Date: Wed, 14 Oct 2009 07:28:58 GMT
Local: Wed, Oct 14 2009 3:28 pm
Subject: Another GIC bad investments
By Lingling Wei from Wall Street Journal
One of the biggest, most high-profile deals of the commercial real-estate
boom is in danger of imminent default, say people familiar with the matter,
signaling the beginning of what is expected to be a wave of
The sprawling Manhattan apartment complex known as Peter Cooper Village and
Stuyvesant Town - acquired for $5.4 billion in 2006 by a venture of Tishman
Speyer Properties and a unit of BlackRock Inc. - is running out of cash. As
of the end of September, it had $33.7 million left of the $400 million in
interest reserves set up to service its debt, according to the people
familiar with the matter. At its current burn rate of about $16 million per
month, the reserve could be depleted before the end of the year, the people
said. Others have said the venture could avoid default until February.
Major players in these talks will likely be Fannie Mae and Freddie Mac,
which together own more than $1.5 billion of the most highly rated, triple-A
slices of the CMBS debt, according to people familiar with the matter. They
would likely benefit from a fast foreclosure because, as senior lenders,
they would be paid back first.
A Fannie representative declined to comment. A spokesman at Freddie
confirmed its holding of the debt. "We don't expect to incur any losses on
these securities," he said.
Another big player in the restructuring talks could be Singapore's GIC. The
fund owns a $575 million mezzanine loan backed by the property, according to
people familiar with the matter. Also, GIC owns about $100 million to $200
million in equity, the people said.
Both investments might be wiped out unless GIC maneuvers to have more
influence in the loan workout process, possibly by buying more senior debt.
GIC declined to comment.