From the NY Times:
Developer That Bought Times Building Puts Up For-Sale Sign, Hoping to Triple Its Money
What a difference 885 days make.
This week, Tishman Speyer Properties put the historic headquarters of The New York Times Company on West 43rd Street on the block for $500 million — nearly three times the amount Tishman Speyer paid for it, $175 million, in November 2004.
“It’s indicative of how fast rents have moved up and how much capital is chasing deals,” said Dan Fasulo, managing director of Real Capital Analytics, which tracks real estate deals. “There’s just so much money in the market. I don’t see it stopping in the short term.”
The average rent for first-class office space in Midtown has climbed to a record high of $70.77 per square foot, according to a report released on Tuesday by Cushman & Wakefield, a real estate broker. In addition to American investors and pension funds, foreign investors have also found New York attractive, because it is less expensive than cities like London, Paris and Hong Kong. At the same time, interest rates are still relatively low and the dollar is weak against the euro.
…
At $500 million, the company or investor that buys The New York Times headquarters would be paying $666.66 a square foot, seemingly a bargain by comparison. But the 750,000-square-foot, 15-story building, which opened in 1913, is no one’s idea of a first-class office tower. It needs an expensive overhaul before it can be rented to corporate tenants.
From Bloomberg:
Commercial-Mortgage Risk Forcing Change, Moody’s Says
Moody’s Investors Service, one of the two largest credit-rating firms, will require more protection for investors in securities backed by mortgages on apartment buildings, offices and other commercial properties because of “a continued slide” in lending standards.
Moody’s is raising the minimum subordination levels on new commercial mortgage bonds that will be needed to achieve better debt ratings. The higher subordination levels — or amount of lower-rated bonds needed in the transactions to take losses before the higher-rated securities — will reverse years of falling investor protection, Moody’s said in a statement today.
Surging delinquencies on subprime residential mortgages caused by looser lending practices are an “elephant in the room” that has called attention to standards on other loan types, Moody’s said. As with home loans, commercial mortgages have been requiring less documentation and including the use of more interest-only loans and secondary financing, it said.
“This is a direct response to the slow but steady erosion in underwriting quality within the securitized commercial mortgage lending world,” Jim Duca, a group managing director at Moody’s in New York, said in the statement.