FEB 25, 2013 12:05pm ET

Single-Asset CMBS Backed by Times Square Building Gets Underway

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A single-asset commercial mortgage-backed securities deal collateralized by a $900 million first-mortgage loan on a Times Square area property in New York is underway, according to a Morningstar presale report.

Morningstar assigned ratings ranging from its top investment grade rating of AAA to a speculative grade rating of BB+ to 11 classes in the deal, leaving two classes unrated.

Fee simple interest in 1515 Broadway secures the loan in the transaction, BWAY 2013-1515. The 12-year loan is interest-only for the first three years followed by nine years of 30-year amortization. Loan interest accrues at a fixed rate of 3.93375% throughout the life of the loan. Coverage on the loan is 1.86x during the IO period and 1.31x upon amortization based on Morningstar’s cash flow estimates.

The collateral property is a 1.7 million square foot, class-A high-rise office building in Times Square with theater and retail components. The largest tenant, Viacom, has committed to lease 79% of the building’s space through June 2031. The Minskoff Theater, which is part of the property, has a lease running through June 2044.

The loan is being used to refinance about $779 million of existing debt, fund a reserve under the borrower’s obligations under the Viacom lease, pay for closing and costs and return about $116 million in equity to the sponsor.

Real estate investment trust SL Green Realty Corp. is the loan’s sponsor. The borrower is 1515 Broadway Owner LLC, which is indirectly held by various entities held by SL Green. The mortgage loan seller/sponsors are German American Capital Corp., Bank of China-New York Branch and Goldman Sachs Mortgage Co.

Wells Fargo is the special and master servicer. Deutsche Mortgage & Asset Receiving Corp. is the depositor. Deutsche Bank and Goldman Sachs are the lead managers. The trustee is U.S. Bank and the certificate administrator is Deutsche Bank Trust Co. Americas.

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