The Fed’s criteria for accepting and rejecting legacy CMBS as collateral in its Talf programme has been much scrutinised, yet its selection methodology remains a bit of a puzzle to most analysts.
For instance, the central bank has accepted stuff with exposure to General Growth Properties, the bankrupt mall operator, and Peter Cooper & Stuyvesant Town, which is teetering on the edge of default. Yet it’s rejected other CMBS bonds which seem to have a similar risk profile. Very mysterious.
All of the CMBS is, incidentally, triple-A rated per the Fed’s rules for the programme.
However, we couldn’t help but notice that six of the circa-115 Talf-accepted CMBS look to now be on Fitch’s list of problem loans — that is, they are either `of concern’ to the ratings agency, are the largest delinquent loans or the biggest that are being specially-serviced.
They are as follows:
MLFCFC 2007-5 ASB/CUSIP #55312YaD4
WBCMT 2007-C30/CUSIP #92978QAc1
Peter Cooper Village/Stuyvesant Town — The $3 billion loan is secured by 56 multistory buildings with 110 different addresses situated on 80 acres that include 11,227 residential apartments in New York City. The borrowers, Tishman Speyer Properties, LP and BlackRock Realty, acquired the property with the intent of converting rent-stabilized units to market rents. As of July 2009 there were 4,461 market units and 6,768 rent-stabilized units, with a vacancy rate of 4.1%.
BACM 2007-1/CUSIP #059497AU1
Solana — The $360 million Solana loan is backed by 1.79 million square feet of office space, 43,685 square feet of retail, a 38,000-square-foot health club, and a 198-room full-service Marriott hotel in Westlake, TX. The loan is sponsored by Maguire Partners. The special servicer is discussing workout options.
JPMCC 2005-LDP1/CUSIP #46625YGP2
Woodbridge Center — The $207.9 million loan is secured by the 556,835-square-foot in-line portion of the Woodbridge Center, a super-regional mall in Woodbridge, N,J totaling 1.64 million square feet. The loan is sponsored by General Growth Properties (GGP) and was included in its April 2009 chapter 11 bankruptcy filing. (Nonperforming Matured)
JPMCC 2005-LDP5/CUSIP #46625YXP3
Jordan Creek Town Center — The $164.8 million loan is secured by a 939,085-square-foot retail property in West Des Moines, IA. The borrower is an entity owned by General Growth Properties. (90 days delinquent)
LB-UBS 2005-C5/ CUSIP #50180JAB1
Providence Place Mall — The $258.5 million loan is secured by a 1.29 million-square-foot four-level super-regional mall in the heart of downtown Providence, RI. The sponsor is General Growth Properties.
Admittedly, such problem CMBS does not make up a huge proportion of the Fed’s accepted bonds, but it does make one wonder how the central bank is going about choosing these things. Little wonder, then, that we are seeing analysts call for more transparency in the programme.
(H/T W Matthei for the Fitch list).
Related links:
The Fed’s black sheep bond herd grows - FT Alphaville
An ode to JPMCC 2007-LDPX A2s – FT Alphaville
Accepted and rejected legacy CMBS (Subs. Aug. 20) - Federal Reserve Bank of New York
Accepted and rejected legacy CMBS (Subs. July 16) - Federal Reserve Bank of New York