U.S. commercial mortgage-backed securities saw another monthly jump in the rate of delinquencies in October, according to data from Fitch Ratings, with Larry Gluck’s $225 million loan, collateralized by the Riverton Apartments in Harlem, clocking in as the largest newly delinquent loan, even though it was transferred to a special servicer over a year ago. Gluck, however was not alone. Late-pays on all CMBS jumped 3.86 percent since September. Office properties saw the biggest jump in delinquencies out of the different types of commercial properties tracked, with 19.4 percent more recorded in October than the month before. Overall, hotel properties saw the greatest percentage of mortgage defaults, with 6.81 percent of hotel property loans going into default, according to the report. TRD
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When ailing banks were lining up for infusions of federal money last year, as part of the government’s $700 billion bailout package, the New York Community Bancorp politely said “no thanks.” The company, whose holdings include savings banks and larger commercial operations, was cleared to receive $596 million in preferred equity stock from the Treasury Department. But its earnings capacity was so solid, according to Joseph Ficalora, its chairman, president and chief executive, the funds weren’t needed. And this may be even more striking considering that a steep 80 percent of its business is real estate loans; among them, 71 percent are apartment building mortgages with another 21 percent to similar residences with stores in their ground floors. And all told, about a quarter of its loans underwrite Manhattan properties. But Ficalora,
who began working for the company in 1965, as a teller at a bank branch
in Corona, Queens, just a few blocks from his house, doesn’t invest in
splashy, high-risk mega-projects. On the contrary. Most of his buildings are comparatively small, old and rent regulated.
Though they may not generate huge multiples, they are dependable bets
over time, which is particularly beneficial when the market tanks, like
recently. And with an average size of $4 million, 60 percent loan-to-value ratio
and four-year payback rate, those loans offer minimal exposure,
Ficalora explained. As a result, the company, which is based in
Westbury, NY, posted a third-quarter profit, in its fifth consecutive
quarter of growth. It may also explain why New York Community Bancorp, with assets of $33
billion, is the country’s 24th largest bank-holding company and the
city’s largest thrift. Click here to see The Real Deal’s Q & A with Ficalora. [more]

As rating agencies have slashed the value of bonds tied to securitized commercial real estate loans nationwide, some loan servicers are taking a harder look at the value of their assets and finding they are worth a lot less. Loan servicers reported more appraisal reductions for New York City properties last month than in the preceding eight months combined, data from mortgage tracking firm Trepp showed. The firms that manage troubled loans in commercial mortgage-backed securities, known as special servicers, reported in September appraisal reductions for 11 properties, reflecting a total reduction of $150 million that month, the firm reported. In the previous eight months, there were only three properties that showed a total reduction in value of $15 million; and there were no appraisal reductions published in the first eight months of 2008, Trepp reported. [more]

The Riverton Houses apartment complex in Harlem was reappraised at $108 million, less than half the value of its $225 million mortgage, according to a report today from commercial mortgage tracking firm Trepp. The property has now lost 68 percent of its value compared to its appraisal value of $340 million in January 2007, according to a source. Comments

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Fitch Ratings downgraded another series of commercial real estate loans, driven in part by concerns that the troubled Riverton Houses apartment complex in Harlem would incur a “significant loss upon liquidation” based on a recent appraisal report. Wells Fargo, the trustee of the Riverton loan, filed a motion last month in New York State Supreme Court for a summary judgment against developer Laurence Gluck of Stellar Management, who defaulted on a $225 million loan and was thus far unable to arrange a workout with his lenders. Sources close to the case said a hearing is scheduled for tomorrow to determine whether to order a judgment against the developer. If such an order is issued, a referee would be appointed to determine the total amount due and what steps would be taken to place the property up for sale and collect on any personal guarantees. [more]

The total value of delinquent securitized loans written on Manhattan properties declined by 55 percent in May to $121 million from $272 million in April, according to data from loan tracking firm Trepp. While this drop is significant, the majority of the value of April’s delinquencies was the $225 million note on the Riverton Houses in Harlem, and that note was no longer classified as delinquent in May. Included for the first time on the delinquency list in May was $30 million remaining on a loan with an original principal balance of $375 million on Kent Swig’s Sheffield57 at 322 West 57th Street in Midtown, and $53 million secured by the Soho office building 625 Broadway owned by the Moskowitz family, the data shows. [more]