Banks and insurance companies are avoiding secondary U.S. markets and directing their refinancing funds to a select group of borrowers in urban centers as mortgages from the real estate boom begin to mature, Bloomberg News reported.
More than 50 percent of the $19 billion in commercial property loans set to mature this year may fail to find refinancing, according to data from Standard & Poor’s, but those in New York City like 350 Park Avenue have the best chance, Bloomberg said.
“Having a New York City trophy asset in a [commercial mortgage-backed securities] deal, if it is a true trophy, generally is a positive for investors,” said Julia Tcherkassova, a commercial mortgage bond analyst at Barclays Capital. Outside of major metropolitan areas “there are going to be fewer competitors bidding and when the buildings lose tenants it’s difficult to replace them.”
There may even be some competition when it comes to refinancing the city’s most prestigious towers.
Harris Trifon, global head of commercial real estate debt research at Deutsche Bank, added: “There is a long line of people who are willing and able to recapitalize trophy assets.”
One example of a trophy property that just got refinanced is 350 Park Avenue. Vornado Realty Trust just got $300 million from New York Community Bank to refinance the property, it was recently reported. [Bloomberg]