The Next Shoes To Drop In Commerial Real Estate - Part 1
Everyone is now well aware of the plight of Stuy Town, which has become a set fixture on the front page of the daily press, and is expected to default on its underlying borrowings within a few months at the most. What will happen to the controlling equity, and the tenants at the multiapartment complex, is unknown. It is no surprise that this will be yet another epic failure for the existing owner, Tishman Speyer, which after gobbling up property after property at the peak of the housing market, is all too aware that it is only a matter of time before control is wrested from it not only in the case of Stuy Town but many of its other properties.
And even though everyone "knows" the state of commercial real estate is in free fall, few have been able to pin it down to specific buildings, as property-level data is still very expensive and more often than not, proprietary. In order to bring the full degree of CRE collapse closer to home, and to provide some leads to our MSM-originating readers, we present a detailed analysis of some of the most impacted CRE properties that have yet to make headline news. For that purpose we combed through BarCap's CMBS remittance data for CMBX 4 (2007 vintage), which is broadly considered the peak year for commercial real estate deals and also the very peak of the housing bubble. We expected to find some of the juiciest CRE failures to be in this loan set. We were not disappointed.
In addition to presenting the property, we highlight the specific loan amount within any given CMBS deal, as well as the property's most recent DSCR (Debt Service Coverage Ratio - comparable to a Free Cash Flow to Interest ratio: anything below 1.0x means the property does not cover its debt service and is a flashing sign of an impending default), complete with any detailed delinquency or special servicer notes as collected by BarCap. Notable in the commentary are numerous tidbits about prevailing rents as well as less than public negotiations between various stakeholders which disclose just how impacted CRE across the country really is.
So without further ado...
1. CMBX 4 deal: CSMC 07-C3
2. Current loan balance: $135 million, matures March 2012
3. DSCR: 0.42x (down from 2.19 at 2007)
4. Number of units: 264
5. Occupancy: 64%, down from 75% at inception
6. Loan comes out to $544,354.84 per unit
7. Watchlisted for past two reporting periods
8. Servicer Watchlist Comment: (11/01/2009) - "concerned on Dubai exposure and mezz. mezz could take over and keep the loan. however, it is likely that it’d default." - BarCap
9.BarCap estimated loss: 10%
1. CMBX 4 deal: WBCMT 07-C31
2. Current loan balance: $395 million, matures Feburary 2017
3. DSCR: 0.57x (down from 0.65 at U/W)
4. Total sq. footage: 1,454,110
5. Occupancy: 90%
6. Loan comes out to $271.64 per sq. foot
7. Watchlisted for past year
8. Servicer Watchlist Comment: (10/01/2009) - 10/13/2009: - Structured Debt: $1.215B Whole Loan split btween 8 Pari Passu loans. Q2-2009 NCF DSCR is 0.57x with an occ of 90%; NCF, as compared to stabilized U/W NCF, is not yet stabilized. Ann. Q2-09 shows a 4% drop from YE 08, & a 38% drop from U/W; YE 2008 showed a 5% EGI drop from YE 07, & a 36% drop from U/W. The EGI drop from ann 09 & YE 08 is a result of an occ decline in 2008. Total vacant sf as of 09/09 RR is 195,520. Current asking rates range from $60- $82 PSF. TI’s range from $50-$60 for new leases, & $25-$30 for renewals. The 09/09 leasing report shows total lease rollover of 242,479 sf during the next 12 months with 63,122 SF of leases out for signature for 10 yrs at rates ranging from $35.20-$100 PSF. Bwr has a proposal out to 2 prospects totaling 267,000 sf for 10 & 15 yrs at rates of $63 & 66 PSF. There were 5 lease renewals totaling 48,304 sf with rates ranging from $60-$240 PSF; & 3 new leases totaling 19,533 sf with rates $65-$165 PSF signed during 2009. Per a late 08/2009 update, Orrick (232,000 SF or 16% of NRA) will be vacating upon their 03/31/2010 lease expiration. Per Bwr, there are no firm prospects for the Orrick space but they are in proposal stages with 3 different potential tenants for all or a portion of the space. Current asking rates as per Bwr for the Orrick block is roughly $70/sf (Note: Orrick was paying $45 per SF) - midtown asking rents are avg $60/sf. [TD:Good luck] Space will be adv through Co-star, web site & through advertisements. Bwr leasing team is also doing direct telephone mkt to significant brokers & specific tenants in the mkt. Ann Q2-2009 Oper Exp show a 3% drop from YE 08 & a 26% increase from U/W; & YE 2008 Oper Exp showed a 13% increase from YE 2007 & a 32% increase from U/W. The increased exp are due to higher than normal UTIL, RM, & GA exp. Reported exp appear to be recurring in nature. The ongoing reserve bal for the loan is $74,956,986.40 as of 10/06/09.
