Fitch downgrades pool of loans led by Metrotech Center building

New York /
Jul.July 22, 2011 01:39 PM

Fitch Ratings downgraded a $6.6 million class of commercial real estate loans led by 10 Metrotech Center, a seven-story office building owned by Forest City Ratner in Downtown Brooklyn.

Fitch downgraded one class of COMM Mortgage Trust 2005-FL-10, saying 42 percent of the pool is expected to default due a 10 percent overall decline in cash flow compared with the last update.

The 359,000 square foot property, located at 625 Fulton Street in Brooklyn, is faced with an expiring lease with the Internal Revenue Service, which occupies nearly 88 percent of the building. The loan represents 7.4 percent of the pool balance.

The lease is scheduled to expire in February 2012, though the General Services Administration has announced plans to extend the IRS lease for at least six months. The loan is currently in special servicing and has been listed as distressed since early 2010.

The Human Resources Administration occupies another 8.5 percent of the building, and has a lease expiring in 2013.

The largest “loan of concern” that is not in special servicing is the pool’s Hudson Valley West/Seneca West loan, secured by two performing retail malls in Kingston and Seneca, N.Y., representing 7.8 percent of the entire pool balance. The loan is scheduled to mature in September, and no information was immediately available on refinancing.

The largest remaining loan, backed by the Palisades Center, is an interest only loan backed by 2 million square feet of a 2.3 million square foot mall in West Nyack, N.Y. The loan was previously transferred to special servicing in January 2010 due to what Fitch calls an imminent final maturity default, but has since been sent back to master servicing. The loan has been extended to February 2012, and a “cash sweep” has been put in place to pay down the principal balance each quarter.


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