NYC spared CMBS wall of maturities fallout – for now

The delinquency rate for New York City’s CMBS market fell in February, while market-wide the delinquency rate continued to rise in the fallout from the so-called “wall of maturities,” dragged down by the office sector in particular.

There was a total of $59.4 billion on the New York CMBS market in February, down 3.9 percent from $61.8 billion in January, and the delinquency rate fell 14 basis points from .76 percent to .62 percent, according to Trepp data prepared for The Real Deal. Of the $875 million in CMBS loans issued in 2017 in New York, office properties made up $643 million (more than 73 percent) of the total.

The largest loan to come off the delinquent list in February was a $195 million loan backed by the 45-story office tower at 500-512 Seventh Avenue, which was extended until 2018. The loans on the 45-story tower, owned by Moinian Group, the Chetrit Group and Minskoff Equities, were issued in 2006 and became due in July 2016. The 1.2 million-square-foot building is at 68 percent occupancy.

An $82 million loan backed by Chetrit’s 10-story office building at at 90-100 Trinity went into default in February. The 186,455-square-foot building is entirely occupied by the New York School Construction Authority, which has five years remaining on its lease. The loan, issued in 2007 by UBS, makes up close to 8 percent of a $1 billion CMBS deal securitized by JP Morgan Chase, more than half of which is delinquent. Chetrit is reportedly in talks to refinance the loan.

At 85 Tenth Avenue, where Vornado Realty Trust and Related Companies [TRDataCustom] refinanced a 2007-issued loan with $396 million from Deutsche Bank, all of the loan has now been securitized. Deutsche Bank and Wells Fargo securitized $271 million in two single-asset deals, and the rest was securitized in two separate conduit deals.

The renegotiation at 500-512 Seventh and refinancing at 85 Tenth indicate that despite difficulties in the CMBS office sector overall, with borrowers struggling to refinance loans made in the pre-recession peak, New York’s Class-A office properties are an exception, an analyst from Trepp said.