9.BarCap estimated loss: 40%
1. CMBX 4 deal: WBCMT 07-C31
2. Current loan balance: $536 million, matures March 2017
3. DSCR: 0.98x (down from 1.01 at U/W)
4. Total sq. footage: 1,101,779
5. Occupancy: 99% (even at full occupancy the building can not cover its debt service!)
6. Loan comes out to $486.49 per sq. foot
7. Watchlisted for past year
8. Servicer Watchlist Comment: Servicer Watchlist Comment: (10/01/2009) - 8/10/09: With the execution of the Sephora lease, the property is now expected to cashflow in September 2009. The debt service reserve as of 8/10/09 is $10,477,942.25. 4/14/09 - Comcast Shared Services has leased floors 9, 10 & 11 through a partial termination of the E&Y lease for the same space (94,441sf). Represents increased cash flow to the property that will be realized after approximately $8.1MM is used for TI/LC and free rent period. In addition a new retail lease with Sephora was entered into with an expected commencement date of September 09. Per FYE08, DSCR was 0.96x and occupancy was 99%. Per FYE2007 OSAR, DSCR was 0.94x. Variance in DSCR due in part from annualized Statement from 320 days to 365 days based on loan Origination Date 02/15/2007. The property is 100% leased to a total of four tenants. Five Times Square is 97% occupied by Ernst & Young whose lease expires in 2022 with 2 10yr extension options. The current base rental rate paid by Ernst & Young is $43.87 / SF (approx. $46.7 mm annually). Contractually, the Ernst & Young base rent bumps to $48.62 / SF (approx. $51.8 mm annually) beginning on May 1, 2012. The underwritten average base rental rate is well below current market levels. Underwriting assumes a weighted average rental rate through the 10-year loan term based on below market rents and credit quality of largest tenant. At loan closing a Debt Service reserve also was required ($17.8MM), which will support the total mortgage and bring the DSCR to 1.0x for 5.5yrs. The current bal of the debt service reserve as of 4/14/09 is $9,961,337.45.
9.BarCap estimated loss: 25%
1. CMBX 4 deal: CSMC 07-C4
2. Current loan balance: $310 million, matures May 2014
3. DSCR: 0.88x (down from 1.29 at U/W)
4. Number of units: 327
5. Occupancy: see below
6. Loan comes out to $948,012.23 per unit
7. Watchlisted for past year
8. Servicer Watchlist Comment: (11/01/2009) - 10/30/2009 Lender approval is required for any lease affecting more than 3,500 SF. 10/30/2009 This loan maintains a Furniture Fixture and Equipment Reserve with a current balance of $563,906.07 and a monthly constant of $179,739.21. 10/28/2009 Nothing new to report. 10/13/2009 Both Shutters on the Beach and Casa Del Mar are compared to several different market segments in their 8/31/2009 Star Reports. Shutters is compared to the Beverly Hills set of hotels, the greater Los Angeles Luxury Class hotels, and Southern California Luxury Beach Resorts. Casa is compared to the Beverly Hills set of hotels, the Santa Monica Upscale Hotels, and the greater Los Angeles Luxury hotels. Both Shutters and Casa are market leaders for all market sets. 10/13/2009 Per the Star Report dated 8/31/2009, Shutters on the Beach for the 31 days preceding 8/31/2009 had occupancy of 87.8% while the competitive set had occupancy of 60.6%. The ADR at Shutters on the Beach was $522.68 while the ADR for the competitive set was $518.82. The RevPar at Shutters on the Beach was $458.73 while the competitive set had a RevPar of $314.64. 10/13/2009 Per the Star Report dated 8/31/2009, Casa Del Mar for the 31 days preceding 8/31/2009 had occupancy of 81.6% while the competitive set had occupancy of 60.6%. The ADR at Casa Del Mar was $440.19 while the ADR for the competitive set was $518.82. The RevPar at Casa Del Mar was $359.29 while the competitive set was $314.64. 