Moody's published a report on August 31. It covered the declining state of the New York City multi-family rental market and its negative effect on the Commercial Mortgage Backed Securities market.
The two are intimately related since a good number of CMBS's are backed by multi-family properties in NYC, including: Stuyvesant Town and Peter Cooper Village.
The problem: Moody's gets it right even if the Wall Street Journal missed it, as i posted monday.
To quote Moody's:
"Originated at the height of the market in 2007, the [Stuy Town] loan financed the acquisition of the complex [with over 11,00 units] and a repositioning plan to renovate and convert the vast majority of the stabilized units to free-market units during the loan term. The loan has performed below... original expectations primarily due to a much lower conversion rate of stabilized to market-rate units and more recently, declining effective rents."
The fact that this loan is "on the watch list" cannot be laid at the door of the recession. As i said monday, the primary culprit is not the drop in rents due to the weak economy, it is the unrealistic rate of rollover they originally projected. Reality was much different.
The economy is the nail in the coffin, however.
The two are intimately related since a good number of CMBS's are backed by multi-family properties in NYC, including: Stuyvesant Town and Peter Cooper Village.
The problem: Moody's gets it right even if the Wall Street Journal missed it, as i posted monday.
To quote Moody's:
"Originated at the height of the market in 2007, the [Stuy Town] loan financed the acquisition of the complex [with over 11,00 units] and a repositioning plan to renovate and convert the vast majority of the stabilized units to free-market units during the loan term. The loan has performed below... original expectations primarily due to a much lower conversion rate of stabilized to market-rate units and more recently, declining effective rents."
The fact that this loan is "on the watch list" cannot be laid at the door of the recession. As i said monday, the primary culprit is not the drop in rents due to the weak economy, it is the unrealistic rate of rollover they originally projected. Reality was much different.
The economy is the nail in the coffin, however.
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