Commercial Real Estate Direct Staff Report
Unable to de-regulate the rent-stabilized units in a portfolio of 1,083 Manhattan apartments, a venture of Praedium Fund VI and Pinnacle Group International is looking to convert the units to for-sale condominiums.
The venture is looking to pare down the portfolio's $192 million of debt, which is securitized through GE Commercial Mortgage Corp., 2007-C1. It is negotiating the details of the proposed conversion with the deal's special servicer, LNR Partners Inc.
Even if a condo conversion is approved, analysts doubt that the sale of individual units would generate enough proceeds to fully retire the debt, which carries a rate of 6.2 percent and May 2012 maturity.
The loan was originated with a $28 million reserve, but because its collateral doesn't generate enough cash flow to fully service its annual $12.4 million debt requirement, the reserve has been whittled down to $7.9 million.
The property last year generated only $4.7 million of net cash flow, down from $5.2 million in 2007. This year, it's on a run rate to generate $3.3 million of...
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