10/13/2009 The borrower attributes the hotels impressive STAR Report statistics to two factors. First, the hotels enjoy clearly superior locations compared to their competition. Secondly, the hotels management has been very aggressive in current marketing efforts, which has resulted in significantly superior occupancies, while being flexible on rates. 10/13/2009 This is a multi-property loan with both Shutters on the Beach (property 1, 59.88% loan allocation) underperforming with an individual NCF DSCR of 1.03 and Casa Del Mar (property 2, 40.12% loan allocation) underperforming with a NCF DSCR of 0.65. The weighted average NCF DSCR is 0.88 which is a 31.8% decrease from underwriting. 10/13/2009 Shutters on the Beach (property 1), NCF DSCR has decreased from underwriting due to other income decreasing 89.6% ($3,688,000 -$385,000), 27.8% ($533,000-$385,000) from prior year, room revenue decreasing 16.3% ($27,396,000 - $22,937,000), 16.6% ($27,486,000 - $22,937,000) from prior year, and food and beverage income decreasing 15.1% ($14,994,000 - $12,726,000), 9.8% ($14,103,000 - $12,726,000) from prior year. 10/13/2009 Expenses at Shutters have decreased 9.0% ($30,328,000 - $27,590,000) from underwriting, 10.8% ($30,921,000-$27,590,000) from prior year. 10/13/2009 Shutters on the Beach (property 1), occupancy was 92.4% at 8/31/2008, decreased to 54.55% at 12/31/2008, increased to 71.21% at 3/31/2009, and has increased to 87.8% as of 8/31/2009. ADR was $436.92 at 12/31/2008, decreased to $414.55 at 3/31/2009, and has since increased to $522.17 as of 8/31/2009. RevPar was $238.96 at 12/31/2008, increased to $296.22 at 3/31/2009, and has since increased to $458.28 as of 8/31/2009. 10/13/2009 Casa Del Mar (property 2), NCF DSCR has decreased from underwriting due to other income decreasing 84.1% ($1,977,000-$318,000), 2.1% ($325,000-$318,000) from prior year, room revenue decreasing 27.5% ($17,622,000-$12,768,000), 19% ($15,759,000-$12,768,000) from prior year, and food and beverage income decreasing 25.8% ($11,882,000-$8,816,000), 19.7% ($10,976,000-$8,816,000) from prior year. 10/13/2009 Expenses at Casa have decreased 4.0% ($18,927,000-$18,163,000) from underwriting, 14.9% ($21,343,000 - $18,163,000) from prior year. 10/13/2009 Casa Del Mar (property 2), occupancy was 82.9% at 8/31/2008, decreased to 46.51% at 12/31/2008, increased to 59.69% at 2/28/2009, and has increased to 81.4% as of 8/31/2009. ADR was $419.78 at 12/31/2008, decreased to $379.81 at 3/31/2009 and has since increased to $441.26 as of 8/31/2009. RevPar was $193.88 at 12/31/2008, increased to $272.68 at 3/31/2009, and has since increased to
$360.16 as of 8/31/2009. 10/13/2009 Per borrower on 9/30/2009, both hotels other income line item is comprised of all miscellaneous hotel income and interest on retained earnings. Other income is where all small commissions are coded, such as taxis, limos, movies, as well as one time charges. Per the borrower, these revenue items have decreased as a result of decreased room revenue and occupancy. 10/13/2009 Per borrower on 9/30/2009, market is slow but showing signs of improvement. Subject occupancy and rental rates are both above the market. In efforts to increase NCF DSCR, borrower has reduced staffing and overhead which has allowed them to maintain their operating margins on lower revenues. 10/13/2009 Per borrower on 9/30/2009, advertising is done through internet advertising, banner ads, and their Web Site.
