Office properties anchor New York’s CMBS market in Q1

$1.4B in new securities issued in the first three months of 2017

935 Madison Avenue
935 Madison Avenue

New York’s CMBS market continued to buck the twin national trend of increasing delinquency rates and weak office markets, during an active first quarter. New York saw a total of $1.4 billion in new issuance, $901 million of which was backed by office properties.

There was $59 billion on the New York CMBS market in March, down 0.7 percent from $59.4 billion in February, and the delinquency rate fell 11 basis points to 0.51 percent, according to Trepp data prepared for The Real Deal. Nationally, the delinquency rate ticked up 6 basis points to 5.37 percent.

New issuance in March totaled $556 million across four deals. Three loans totaling $197 million were securitized in the same $1 billion CMBS deal originated by Goldman Sachs. They include a $100 million loan backed by Vornado Realty Trust’s 350 Park Avenue, part of a $400 million financing package provided by Goldman Sachs, and a $70 million loan backed by Straus Group’s retail condominium at 935 Madison Avenue.

Four New York loans, totaling $230 million, were included in another $1 billion CMBS deal, originated by by JPMorgan Chase and Deutsche Bank. They include a second chunk of the 350 Park Avenue loan and an $80 million piece of the $370 million refinancing of the Kushner Companies’ retail condo at 229 West 43rd Street.

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While the majority of the new issuance was backed by office and retail properties, a total of $28 million in loans on co-op properties in Manhattan, Brooklyn and Queens, were securitized in a $624 million CMBS package.

As for subtractions from the CMBS pool, the Chetrit Group’s $82 million loan on two office properties at 90 and 100 Trinity Place, which had been non-performing beyond maturity, was refinanced with a $101 million loan from South Korean fund manager KTB Asset Management and Midtown-based Rexmark.

The market is expected to perk up more in the upcoming quarter, said Trepp analyst Sean Barrie, as concerns about the risk retention laws implemented in December wane.

(To view our office leasing Deal Sheet, click here)