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OLYMPIA & YORK WATER STREET FINANCE ASKS BONDHOLDERS TO FORM COMMITTEE

OLYMPIA & YORK WATER STREET FINANCE ASKS BONDHOLDERS TO FORM COMMITTEE
 NEW YORK, May 19 /PRNewswire/ -- Olympia & York Water Street Finance Corp. today met with holders of both series of non-recourse notes secured by 55 Water St., a New York City office building. The noteholders were advised that the cash flow to be generated by the building is not expected to be sufficient to satisfy the debt service on the notes in 1993. Olympia & York confirmed that the noteholders must rely solely upon the building and various credit support programs already in place for any repayment of the mortgage debt.
 Two series of notes secured by the building are outstanding, one in the principal amount of $435 million due in 1996 and bearing 8-1/4 percent interest payable annually and the other a zero coupon issue in the principal amount of approximately $113 million due 1996. Olympia & York Water Street Finance Corp. asked the noteholders to form a committee which would negotiate with the company to deal with the building's financial situation.
 At the noteholders meeting, a representative of Olympia & York Water Street Finance Corp. explained that, based upon the currently available space and scheduled lease expirations, approximately 1.5 million square feet of space (40 percent of the building) will be available for lease by June 30, 1993 and approximately an additional 650,000 square feet of space will become available by the end of 1997. The cost of re-leasing this available space could total $100 to $200 million or more over the five-year period ending in 1997.
 Lease expirations over the five years approximate:
 -- 829,000 square feet in the 12 months ending June 30, 1993
 -- 3,000 square feet in the 12 months ending June 30, 1994
 -- None in 1995
 -- 138,000 square feet in the 12 months ending June 30, 1996
 -- 516,000 square feet in the 12 months ending June 30, 1997
 In addition, 619,648 square feet of space in the building is presently vacant.
 Operating cash flow from current leases before payment of debt service, and assuming no additional space is leased, is estimated to be as follows (year ending June 30, in millions):
 1993 1994 1995 1996 1997
 $25.0 $5.6 $5.2 $5.3 $(.9)
 These estimates assume a level of operating expense based on the building being fully occupied. The annual interest payments on the 8-1/4 percent notes is $35.88 million.
 A spokesman for Olympia & York (USA) said, "Today's announcement by Olympia & York Water Street Finance Corp. reflects the unprecedented recession in the downtown Manhattan office market."
 Approximately $4.8 million is currently held in the building's operating account, which is estimated to increase to over $10 million by June 30. In addition to the 55 Water St. building, the notes are supported by approximately $50 million of credit supports issued by third parties. At the meeting, the noteholders were told that they would need to determine how such funds would be applied to the building's obligations.
 Subject to any action that may be taken by the noteholders, Olympia & York Water Street Company will continue to manage 55 Water St. and expects to continue to supply services to the building tenants as in the past.
 Olympia & York has no obligation to make payments on the notes or to make any additional investment in the property. An officer of Olympia & York announced at the meeting that, while it will cooperate with the noteholders in seeking a resolution of the building's financial difficulties, it does not intend to advance any funds to support the building's operations.
 -0- 5/19/92
 /CONTACT: Peter Rosenthal of Howard J. Rubenstein Associates, 212-489-6900, for Olympia & York Water Street Finance Corp./ CO: Olympia & York Water Street Finance Corp. ST: New York IN: SU:


GK-OS -- NY076 -- 1900 05/19/92 14:06 EDT
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Publication:PR Newswire
Date:May 19, 1992
Words:637
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