9.BarCap estimated loss: 55%
1. CMBX 4 deal: BACM 07-2
2. Current loan balance: $187.5 million, matures March 2012
3. DSCR: 0.98x (down from 1.16 at U/W)
4. Total sq. footage: 924,501
5. Occupancy: 97% however tenant Segal (154,947 sq. feet) is bailing
6. Loan comes out to $202.81 per sq. foot
7. On Special Servicing, Default Imminent
8. A. Servicer Delinquency Comment: (10/01/2009) - 09/30/09 One Park is 924k SF office building in Midtown, Murray Hill, Manhattan. The occupancy is 97%. The loan was transferred into Special Servicing due to an imminent default. The borrower has requested a restructure of the mortgage loan due to the weakening office market. Lender engaged Dechert and has hired an appraiser to assets with the market analysis.
8. B. Servicer Watchlist Comment: (07/01/2009) - 1E - DSCR < 1.10. Loan is secured by a 924,501 sf 20-story office bldg in New York, NY, built 1925/renovated 2000. The 02/25/2009 inspection rated the subject in Fair condition. Debt consists of a $483MM whole loan split btwn a $187.5MM A-1 Note (BACM 2007-2) & a $187.5MM A-2 Note (BACM 2007-3), which are Pari Passu, & two Mezz loans totaling $108MM. Q1-09 NCF DSCR is 1.08 with an occ of 97.90%; YE 2008 NCF DSCR was 0.88x with 97.1% Occ. Based on ann Q1-09 figures, EGI has increased 5% from YE 2008, but is still not at anticipated U/W levels & shows a 6% decline. The YE 08 NCF decline was due to low Rental Income due to abatements, combined with an increase in A&M from PYE, & a 25.26% rise in R&M Exp. The 2008 Budget projected Base Rents of $34.88MM, 1% higher than reported 2008 Base Rents of $34.49MM. 2009 Budget is projecting base rents of $35MM, a 1% increase compared to ann. 2009 base rents. At U/W the Property was 98% leased, with office space having 100% Occ and avg rents of $35 psf. U/W cited avg asking rates increased > 40%. Tenant Segal, who occupies 157,947 sf (19% NRA), has a 12/2009 lease exp. Segal pays $38 psf; Per Bwr, Segal is scheduled to move out upon lease exp. Bwr is still actively mkt the space, and stated that there has been traffic to tour the space; however, no firm prospects to date. At closing, a DS Reserve & a TI/LC reserve were required as add’’l collateral; DS reserve bal is approx $4.5MM & TI/LC reserve bal. is approx $3.3MM as of 06/04/09. Per Bwr, there are 19,272 vacant sf available for lease (9500 sf in sub-basement & 9773 sf on concourse level) as of 1/2009. Bwr stated that they have not been actively mkt these spaces in order to keep available for the tenant takes occ of the former Segal space. Bwr’s asking rates are $30 psf/concourse and $25 psf/sub-basement, $2 - $3 above Market, per Bwr. Bank of America will continue to monitor loan.
