The Real Deal New York

Sale of delinquent Midtown mortgage shows 2007 prices back

Property valuations approaching pre-crash levels

June 02, 2014 11:40AM

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219 West 40th Street

The sale of a $160 million commercial mortgage security secured by a single Midtown office tower earlier this year provides another sign that property values are recovering to pre-crash levels.

Blackstone Group purchased the mortgage tied to 119 West 40th Street for $165.7 million, roughly the same price the original joint venture bought the tower for in 2007.

It’s one of New York’s large delinquent commercial loans that has been in default for a while, Joe McBride, research analyst at Trepp, told the Wall Street Journal.

“Seeing it get sold for as much as it did is a good sign,” said McBride.

Blackstone sees the price as a “sizable discount” considering the property’s location near Bryant Park, Frank Cohen, a partner in the firm’s real estate investment group, told the Journal. Blackstone has invested in a number of properties in the area, including 1095 Sixth Avenue, the site of a future Whole Foods.

Blackstone’s purchase of the CMBS also helps reduce the total value of the city’s delinquent CMBS loans, the Journal reports.

The market for commercial mortgage backed-securities tied to a single building in New York accelerated last year, helping to drive total CMBS generation in New York to $12 billion. [WSJ]Tom DiChristopher

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