Fitch downgrades loan pool led by Stuy Town

New York /
Apr.April 01, 2011 01:01 PM
From left: Stuyvesant Town, 300 Broadhollow Road and the Westin Ft. Lauderdale

Fitch Ratings yesterday downgraded a pool of commercial real estate loans
led by Stuyvesant Town and Peter Cooper Village, a Florida hotel and a
Melville, N.Y. office property.

Fitch said the $2.42 billion loan pool, sold under the name Cobalt 2007-
C2, has 57 loans of concern, representing 38 percent of the pool, and 15 of
the loans are in special servicing, representing 17 percent. The current loan
balance is $2.32 billion.

The Peter Cooper Village and Stuy Town loan represents the largest
percentage of the pool, or 10.3 percent, and remains in special servicing
under CW Capital. The 80-acre site, with more than 11,000 units, is
currently under new management with Manhattan-based Rose Associates,
which declined to comment.

The plan is to renovate 570 vacant apartments at a cost of $48 million, and
Fitch says the property is performing below where it needs to be to service
the debt. The securitized loan balance of $267,000 per unit, however, is
below that of many other New York multi-family properties. The building
was 94 percent occupied
at the end of February.

“That doesn’t sound like anything substantively changed,” said Ben Thypin,
senior market analyst at Real Capital Analytics in New York.

The second largest contributor to the downgrade is the 293-room Westin
Fort Lauderdale at 400 Corporate Drive, which was acquired by the Procaccianti Group from
Starwood for about $40 million in 2007. About $12.9 million was spent
on renovating the hotel, but due to the weak local economy, net operating
income has fallen 31 percent
since the end of 2007 through the end of 2010,
Fitch said.

A spokesperson from the Procaccianti Group was not immediately available
for comment.

The property cannot generate enough income to service the debt on the
interest-only loan, which is scheduled to amortize starting in May 2012.

The third largest contributor is a 242,000-square-foot office building at 300
Broadhollow Road in Melville, N.Y., that was acquired by Woodbury, N.Y.-
based CLK/HP from SL Green and Reckson Associates when they merged in 2007.

Occupancy fell to 84 percent as of this month and the loan was transferred to
special servicing March 16, after a monetary default, when the loan fell 60
days late, Fitch said.

CLK/HP officials were not immediately available for comment.


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