9.BarCap estimated loss: 35%
575 Lexington Avenue (SkyGrid Building) - New York
1. CMBX 4 deal: BACM 07-2
2. Current loan balance: $162.5 million, matures October 2013
3. DSCR: 0.65x
4. Total sq. footage: 637,685
5. Occupancy: 88%
6. Loan comes out to $254.83 per sq. foot
7. Watchlisted for past year
8.Servicer Watchlist Comment: (10/01/2009) - 1E - DSCR < 1.10; 1F - DSCR < 1.40 & < or = 75% U/W. Loan is secured by a 637,685 sf office bldg in New York, NY, built 1958/renov 1990; inspected 2/24/09 and rated in Fair condition. Debt consists of a
$325MM whole loan split btwn a $162.5MM A-1 Note (BACM 2007-1) & a $162.5MM A-2 Note (BACM 2007-2), Pari Passu. Q2-2009 NCF DSSCR is .65 with 88% Occ; YE 12/31/2008 NCF DSCR was 0.63x with 89.9% Occ; YE 12/31/2007 NCF DSCR was 0.62x with 92% Occ. NCF decline is due to lack of loan stabilization as of Q2-2009 & YE08. Stabilized rents per U/W: Floors 2-9, $62.50 psf; Fls 10-20, $67.50 psf; Fls 21-28, $71 psf; Fls 29-35, $75 psf; Garage, $35 per space; Street Retail, $125 psf; and Ave Retail, $180 psf. Bwr rep’s update on tenants whose leases expire in the next 12 months: Kodashana will vacate upon 4/30/09 lease expiration; Mid Town Parking’’s lease expires 8/31/09; and 575 Lex Garage LLC has signed a 10-year renewal at a rate of $28.70 psf for the first 3 years. Regent’s lease will expire 12/31/09, however, Bwr does not yet have a renewal proposal out to this tenant. As per the 06/30/09 rent roll, there are 77,921 sf sitting vacant at the Property. Bwr rep further stated that these vacant spaces are being actively and aggressively marketed. Asking rates: $70-72 psf for years 1-5; $76-79 psf for years 6-10; per the Bwr rep, rates are comparable to market and most new leases or proposed renewals have rent steps every 5 years. Bwr’s $10MM Guarantee was required to cover future DS shortfalls/mitigate below-mkt rents. Bank of America will continue to monitor the Loan.
9.BarCap estimated loss: 45%
1. CMBX 4 deal: LBUBS 07-C6
2. Current loan balance: $117.4 million, matures June 2012
3. DSCR: 1.01x
4. Total sq. footage: 482,404
5. Occupancy: 85%
6. Loan comes out to $243.36 per sq. foot
7. Watchlisted for past year
8. Servicer Watchlist Comment: (11/01/2009) - 7/13/09- Per the FYE 2008 OSAR, DSCR was 1.01x and occupancy was 85% as of 12/31/08. Per Property Management, overall leasing strategy is to meet market demand for smaller tenants as the demand for big tenants has decreased significantly. Their 2009 strategy is to capture renewals. They have about a 90% renewal rate overall. There are no concerns over meeting debt service obligations at this time. Servicer added this loan to the watch list due to the fact that the bridge mezzanine financing had a maturity date of May 2009. Lehman initially gave the borrower a 30 day extension to try to restructure the loan. Lehman also extended the forbearance agreement that was set to expire on 6/10 until 6/29. Servicer has now received notice of the following events: NOTICE OF TRANSFER OF THIRD MEZZANINE LOAN NOTICE OF EQUITY COLLATERAL ENFORCEMENT ACTION UNDER THIRD MEZZANINE LOAN DOCUMENTS NOTICE OF AGREEMENT TO MODIFY SECOND MEZZANINE LOAN AND THIRD MEZZANINE LOAN Wachovia along with counsel has confirmed that the above referenced events did not need Senior Lender consent and were accomplished in accordance with the related Intercreditor agreement. The 100 Wall Street loan is secured by a 482,404 square foot office building located in New York, NY. The 5 year, interest only loan was funded in June 2007 with a 47% loan to value and 1.17X debt service coverage. The Sponsor is Broadway Real Estate Partners, LLC. As part of the loan closing, the Borrower obtained $62,491,102 of senior mezzanine and $50,513,622 of Aggregate Bridge Mezzanine financing provided by Lehman Brothers. The senior mezzanine financing is secured by a pledge of the ownership interest in 100 Wall Street and is co-terminus with the first mortgage. The bridge mezzanine financing is secured by a pledge of the senior mezzanine interest in the 100 Wall Street Mezzanine Borrower and the interests in several other assets including 3 Trust assets known as One Sansome Street, Greensboro Park and One Fair Oaks. The bridge mezzanine financing had an initial term of 15 months with a 3 month and 6 month extension option with a maturity of May 2009. A debt service reserve of $4,004,167 to cover the debt service forr the first and both mezzanine obligations was funded at closing and has been drawn down too approximately 500,000. The Borrower’s business plan was to increase the net cash flow at closing from approximately $8.7MM to an estimated $11.7MM as tenants are rolled to market.
