A spokesman for RXR tells GlobeSt.com he was not aware that an agreement had gone into effect. GlobeSt.com had obtained a copy of an e-mailed memo that CLK/H-P distributed on Thursday announcing the agreement and listing the 32 properties, all in Woodbury, NY.
However, the spokesman confirmed a report in the Wall Street Journal earlier this week which said that RXR was looking to use its mezz-debt position to take full control of the properties, which would increase the square footage of its Long Island holdings by about 40%. Calls to CLK/H-P were not returned by deadline.
Scott Rechler, CEO and chairman of RXR, told the Journal that his company had consensually agreed with CLK to eventually take full ownership of the properties and assume the first mortgage. However, Craig Koenigsburg, principal of Great Neck, NY-based CLK Properties, was quoted as saying his company was negotiating to keep the properties. "We're trying to work it out," Koenigsburg told the Journal.
In January, Fitch Ratings said it was downgrading nine classes of CMBS from LB-UBS Commercial Mortgage Trust 2005-C2, a pool that included loans on the Woodbury portfolio. When CLK/H-P acquired the portfolio, occupancy was about 96%. However, Fitch said that occupancy across the 22-building, one-million-square-foot Woodbury Office Portfolio II was expected to drop from 97% in June of last year to approximately 87% at year's end, "primarily due to the loss of one of the largest tenants (CSC) in the portfolio, which did not renew upon its lease expiration." The ratings agency said an additional 38% of space was due to expire through 2011, "which could further stress the property's occupancy and income depending on renewal activity."
Fitch said the loan for the 466,000-square-foot Woodbury Office Portfolio I, comprised of 10 additional properties, was a "loan of concern," again due to the loss of a large portion of the space CSC had previously leased. CSC had occupied about 25% of Office Portfolio I, but renewed only 60% of its previous space when the lease expired in mid-'09. "Occupancy across the portfolio was 78% as of June '09, down from 89% at year-end 2008," according to Fitch. "Furthermore, approximately 25% of additional space in the portfolio expires through 2011."
Outside the Woodbury properties, CLK's portfolio is otherwise 94% occupied, Koenigsburg told the Long Island Business News in March. Some of the properties, including 1985 Marcus Ave. in Lake Success, NY, the Business News reported. For example, CLK/H-P recently signed State Farm Insurance to 55,109 square feet, while another insurance firm, Crawford & Co., committed to 49,927 square feet at the Lake Success building.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
