By John Richard, Managing Director Investcap Advisors LLC
Many market participants hold the belief that the property markets still have several years of price correction ahead of it, but the process of price discovery took a few steps forward last week with Tishman's sale of two office properties in California. One of the properties sold in San Francisco represented a 20% decline from its 2005 purchase price while the Santa Ana sale saw a drop in price of 60% from its 2007 acquisition level. These two projects lend insight into the rapid price appreciation in the market from 2005-2007 and what may be motivating borrowers and/or sellers in today's market conditions. One other notable Tishman property that plays very prominently in several 2007 vintage CMBS deals is the Peter Cooper Village & Stuyvesant Town project. At sale and origination of the financing, this project was valued at roughly $6 billion with $3 billion used as debt financing. By some accounts, this project is now valued at closer to $2 billion which represents roughly a 30% loss to the first mortgage. With the loan now having less than three months of reserves to service the debt, this loan will be interesting to watch from a price discovery and servicer workout perspective.
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Tishman's Washington DC office properties may also offer some price discovery insight as well. However, Peter Cooper-Stuytown is a peculiar property which also finds itself in very peculiar legal and political circumstances and is also tied up in CMBS and probable tranche warfare. I don't know how much info it will really yield the market for price discovery.
ReplyDeleteOctober 19, 2009 12:27 PM