As coverage continues this week in the wake of a New York court ruling that presented a negative credit event for commercial mortgage-backed securities (CMBS) involving the Peter Cooper Village/Stuy Town mortgage, at least one market observer warns the speculation over current value may lead to greater losses. Widely-published reports on the value of the property backing the Stuy Town loan may make a CMBS loss more likely to occur, according to Malay Bansal, a managing director at NewOak Capital, a Manhattan-based asset management, advisory, and capital markets firm. In market commentary Tuesday, Bansal indicated the sprawling multifamily property, which was bought in 2006 for $5.4bn, is now estimated to be worth less than $2bn. "Normally the low estimates do not matter," Bansal said. "What really matters is the highest bid or the price one -- just one -- buyer is willing to pay. Valuation of properties like this is not totally a science, and it is entirely possible for one buyer to put a higher valuation on it than others based on their view of possible upside." In the case of the Stuy Town property, Bansal noted, the wide speculation on a $1.8bn to $1.9bn current value may hinder buyers from placing a higher valuation on it. Moody’s Investors Service said this week it continues to monitor 85 classes of CMBS transactions that contain pieces of the $3bn mortgage on the Stuy Town properties. The interest reserve is $24m, which Moody’s does not expect will last through 2009. "With reserves running out, special servicer may not be too keen on taking over the properties," Bansal said. "That will make it more likely that they will end up accepting losses on the $3bn senior loan, included in five different CMBS deals, and modifying it for whoever emerges as the new owner.” Write to Diana Golobay.