DBRS Confirms Two Classes of COMM 2012-9W57

DBRS has today confirmed the ratings of the following classes of COMM 2012-9W57:

-- Class A at AAA (sf)
-- Class X at AAA (sf)

The trends are Stable.

The collateral consists of a $625 million fixed-rate loan secured by 9 West 57th Street, a 1.67 million sf, 50-story Class A office tower built in 1972. It is considered one of the premier office towers in Manhattan because of its location directly south of Central Park, which provides unobstructed views of the Park starting at the 27th floor. Tenancy at the property is considered strong, including a list of elite hedge funds, investment managers, financial institutions and luxury retailers. At issuance, DBRS was aware that the sponsor has historically operated the property at elevated vacancy levels to maintain its elite status among users of commercial space in the submarket. There was a $25.0 million leasing reserve funded at closing, and as of the April 2014 remittance this reserve has a current balance of $11.8 million.

According to the December 2013 rent roll, the property was 51.9% leased, with eleven leases representing 7.2% of the NRA signed since issuance. Two leases, representing 1.73% of the net rentable area (NRA), are scheduled to roll in 2014. The tenant for both of those leases is Silverlake Management (Silverlake), who currently subleases their space to Coatue Management (Coatue). Coatue will enter into direct leases for the space when Silverlake’s leases expire in November 2014. Since issuance, Natixis, who previously occupied 4.8% of the NRA, has vacated the property. It was known at issuance that this tenant would likely not renew their lease. Three of the five units Natixis vacated have already been re-leased, while two remain vacant.

According to CoStar, the property is in the Plaza District submarket, which reported an overall vacancy rate of 6.9% for the 157 Class A properties (78.32 million sf) at Q1 2014, with an average rental rate of $74.45 psf. These figures are in line with market statistics at issuance. The property currently has an average rental rate of approximately $120.01 psf as of the December 2013 rent roll. Leases signed at the property since issuance averaged $132.90 psf.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool. The April 2014 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com

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

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

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American CMBS Surveillance Methodology (November 2012), which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.