9. BarCap estimated loss: 20%
Westin Casuarina Resort & Spa (Cayman Islands)
1. CMBX 4 deal: WBCMT 07-C32
2. Current loan balance: $182.15 million, matures May 2017
3. DSCR: 0.66x
4. Total # of units: 594
5. Occupancy: N/A
6. Loan comes out to $306,645.7 per unit
7. 30 Days Delinquent
8. Servicer Watchlist Comment: (10/01/2009) - NOI dropped significantly in T12 June 09. Sponsor has other hotel exposures. concerns on default. lower the valuation. W court in NY sold for $250k/key in Nov 2009. not necessary the best comp.
9. BarCap estimated loss: 60%
US Bank Tower /Tabor Center (Denver, Colorado)
1. CMBX 4 deal: MSC 07-IQ14
2. Current loan balance: $180 million, matures April 2012
3. DSCR: 1.11x
4. Total sq. footage: 696,027
6. Loan comes out to $258.61 per sq. foot
7. Transferred to Special Servicing
8. Servicer Delinquency Comment: (11/01/2009) - The Mortgage Loan was transferred to Special Servicing effective 10/7/2009 as a result of the Borrower sending three (3) letters dated 09/04/2009, 09/21/2009 and 09/30/2009 requesting a modification of the Mortgage Loan due to operating shortfalls at the Property. A "Hello" letter was sent to the Borrower on 10/16/2009 and Trust counsel was engaged on 10/20/2009 to assist with any work-out negotiations and, if necessary, the preparation of a pre-negotiation letter. Borrower’s request for a five (5) year extension and priority repayment of future equity investments is under review.
9. BarCap estimated loss: 10%
Meyberry House New York (220 East 63rd Street aka The Blake)
1. CMBX 4/5 deal: CSMV 07-C4
2. Current loan balance: $90 million, matures September 2016
3. DSCR: 0.78x
4. Total sq. footage: 717,339
5. Occupancy: 97%
6. Loan comes out to $292.75 per sq. foot
7. Special Servicer - 30 Days delinquent
8. A. Servicer Delinquency Comment: (11/01/2009) - 11/12/2009 Per ING Clarion 11/12/09: Loan was transferred due to the Borrower’s inability to fund the debt service reserve with $1 million as required by the loan documents. Borrower has sent a loan modification request which the Special Servicer is currently reviewing. The Loan defaulted on the October 2009 debt service payment. In addition, cash flow sweeps from the lockbox bank to the Lender’s Cash Management Account have ceased. Special Servicer is exploring this situation as well as collecting due diligence. 1/30/2009 Per borrower, market is stable, occupancy is above the market, and rental rates are in line with market rates. Borrower stated that increased utilities is due to the increased cost of energy along with increases in occupancy. Increased professional fees are due to legal fees associated with litigation over the termination of the garage tenant’s lease when the borrower purchased the building. 1/13/2009 Per ING Clarion 1-12-09: Loan returned to the master servicer effective 1/2/2009.
