When Washington issued new rules three weeks ago to facilitate the
modification process for troubled securitized loans, some leaders in
New York’s commercial real estate industry quickly took notice. But anyone hoping to see immediate help for struggling property owners
will be disappointed, experts who track commercial mortgage-backed
securities say. “I think it is premature. [The changes are] really just giving people
the opportunity to enter into negotiations,” said Tom Fink, senior vice
president at Trepp, a firm which tracks commercial mortgage securities.
“Whether it is going to make a difference on any of the loans in New
York City, it is too early to tell.” At a real estate panel last month, Robert Freedman, executive chairman
at commercial firm FirstService Williams, told the audience that the
changes were a positive development. “We will be hearing a lot more about it,” he said. The new rules issued by the Internal Revenue Service Sept. 15 allow the
special servicer to alter loans in CMBS pools under broader
circumstances than before. [more]

From the October issue: Stupid, stupid, stupid cheap.” That’s how low prices have to fall before the commercial real estate market hits bottom, Steven Roth, the chairman of Vornado Realty Trust, predicted earlier this year. In a letter to shareholders in April, the square-jawed mogul confided, “I think we are now at the third and last stupid. Not that he’s buying yet. But in recent months, the 67-year-old real estate titan, along with CEO Michael Fascitelli, the other half of the so-called “Vornado Tornado,” has been building a war chest to go shopping. And when Vornado gets ready to shop, there’s good reason to pay attention.

The sharp decline in asking rents in Manhattan over the past year is
beginning to force lenders to reduce principal mortgage balances in
some buildings, one of the city’s top brokers told an audience in
Midtown this morning. Citing as an example a 200,000-square-foot building in Midtown South,
Robert Freedman, executive chairman at FirstService Williams, said the
lender reduced a loan to allow a major tenant his firm was representing
to sign a 40,000-square-foot lease. In that market, CB Richard Ellis
data shows average asking rents have fallen by 20 percent since their
highs in August 2008. “What we are doing is legislating a cramdown,” he said, referring to
the forced reduction of mortgage principal. It is “a haircut the lender
is going to have to take to restore the rent to a rational basis.” Freedman was part of a real estate panel organized by publisher Bisnow
in Midtown this morning. The other panelists were Robert Alexander, CBRE chairman of the New York region, and Peter Riguardi,
president of the New York office of Jones Lang LaSalle. The event was
moderated by Marc Shapiro, partner with law firm Orrick, Herrington
& Sutcliffe. [more]

Two of the top Manhattan office leasing brokers
said rents had further to fall on a panel yesterday, but Newmark Knight Frank CEO Barry
Gosin took a different stance. Robert Freedman, executive chairman of FirstService Williams said the
market needed another 12 to 14 months before hitting bottom, and large
sublease blocks needed to be absorbed first. Peter Turchin, executive vice
president at CB Richard Ellis, said it might be another year before
prices would pick up. But Gosin said following the fastest price discovery he had ever seen, leasing values are about at the bottom. “Usually I am the bear in the group, this is hilarious,” Gosin said. “I
think prices are pretty well established and I think we are bumping
along the bottom. I don’t think there is a significant decline left in
the market.” [more]