As demand for distressed U.S. commercial assets crescendos, UBS is shopping a pool of failing commercial mortgages with a face value of $1.5 billion, Bloomberg News reported. Bids for the portfolio are due Wednesday. [more]

From left: CBRE vice chairmen Darcy Stacom (top) and Bill Shanahan, 33 Maiden Lane and Federal Reserve Bank of New York Chairman Lee Bollinger

The Federal Reserve Bank of New York exercised its right to buy the downtown office building it occupies for $207.5 million, according to CBRE Group, which marketed the building. The 27-stoy 600,000-square-foot property at 33 Maiden Lane, between Nassau and William streets, was put on the market by Atlanta-based Invesco and Hannover Leasing in October.

While the Fed’s occupancy of three-quarters of the building lent it stability, the lease also mitigated the building’s upside, according to published reports, because it was signed in 1986 and guarantees a below-market rate through 2023. [more]

From the South Florida website: Florida home flippers were partly to blame for the housing downturn in the state, and their role is larger than previously thought, according to a federal report. “We conclude that investors were much more important in the housing boom and bust during the 2000s than previously thought,” the report, by the Federal Reserve Bank of New York, noted. [more]

Real estate speculation was an overlooked but apparently significant factor in the U.S. real estate bust, according to a report by researchers with the Federal Reserve Bank of New York cited by the Associated Press.

More than one-third of all U.S. home mortgages initiated in 2006 went to people who already owned at least one home and buyers owning three or more properties were the fastest-growing segment of homeowners between 2000 and 2006. According to the report, many of the new wave of speculators used small down payments and subprime credit to acquire properties. [more]

Atlanta-based investment fund Invesco has put the office tower at 33 Maiden Lane on the sales market, Crain’s reported, but thanks to a unique tenant the building’s sales price will likely be compromised.

Three-fourths of the 625,000-square-foot tower is leased by the ultra-credit-worthy Federal Reserve Bank of New York. But the bank rented the space in 1986 in an agreement that runs through 2023, guaranteeing it will be paying below market rate for another dozen years.
[more]

Bank of America agreed to pay $8.5 billion to investors nationwide to settle claims that it sold bad mortgages, and according to Crain’s, the payment stabilized the bank in the eyes of investors. A group of 22 investors, including the Federal Reserve Bank of New York, initially demanded that the bank repurchase $47 billion in subprime mortgage-backed securities that it sold to them as bonds. They argued that the bank profited by continuing to service the bad loans while its investors bled cash. The settlement covers 530 trusts with an original balance of $424 billion, and must still be approved by a court. [more]

After $150 million and more than a decade, the Federal Reserve Bank of New York’s building at 33 Liberty Street is finally ready for the 21st century, according to the Wall Street Journal. The 870,000-square-foot bank, modeled after the Florentine palazzos of the Italian Renaissance, had been in need of nearly every kind of upgrade. The 22-story building, which houses 1,400 employees and 14.8 million pounds of gold bars, got air conditioning, fire alarms and sprinkler systems, as well as modern lighting and updates to its Internet connection and phone lines. Years worth of soot and pollution were removed from the exterior and interior limestone and sandstone walls, while preserving their original aesthetic. The first floor, once a public bank and later an office, is now the New York Fed’s museum. The rehabilitation program was “necessary to ensure the effective functioning of modern-day central-bank operations,” said Thomas Reilly, vice president of real estate and general services at the New York Fed. [WSJ]

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After $150 million and more than a decade, the Federal Reserve Bank of New York’s building at 33 Liberty Street is finally ready for the 21st century, according to the Wall Street Journal. The 870,000-square-foot bank, modeled after the Florentine palazzos of the Italian Renaissance, had been in need of nearly every kind of upgrade. The 22-story building, which houses 1,400 employees and 14.8 million pounds of gold bars, got air conditioning, fire alarms and sprinkler systems, as well as modern lighting and updates to its Internet connection and phone lines. Years worth of soot and pollution were removed from the exterior and interior limestone and sandstone walls, while preserving their original aesthetic. The first floor, once a public bank and later an office, is now the New York Fed’s museum. The rehabilitation program was “necessary to ensure the effective functioning of modern-day central-bank operations,” said Thomas Reilly, vice president of real estate and general services at the New York Fed. [WSJ]

[more]

Tishman’s Chicago purchase included the Civic Opera Building

A Tishman Speyer venture is in default on a mezzanine loan that was part of a $1.7 billion purchase of six Chicago office buildings comprising 5.7 million square feet, which marked the largest real estate deal in Chicago history, sources told Crain’s. Tishman bought the package of mortgages in 2007 at the top of the market from Blackstone Group, which flipped it as part of a $39 billion leveraged buyout of Sam Zell’s Equity Office Properties that year. Tishman is negotiating with the Federal Reserve Bank of New York to rework an estimated $1.4 billion in loans, set to come due next year, according to sources, and in response to the default, the Fed has frozen a reserve fund. “The lenders have delayed certain capital expenditures that already had been approved and that were required under the loan agreement,” Tishman said in a statement. If the buildings cannot get refinanced, they could become part of the growing wave of “zombie buildings,” which lack the money to cover brokers’ commissions and reconstruction. [more]

The Federal Reserve Bank of New York and the City Bar Justice Center are working to recruit more attorneys to volunteer to save New York
City homeowners from foreclosure. The joint effort, called the Lawyers’ Foreclosure Intervention Network,
turned one year old last Thursday, and officials from the Fed and the
city’s Bar, as well as attorneys from the city’s biggest law firms and
financial institutions, gathered to discuss strategies to recruit more
lawyers to the program, particularly from large law firms, where
participation has been almost non-existent. [more]