UBS and Citigroup plan to issue $335 million in commercial mortgage bonds backed by a single loan that is secured by 1500 Broadway, a 506,412-square foot, 33-story, Class A high-rise office/retail building in New York City’s Time Square, according to Morningstar.
The building’s most significant tenant is Times Square Studios, an affiliate of The Walt Disney Company, part of the Disney/ABC Television Group network. Times Square Studios used the space as the television studio for ABC’s Good Morning America and some news and sports productions.
TMSQ 2014-1500 Mortgage Trust has been assigned preliminary ratings by Morningstar. On offer are $236 million of AAA’ rated notes that have credit enhancement at 29.55% and $20 million of AAA’ rated notes with credit enhancement at 20.9%
The issuers also plan to sell $40 million of A-’ rated securities and $30 million of BBB’ rated securities.
The underlying loan has a 10-year term and will pay only interest for its entire term. The lack of payments toward the principal balance during the loan term exposes the loan to higher refinance risk at maturity, especially in a rising interest rate environment.
The capital stack also includes a $170.0 million mezzanine loan. The mezzanine debt raises the loan’s LTV to 96.9%, according to the presale report.
