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									Weekly Commentary

October 26, 2009 - In         NY State of Appeals Court rent control ruling.
     This Issue
                              Boston, MA October 26, 2009
NY State of Appeals Court -   by John Richard, Managing Director, Investcap Advisors LLC
   Rent Control Ruling
                              The property markets received another jolt this week, this time
  2010 CMBS Multifamily       coming from the New York state Court of Appeals. A very tenant-
        Matutities            friendly ruling handed down this week indicated that Tishman
                              Speyer, the owner of Stuyvesant Town and Peter Cooper Village in
        Follow us             Manhattan, had illegally converted roughly 4,000+ units from rent
                              controlled/stabilized status to market rent. The issue in this ruling
                              centered around whether an owner of a multi family property could
     Quick Links              renovate units taking advantage of certain tax abatements and still
                              convert those units to market. This ruling evidently contradicts a
                              decade-old policy promulgated by a New York City housing
  Investcap Advisors Inc
                              commission. It is unclear whether Metropolitan Life, the previous
         About Us             developer and owner of the multi family project, will also be held
                              partially responsible for this practice prior to their sale of the
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                              property in 2006. The senior mortgage on Stuy Town/Peter
                              Cooper has garnered much attention over the past year as the debt
                              service reserve established at closing nears depletion. Portions of
                              this senior debt ($3 billion) are spread across multiple CMBS
                              deals. This ruling will certainly place an added stress on Tishman's
                              ability to service the debt and it has obvious implications for other
                              multi family projects in New York City that conducted the same rent
                              conversion practice while also taking advantage of the tax

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                              MBA's Commercial Real Estate/Multifamily Survey of Loan Maturity
                              Volumes reported short-term floating-rate mortgages in commercial
                              mortgage-backed securities and mortgages held by credit
                              companies, warehouse facilities and other investors are more likely
                                  to mature in 2009 and 2010 than are fixed-rate CMBS mortgages,
                                  mortgages held by life insurance companies or multifamily
                                  mortgages held or guaranteed by Fannie Mae, Freddie Mac or
                                  FHA. The report said $120 billion of non-bank
                                  commercial/multifamily mortgages are scheduled to mature in

                                  Even though credit is tight, financing continues to be available for
                                  commercial real estate. Unfortunately, it is not as attractive to
                                  borrowers as it has historically been. Fannie Mae, Freddie Mac and
                                  the Federal Housing Administration (FHA) continue to offer
                                  permanent financing for multifamily properties.

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                                  data to market participants in the US and Canada. We provide
                                  solutions for Commercial Lenders, Opportunity Funds, Banks and
                                  Real Estate Investment Firms.

                                  For more information on how we can provide CMBS surveillance
                                  call us at 800-667-6007 or visit our website at
                                  www.investcapadvisors.com .

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