8.B. Servicer Watchlist Comment: (09/01/2009) - 9/9/2009 Key has contacted borrower regarding market conditions, increased expenses, efforts to increase NCF DSCR, advertising, and concessions; Key is awaiting a response. 9/9/2009 NCF DSCR has decreased from underwriting due to base rent decreasing 13.7% ($8,940,000 - $7,712,000), increasing 40.9% ($5,473,000-$7,712,000) from prior year, property taxes increasing 40.7% ($1,202,000-$1,691,000), increasing 90% ($890,000-$1,691,000) from prior year, utilities increasing 58.5% ($455,000-$721,000), 27.3% ($567,000-$722,000) from prior year, and general and administrative expenses increasing 0.1% ($118,000-$119,000), 77.6% ($67,000-$119,000) from prior year. 9/9/2009 Per borrower reports, occupancy has increased from 55.9% as of 12/31/2007 to the 97.36% as of 6/30/2009 and average rental rates have increased from $2,362.58/unit as of 12/31/2007 to $3,438.33/unit as of 6/30/2009. 8/31/2009 Lender approval is required for all new leases which account for greater than 10% of the gross income from operations. 8/31/2009 This loan maintains an Immediate Repair reserve with a current balance of $6,369.84 and no monthly constant, an Interest Reserve with a current balance of $23,599.27 and no monthly constant, and a Renovation reserve with a current balance of $208.36 and no monthly constant. 7/9/2009 Increased utilities is due to the increased cost of energy along with increases in occupancy. 1/30/2009 Per borrower, market is stable, occupancy is above the market, and rental rates are in line with market rates. Borrower stated that increased utilities is due to the increased cost of energy along with increases in occupancy. Increased professional fees are due to legal fees associated with litigation over the termination of the garage tenant’s lease when the borrower purchased the building. 1/13/2009 Per ING Clarion 1-12-09: Loan returned to the master servicer effective 1/2/2009
9. BarCap estimated loss: 40%
1. CMBX 4 deal: COMM 07-C9
2. Current loan balance: $221.25 million, matures July 2017
3. DSCR: 1.43x
4. Total sq. footage: 7,239,096
5. Occupancy: NA
6. Loan comes out to $30.56 per sq. foot
8. Servicer Watchlist Comment: (09/01/2009) - 8/27/2009 There are three Circuit City locations related to this loan - Hilltop Plaza (Richmond, CA), Skyview Plaza (Orlando, FL), and Highland Grove (Highland, IN). 8/27/2009 Hilltop Plaza - Circuit City vacated this location on 12/31/08. They are marketing the space and have had initial contact with Big Lots and Fresh Market. They believe that this is good real estate and expect additional interest from national tenants. They continue to market this space to national tenants. Their leasing and tenant coordination groups are evaluating interest from CitiTrends for approximately 12,000sf of the box. 8/27/2009 This would still leave enough remaining space for a national anchor tenant. Skyview Plaza - Circuit City is still open at this location and is conducting a going out of business sale. They anticipate they will be vacating in the next 30-60 days. Their leasing team is marketing this space both as a whole unit and as a potential split into two jr. anchors. Bed Bath & Beyond has expressed interest in the space. The tenant is currently reviewing a proposed letter of intent.
9.BarCap estimated loss: 15%
520 Broadway Santa Monica
1. CMBX 4 deal: CSMC 07-C3
2. Current loan balance: $51 million, matures April 2012
3. DSCR: 1.09x
4. Total sq. footage: 111,583
5. Occupancy: 87.3
6. Loan comes out to $457.06 per sq. foot
8. Servicer Watchlist Comment: (11/01/2009) - 11/2009: The Property, which is located in downtown Santa Monica, CA, is a 6 story/20 unit/111,532sf mid-rise office building, that is 87.3% occupied as of 10/1/09. The Property was buit in 1983 and per the latest inspection (4/9/09), is in above average condition. The YE 08 NCF was $2,864,822 with a 1.00x DSCR. The 2Q09 NCF is $3,137,754 with a 1.09x DSCR. The drop in DSCR is due to a couple of factors. The Lender included credit taken for the $900,000 Interest Reserve collected at closing. The Interest Reserve is recourse to a Fund and subject to 1.20x condition for release. Also, the effective rent at UW was $50.55/sf and has since dropped to $45.39/sf as of 2Q09. Per REIS, 3Q09 effective rent and vacancy for the Santa Monica submarket is $42.32/sf and 10.5%, respectively. The Property is currently being marketed to address vacancy issues and a new management company has been hired.
