Prospectus Outlines $120M A-2 Loan on 25 Broadway

25 BroadwayDeutsche Bank Securities, Inc. has filed a prospectus related to COMM 2014-CCRE16, a $1.1 billion CMBS conduit transaction collateralized by 56 commercial mortgage loans secured by 84 properties.

Included is information on the largest loan in the pool, a $120 million loan on 25 Broadway, a 956,554 sf, 22-story, Class B office building in downtown Manhattan.

The 25 Broadway loan in COMM 2014-CCRE16 is the non-controlling Note A-2 portion of a fixed rate loan in the aggregate principal amount of $250.0 million. The loan combination is secured by the borrower’s fee simple interest in the 22-story Class B office building in Manhattan’s Financial District. Only the Note A-2 will be included in the COMM 2014-CCRE16 mortgage trust.

The controlling Note A-1, with an original and cut-off date principal balance of $130.0 million, is expected to be included in a future securitization.

Based on the appraised value of $369.0 million as of January 16, 2014, the cut-off date LTV of the 25 Broadway Loan Combination is 67.8% and the remaining implied equity is $119.0 million. The most recent prior financing of the 25 Broadway Property was not included in a securitization.

The proceeds of the 25 Broadway Loan Combination were used to retire approximately $96.7 million of existing mortgage loan debt, fund upfront reserves of approximately $33.2 million, pay closing costs of approximately $6.7 million and return approximately $113.5 million of equity to the sponsor.

The borrower, 25 Broadway Office Properties, LLC, is a single purpose Delaware llc structured to be bankruptcy-remote. The sponsor of the borrower and nonrecourse carve-out guarantor is BF&W Realty Company, an entity ultimately controlled by The Wolfson Group, a family investment and real estate firm founded by Zev Wolfson and operated by his sons Abraham and Aaron Wolfson.

The Wolfson family owns and operates in excess of 2.0 million sq. ft. in New York City.

The 25 Broadway Property occupies an irregular shaped block and is bounded by Greenwich Street to the west, Broadway to the east, and Morris Street to the north, with entrances on Broadway and Morris Street. The main entrance on Broadway faces Bowling Green Park and the Charging Bull sculpture by Arturo Di Modica, a popular tourist destination.

Constructed from 1917-1921, the 25 Broadway Property was formerly known as the Cunard Building and served as the ticket office of the Cunard Passenger Ship Line and was designated in 1995 as a historic landmark by the New York City Landmarks Preservation Commission.

The 25 Broadway Property features floor plates ranging from 21,893 sq. ft. to 44,236 sq. ft. for the above ground floors and as of March 13, 2014 was 95.8% leased under 22 separate leases. The building contains six self-service passenger elevators and two freight elevators.

The 2nd through 22nd floors contain office space and the ground and lower levels along Broadway and Greenwich Street contain retail tenants.

The borrower acquired the property in June 1998 and since 2004 has invested $65.8 million in capital expenditures at the property, including $13.2 million in improvements to the building’s heating and cooling systems, $7.4 million for façade restoration and over $45.2 million for tenant improvements.

Major Tenants Include:

– Léman Manhattan Preparatory School

Léman Manhattan Preparatory School, formerly known as Claremont Preparatory School, took occupancy of its space at the 25 Broadway Property in 2009. In 2011, it became part of the Meritas Family of Schools, an international group of ten schools located on three continents that provide college preparatory education to over 12,000 students worldwide. Léman Manhattan offers small class sizes of 18 or less per class and maintains a 5 to 1 student-to-teacher ratio. Léman Manhattan utilizes its 179,885 sq. ft. space at the 25 Broadway Property as its Middle School and High School (5th through 12th grades). Amenities at the school include views of New York Harbor and the Statue of Liberty, a two-floor library, art and music studios, an aquatics center, regulation-size gymnasium and workout room, a rock climbing wall, café, theater and computer labs.

Léman Manhattan has no early termination options and has one ten-year renewal option with 24 months prior notice at the greater of

(i) fair market rent and
(ii) an amount equal to the annual fixed rent in effect during the final year of the initial lease term.

Léman Manhattan is required to take 20,306 sq. ft. of space currently occupied by Deloitte on the 3rd floor after the expiration of the Deloitte lease on December 31, 2016.

– Teach For America

Teach For America is a non-profit organization which recruits recent college graduates for two-year teaching commitments in urban and rural public schools nationwide. Teach For America’s mission is to train and develop corps members. Since 1990, over 33,000 participant teachers have reached more than three million students. During the 2013-2014 school year, 11,000 corps members will reach more than 750,000 students, and in 2013 Teach For America was named one of Fortune magazine’s 100 Best Companies to Work For.

Teach For America signed its lease for 129,827 sq. ft. in January 2014 and has free rent due for its entire space through June 2015, all of which was reserved for at closing. Teach For America has accepted possession of its space and is expected to complete build out and be in occupancy no later than September 2014. Teach For America has no early termination options and has one five-year extension option with 18 months prior notice at the greater of

(i) fair market rent and
(ii) an amount equal to the annual fixed rent in effect during the final year of the initial lease term.

Teach For America is required to take 46,014 sq. ft. of space currently occupied by Deloitte on the 14th floor after the expiration of the Deloitte lease on December 31, 2016.

– WeWork

Founded in 2010, WeWork is a provider of collaborative workplaces for innovative entrepreneurs, growing early-stage startups and successful small businesses. WeWork members include Waze, AirBNB, Imgur, Reddit, Lululemon and Buzzfeed. WeWork offers 16 locations in six cities, including eight offices in New York City, two offices in San Francisco and two offices in Washington D.C.

WeWork Business benefits offered by WeWork to its tenants include health insurance, credit card processing, Zipcar discounts and access to investors. Office amenities include high speed internet and WiFi, bike storage, event space, production suites, recording studios, unique interior design, fresh fruit and purified water. WeWork’s standard membership pricing ranges from $45 per month for a single desk to $700 per month for a one-person office up to $3,450 per month for a six-person office.

WeWork signed a lease for 43,163 sq. ft. of its space on the 5th floor in February 2014 and has free rent due for its 9th and 10th floor space through December 2014 and free rent due for its 5th floor space through September 2015, all of which was reserved for at closing. WeWork has accepted possession of its 5th floor space and is expected to complete build out and be in occupancy of the space no later than June 2014. WeWork is already in occupancy of its 9th and 10th floor space.

WeWork has no early termination options and has one five-year extension option with 18 months prior notice at the greater of

(i) fair market rent and
(ii) an amount equal to the annual fixed rent in effect during the final year of the initial lease term plus $5.00 PSF.

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