placed after regular business hours on Nov. 6. To contact the reporters on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net ; Jonathan Keehner in New York at jkeehner@bloomberg.net ; Oshrat Carmiel in New York at ocarmiel1@bloomberg.net

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Tishman Blackrock Move $3 Billion Stuyvesant Town Loan to Special Servicer

November 7, 2009

By Alan Mirabella Nov. 7 (Bloomberg) — The $3 billion loan backed by Stuyvesant Town-Peter Cooper Village in Manhattan was transferred to a special servicer at the request of Tishman Speyer Properties Inc. and Blackrock Realty , Fitch Ratings said. CW Capital will work on a possible loan modification, Fitch said in an e-mail yesterday. Servicers are used when a loan is in or near default and needs to be reviewed. The loan was transferred after sponsors Tishman Speyer and Blackrock requested “relief,” Fitch said, without providing details. “Fitch expected the transfer of the loan to special servicing as cash flow generated by the property remains insufficient to service the debt,” the ratings company said in the statement. “Debt service reserves are expected to be depleted by the end of December.” Tishman Speyer and its partners are moving toward a default on the debt on Manhattan’s largest apartment complex, which they purchased for $5.4 billion three years ago. Fitch downgraded its ratings on the loan last month and a New York court ruled the owners illegally raised rents on thousands of tenants. Bud Perrone , a Tishman spokesman, didn’t immediately respond to a phone message left for comment yesterday after business hours. A $3 billion loan to finance the acquisition was bundled with commercial mortgages and sold as bonds. The property now has a market value of about $1.89 billion, down 65 percent from the appraised value at the time the loan was securitized in November 2006, according to data from Deutsche Bank. MetLife Sold The group bought the 80-acre, 11,200-unit developments from insurer MetLife Inc. in 2006, near the top of the U.S. property market, with plans to remodel and raise the cost of rent- regulated units to market rates. Soon after, the global credit crisis and the recession hit, constraining the group’s ability to raise rents. Expenses to convert units were also higher than anticipated, Standard & Poor’s said in a report in October 2008. The New York Court of Appeals in Albany said last month that the rent increases on about 4,350 apartments at the Stuyvesant Town-Peter Cooper Village complex violated the law because the development was built with city assistance and the owners received tax breaks. “Fitch believes there will be many factors involved in the workout and ultimate recovery of the loan, including a possible modification, potential legislative changes to rent stabilization laws, commitment of the loan sponsors, the remaining seven-year term of the loan, and the low loan per unit ($267,213),” the ratings company said in its statement. To contact the reporter on this story: Alan Mirabella in New York at amirabella@bloomberg.net .

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Fitch: Stuy Town Loans Transferred to Special Servicer (The New York Observer)

November 6, 2009

The main $3 billion mortgage for Stuyvesant Town and Peter Cooper Village has been transferred to a “special servicer,” according to the rating agency Fitch, a significant step taken when loans are in default or on the verge of default. The owners of the giant 11,200-unit Manhattan apartment complex, a partnership led by Tishman Speyer and BlackRock, had just $24 million left last month in a …

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Fitch Affirms Pacific Life's CMBS Servicer Ratings

October 31, 2009

Also at the same date, Pacific Life was the named special servicer for 13 US CMBS transactions consisting of 123 loans totaling $2.1 billion and was actively special servicing five CMBS loans totaling $440 million. …

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Fitch Cuts Ratings On Peter Cooper CMBS, Says Default Likely …

October 30, 2009

Upon default, the special servicer will need an updated appraisal. If this is significantly lower than the outstanding loan amount, appraisal subordinate entitlement reductions (ASERs) based on an appraisal reduction amount (ARA) will …

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CMBS Bonds Downgraded on Special Servicing Action

October 27, 2009

Chris Rodriguez submits: Standard & Poor’s had downgraded 15 classes of bonds backed by a 5 million loan secured against the Four Seasons Hotel in New York (FS) and 3 other luxury resort hotels. The action was triggered by a drop in …

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Fitch Places 247 CMBS on Rating Watch Negative

October 25, 2009

The 2005 transactions have 4.3% of loans in special servicing and 13.1% loans of concern, compared with 7.2% and 18.3% for the 2006 vintage, 7.1% and 25.9% for the 2007 vintage and 9.6% and 23.7% for the 2008 vintage. …

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"Special Servicer" to Take Over Debt Due to "Imminent Default"

October 23, 2009

According to people familiar with the matter, a ” special servicer ,” CW Capital, is in the process of taking over the deal’s CMBS debt due to “imminent default.” Special servicers are experts in dealing with troubled loans. …

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Troubled CMBS Loans Skyrocket as Special Servicers Wrestle with …

October 23, 2009

By the end of the third quarter of 2009, only 10% of loans dispatched to special servicing following delinquencies or defaults had been returned to the loans’ master servicers and categorized as current. …

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City sees more CMBS property value cuts | The Real Deal | New York …

October 12, 2009

They care about preserving their investment, while master services are concerned about “over-advancing” P&I on properties not worth their debt. In cases where the special servicer does not receive the updated appraisal within 60 days, …

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More Commercial Loans Enter Special Servicing as Performance …

October 8, 2009

The amount of commercial mortgage loans entering special servicing swelled 6% in August as 103 loans totaling $1.8bn joined the ranks of specially-serviced loans within the commercial mortgage-backed securities ( CMBS ) Fitch Ratings …

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Need to know: who's who in a CMBS crisis – Property Week

October 1, 2009

When certain events take place, such as a loan default, the administration of the loan is transferred to the special servicer , which has a duty to act in the interest of all bondholders and has approval authority over material servicing …

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Situs Expands Special Servicing Amid Pressured European CMBS …

September 22, 2009

European CMBS loan performance continued to reflect the effects of asset value and income deterioration as more loans became delinquent, breached covenants and moved into special servicing in August. Write to Diana Golobay. …

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