9.BarCap estimated loss: 25%
1. CMBX 4 deal: CSMC 07-C5
2. Current loan balance: $85 million, matures June 2014
3. DSCR: 0.90x
4. 896 units
5. Occupancy: 90%
6. Loan comes out to $94,866.07 per unit
7. In Foreclosure
8. Servicer Delinquency Comment: (11/01/2009) - The Mortgage Loan was transferred effective 07/17/09 as imminent default a result of a letter from the Borrower dated 07/09/09 that it would not be curing the non-monetary default (i.e., the failure to complete required renovations by 06/30/09) and will no longer be funding operating shortfalls. The 07/09/09 letter from the Borrower was prompted by the Master Servicer sending a default notice as a result of Borrower’s failure to complete the required renovation of the Property by the 07/01/09 deadline. Previously, the Borrower stated that the Property had adversely impacted by the severe economic decline in the Las Vegas market and for the past eight (8) months the Property had not generated sufficient net cash flow to cover debt service which was historically covered by the TIC investors. Counsel was engaged on 07/23/09. The Mortgage Loan is hard cash-managed with debt service originally paid prior to funding operating expenses. Accordingly, the cash management waterfall was modified to ensure tenant services are provided and Property is protected. Because the Mortgage Loan is in monetary default, Trust counsel sent a formal demand and acceleration notice to the borrower on 10/19/09. Because the default was not cured, Trust counsel recorded a notice of default on 10/22/09 to start the foreclosure process. Third party reports have been ordered accordingly.
Servicer Watchlist Comment: (04/01/2009) - The Allanza at the Lakes is secured by a 896 unit Multifamily property located in Las Vegas, NV. 1.22x UW DSCR NCF as compared to 0.97x for YE07 and 1.14x as of 9/08. The occupancy at UW was 90% vs. 90% for YE07 and 86% as of 9/08.
9. BarCap estimated loss: 45%
Irvine Company EOP San Diego Portfolio
2. Current loan balance: $145 million, matures July 2017
3. DSCR: 0.66x
Total sq. footage: 380,954
5. Occupancy: 69%
6. Loan comes out to $359.63 per square foot
8.Servicer Watchlist Comment: (10/01/2009) - 10/09: Loan is secured by 7 properties, 6 Class A and Class B office bldgs and 1 single-tenant restaurant, all located in San Diego, CA with an aggregate SF of 380,954. The portfolio was part of a 14 property, 1.9MM SF portfolio of office properties that The Irvine Company purchased from EOP. At origination a $1,854,551 Debt Service Reserve was established (current balance is $0). A TI/LC Reserve of $3,960,433 and a CapEx Reserve of $900,498 were also established, both of which could be used to fund DS after the DS Reserve was exhausted; both of these reserves are exhausted also. UW was based on a stablized vacancy and assumed all leases rolled to market. Occupancy at the property has deteriorated-at origination (July 07) it was 89.9%, as of June 08 it was 88% and as of June 09 was 69%. The largest tenant, occupying 33.6% of GLA at property ID #2.02, vacated its space upon lease expiration 3/08. The second largest tenant, occupying 33.3% of GLA at the same property, vacated its space on lease expiration 11/08. Prospective tenants for the other units include: Law Firm with LOI for 24,073 SF, suite 200, Technology Co. with LOI for 23,859 SF, suite 300 & Research Firm with LOI for suite 350.
9. BarCap estimated loss: 40%
1745 Broadway Avenue (Random House Building) - New York
1. CMBX 4 deal: LBUBS 07-C1
2. Current loan balance: $340 million, matures January 2017
3. DSCR: 1.18
4. Total sq. footage: 636,598
5. Occupancy: N/A
6. Loan comes out to $534.09 per sq. foot
7. Transferred to special servicing November 6, 2009
8. Servicer Delinquency Comment: (11/01/2009) - Loan transferred to special servicing effective November 6, 2009. The Borrower has requested a forbearance while it negotiates a forbearance/standstill with the Homeowners Association. A pre-negotiation letter has been sent to the Borrower by the SS for signature, and it is expected that a meeting will be held with the Borrower within one week.
9. BarCap estimated loss: 5%