The Next Shoes To Drop In Commerial Real Estate - Part 1

Interesting article from Zero Hedge... Everyone is now well aware of the plight of Stuy Town, which has become a set fixture on the front page of the daily press, and is expected to default on its underlying borrowings within a few months at the most. What will happen to the controlling equity, and the tenants at the multiapartment complex, is unknown. It is no surprise that this will be yet... [more]

Interesting article from Zero Hedge... Everyone is now well aware of the plight of Stuy Town, which has become a set fixture on the front page of the daily press, and is expected to default on its underlying borrowings within a few months at the most. What will happen to the controlling equity, and the tenants at the multiapartment complex, is unknown. It is no surprise that this will be yet another epic failure for the existing owner, Tishman Speyer, which after gobbling up property after property at the peak of the housing market, is all too aware that it is only a matter of time before control is wrested from it not only in the case of Stuy Town but many of its other properties. And even though everyone "knows" the state of commercial real estate is in free fall, few have been able to pin it down to specific buildings, as property-level data is still very expensive and more often than not, proprietary. In order to bring the full degree of CRE collapse closer to home, and to provide some leads to our MSM-originating readers, we present a detailed analysis of some of the most impacted CRE properties that have yet to make headline news. For that purpose we combed through BarCap's CMBS remittance data for CMBX 4 (2007 vintage), which is broadly considered the peak year for commercial real estate deals and also the very peak of the housing bubble. We expected to find some of the juiciest CRE failures to be in this loan set. We were not disappointed. In addition to presenting the property, we highlight the specific loan amount within any given CMBS deal, as well as the property's most recent DSCR (Debt Service Coverage Ratio - comparable to a Free Cash Flow to Interest ratio: anything below 1.0x means the property does not cover it debt service and is a flashing sign of an impending default), complete with any detailed delinquency or special servicer notes as collected by BarCap. Notable in the commentary are numerous tidbits about prevailing rents as well as less than public negotiations between various stakeholders which disclose just how impacted CRE across the country really is. So without further ado... continued http://www.zerohedge.com/article/next-shoes-drop-commerial-real-estate-part-1 [less]