by Calculated Risk on 12/10/2008 10:27:00 AM

Continuing a theme on commercial real estate ...

From the Obersver: It’s a WashMu! Landlords Fear Gaping Spaces as F.D.I.C. Mulls Nuclear Option (hat tip Brian)

[T]he F.D.I.C.’s October agreement with JPMorgan Chase and Washington Mutual allows Chase to pick and choose which of the city’s 148 Washington Mutual branches it will keep. Chase will then turn over the rejects to the F.D.I.C. But here’s the kicker: According to sources, the F.D.I.C. can then simply terminate the leases of those rejected branches, all contractual obligations void.
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Francis Greenburger, chairman and CEO of Time Equities Inc. and owner of 2554 Broadway, will not be sending the F.D.I.C. a thank-you note. About five years ago, Mr. Greenburger’s firm spent more than half a million dollars wooing WaMu, which ultimately took more than 3,000 square feet at his building’s 96th Street corner. The branch has about five years left on its 10-year lease.

“We’re anticipating that Chase gives [our WaMu branch] back to the F.D.I.C., and then the F.D.I.C. gives it back to us,” Mr. Greenburger said. “Chase has a branch directly across the street.

“We’re in the middle of a recession, the worst recession since the Great Depression,” Mr. Greenburger glumly pointed out. “It’s going to be difficult to find a tenant.”