Fitch Ratings says it does not expect to take any negative rating actions following the transfer of the Peter Cooper Village/Stuyvesant Town (PCV/ST) loan to special servicing last week.
The $3 billion A-note was transferred to CWCapital, as special servicer, due to the sponsors' request for relief. Details of the request for relief by Tishman Speyer Properties LP and Blackrock Realty are not immediately available.
Fitch expected the transfer of the loan to special servicing as cashflow generated by the property remains insufficient to service the debt. Debt-service reserves are expected to be depleted by the end of December.
Fitch downgraded U.S. commercial mortgage backed security (CMBS) transactions containing portions of the PCV/ST loan on Aug. 28 and Oct. 30 based on the expected default of the loan and Fitch's estimate of value.
Fitch believes there will be many factors involved in the workout and ultimate recovery of the loan, including a possible modification, potential legislative changes to rent stabilization laws, commitment of the loan sponsors, the remaining seven-year term of the loan and the low loan per unit ($267,213).
Fitch will continue to monitor the workout of the loan and adjust its modeled recognized losses as details become available. Pieces of the $3 billion pari passu PCV/ST loan are securitized in the following transactions:
- WBCMT 2007-C30,
- COBALT 2007-C2,
- ML-CFC 2007-5, and
- ML-CFC 2007-6.
PCV/ST comprises 56 multistory buildings, situated on 80 acres, and includes a total of 11,227 apartments. The loan sponsors, Tishman Speyer Properties and BlackRock Realty, acquired the property with the intent of converting rent-stabilized units to market rents as tenants vacated the property; however, the conversion of units has since been determined to be illegal by the New York State Court of Appeals.
In addition to the $3 billion securitized balance, there is an additional $1.5 billion of mezzanine debt held outside the trust.
SOURCE: Fitch Ratings