DBRS Assigns Provisional Ratings to Madison Avenue Trust 2013-650M

DBRS has today assigned provisional ratings for the following classes of Madison Avenue Trust 2013-650M. The trends are Stable.

-- Class A at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)

The collateral consists of a $675 million fixed-rate loan secured by 650 Madison Avenue, a 594,470 sf, 27-story, Class A office tower built in 1957. It is considered one of the premier office towers in the Plaza District submarket because of its unobstructed views of Central Park starting at the 15th floor and 200 feet of ground floor retail frontage along Madison Avenue. While the property does not have the same name recognition as other prestigous buildings in the submarket, it houses Polo Ralph Lauren’s corporate headquaters, flag ship stores for Tod’s and Crate & Barrel and has demonstrated an ability to achieve comparable office rents, as illustrated by having recently executed an LOI for space on the 25th floor for $150 psf. The previous owner recently invested $35.7 million in capital expenditures, including lobby renovations, further supporting the subject’s position in the market.

The office portion of the collateral is 90.6% occupied by seven tenants and the retail is 100% occupied by three tenants. Polo Ralph Lauren represents the larget tenant at the subject, comprising 46.0% of the NRA and 35.5% of the NRI, and is on a long-term lease that extends more than four years beyond the loan term. The largest retail tenant is Crate & Barrel, who recently amended and renewed its lease through March 2019. The negotiated rental rate is still below market, as determined by the appraiser, given the frontage along Madison Avenue. With a 2.05x DBRS Term DSCR, there is minimal term default risk, and with 63.0% of the NRA leased to long-term investment-grade tenants, refinance risk is considered minimal.

Notes:
All figures are in U.S. dollars unless otherwise noted.

All classes are privately placed pursuant to Rule 144a. The Class X balances are notional.

The applicable methodology is CMBS Rating Methodology which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The Rule 17g-7 Report of Representations and Warranties is hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.