Fitch upgrades CMBS debt on 7 WTC

$125M loan is 78% paid down
By Chava Gourarie | December 01, 2017 02:25PM

Fitch Ratings upgraded two tranches of CMBS debt on Silverstein Properties’ 7 World Trade Center, due to significant paydown of the loan and the building’s strong leasing performance.

Silverstein refinanced the 52-story tower in 2012 with a combination of $452 million in liberty bonds and $125 million in CMBS debt, for a total of $578 million. Fitch upgraded both classes of the CMBS loan, which as of November was 78 percent paid down, with $28 million remaining, and affirmed the rating of the liberty bonds.

Despite a drop in occupancy rate at the 1.7 million-square-foot-tower in 2017, the tenancy is strong, according to Fitch. The four largest tenants, including Moody’s Corporation, Wilmer Hale LLP, and the Royal Bank of Scotland, occupy roughly 74 percent of the building, with the earliest expiration date in 2022. Moody’s is the building’s largest tenant, with over 800,000 square feet, and a lease expiration in 2027.

In 2011, the building hit full occupancy and was appraised at $940 million. Occupancy has since dipped and was pegged at 94.8 percent in June 2017, down from 97.7 percent at the end of 2016.

Net operating income for the first half of the year was $32 million, in line with the building’s previous performance since 2013, with the NOI ranging from $59 million to $62 million per year. Average asking rents in lower Manhattan were at $62 per square foot in the third quarter of 2017.