New York real estate faced a whirlwind year in 2011, and numerous contenders surfaced when The Real Deal sat down to pick our favorite stories of the year.
There was the limping recovery of the residential sales market, coupled with several standout deals and the runaway revival of the rental market. Developers snapped up distressed properties, such as One Madison Park, while other stalled projects like the Azure cond-op tower came back to life. [more]
Despite the historically low interest rates, commercial owners worldwide may face significant hurdles refinancing in the coming year, the Wall Street Journal reported. And most of the five-year mortgages used for commercial properties when the boom was at its height will be coming due next year.
For instance, a venture that includes Goldman Sachs’ Whitehall funds has a $203 million mortgage on the Park Central Hotel, at 870 Seventh Avenue between 55th and 56th streets, that matured in November, the Journal said. Despite being current on the mortgage, the group was unable to refinance, and is asking the lender to accept a discounted payoff on the loan, according to real estate analytics firm Trepp, which also shows the mortgage as delinquent.
[more]
Lenders and investors have been left high-and-dry with CMBS 3.0, the latest cycle of commercial mortgage-backed securities transactions arranged since August, as tightening credit narrows the pipeline for investments, GlobeSt.com reported.
“We had a lot of fast money buying these securities, and when they saw a better opportunity, they took it,” said Joseph Franzetti, senior vice president at Berkadia Commercial Mortgage, comparing the situation to the fickle world of romance. “And like a person who found a better date, they left you standing by yourself.”
Christopher Reilly, managing director at UBS Securities, attributed much of the reduction in purchasing to the uncertainty in the stock market caused by the Standard & Poor’s downgrade of the US credit rating and the removal of $1.5 billion in CMBS from the market due to a change in criteria this summer. [more]
More than 70 percent of 280 surveyed real estate CEOs, COOs and CFOs said they have a negative, or “bearish,” outlook for the commercial real estate sector over the next 12 months. The poll, cited by Reuters, was conducted by global law firm DLA Piper in connection with its Global Real Estate Summit held today in Chicago.
A lack of confidence in the Obama administration, the general gridlock in Washington and poor job growth were reasons behind the pessimism. Though sales have increased this year, and prices are up 12.5 percent from their lows in April, investors worry that the market will lose more footing. [more]
Much of the positive momentum in the nation’s commercial mortgage-backed securities market seemed to have vanished in July, Trepp says in a monthly report, with the nationwide delinquency rate spiking to 9.88 percent, an increase of 51 basis points from June.
For much of the spring, the CMBS market had been experiencing an upswing. There was a greater rate of loan issuance, troubled loan resolution and drop in delinquency rates. The sudden shift may be attributed to a technical change in the manner in which some servicers report their data, Trepp said, but widening CMBS spreads and an announcement by Standard & Poor’s that it was pulling a rating last week may have made issuers more tentative in their approach to new lending. – Katherine Clarke [more]
Crexus Investment Group said yesterday evening that it rejected an unsolicited $254 million acquisition offer by Starwood Property Trust. In the late afternoon yesterday, Starwood made the $14-a-share-offer to acquire Crexus, a Manhattan-based real estate investment trust. The Starwood offer was contingent on Crexus suspending its previously announced offer to buy $586 million in real estate assets from Barclays Capital Real Estate Finance. Crexus planned to launch an initial public offering of $50 million shares of common stock, which would be used to finance the acquisition of the Barclays assets. [more]
Commercial real estate investors may still feel some pain in 2011, according to a new report released today by Trepp. Nationwide, the rate of commercial mortgage-backed securities loans that are 30 or more days delinquent climbed to 9.2 percent in December, the highest ever recorded, according to Trepp. Manus Clancy, managing director of Trepp, said that the rocky nationwide delinquency rate was an indication of a rough road ahead in the commercial market.
“Many have speculated that… the commercial real estate crisis was nearing its final stages,” Clancy said. “The December delinquency rate underscored that there still may be some nasty surprises in store even as the market shows some signs of healing.”
Click here to see the high profile New York City CMBS loans that entered — and exited — Trepp’s trouble list. [more]
Commercial mortgage-backed securities loans are showing unusually high delinquency rates, according to the Mortgage Bankers Association, which noted that third-quarter delinquencies in that class of loans reached 8.58 percent — their highest level in more than 10 years. But other commercial and multi-family loans showed improvement in the third quarter, according to the MBA, with delinquency rates on loans held by Fannie Mae and Freddie Mac both below 1 percent. TRD [more]
The delinquency rate among commercial mortgage-backed securities climbed gradually in September, according to Moody’s monthly CMBS report. Delinquencies climbed 14 basis points on the Moody’s index, hitting 8.24 percent, marking the smallest monthly increase since October 2008. The 311 loans that became newly delinquent last month had a combined value of $3.8 billion and brought the total number of delinquent loans to 3,971, representing $52 billion in debt. Nick Levidy, a managing director with Moody’s, said that while the rate of increase among CMBS delinquencies was modest last month, it’s far too soon to celebrate. “This easing of the rate of growth in the delinquency rate does not necessarily portend a near-term improvement in the market,” Levidy said. “The number and balance of loans becoming newly delinquent remain high.” TRD
Investment management firm BlackRock was hired by state insurance regulators to evaluate the industry’s potential losses from holding commercial mortgage-backed securities, Bloomberg news reported. By the end of the year, BlackRock will review more than 7,000 securities, the National Association of Insurance Commissioners said yesterday in a statement. The New York-based firm will calculate loss expectations for the holdings, which will determine how much capital insurers must hold to cushion potential declines, NAIC said. Insurance regulators are searching for an alternative to Moody’s Investors Service and Standard & Poor’s, whose ratings were cited by some as one cause of the financial crisis. BlackRock advised financial companies and governments during the credit crisis on how to value mortgage-related assets. It won the NAIC contract from among 16 bidders. [Bloomberg]
