Trepp LLC

07/14/2021 | News release | Distributed by Public on 07/14/2021 14:04

The Five Largest CMBS Loan Losses from June 2021

Approximately $442.5 million across 20 loans were resolved with losses in June, carrying an average loss severity of 41.36%. The losses were concentrated around larger shopping center and mall loans that resolved, with 77% of the loss total belonging to the retail sector.

The 12-month average disposition balance rose to $273.1 million, while the 12-month moving average fell to 62.24% from 64.17% the month prior.

See our list of the five largest loan losses from June below.

1.Charleston Town Center (Charleston, WV)

The largest loan loss in June was the $91.3 million Charleston Town Center, which resolved with a full write-off - a 100% loss severity.

The 304,000-square-foot section of the mall was an REO asset of CMBS 1.0 deal BSCMS 2007-T28. In May, the property was purchased by Hull Property group for what was at the time an undisclosed price. During that same month, the collateral was valued at $25.5 million, however, liquidation proceeds totaled only $11.7 million and that was offset by the entirety of the liquidation expenses.

We noted in our client-only, daily newsletter TreppWireearlier this year that the mall was losing Victoria's Secret (third-largest collateral tenant), Sephora, Talbot's, Chico's, and White House Black Market as tenants. Prior to that, the mall had lost three of its four anchor tenants over the past several years, triggering co-tenancy clauses and leading to collateral tenant departures.

Hull plans to continue to operate the property as a mall.

The loan represented 100% of the CMBX 5deal, BSCMS 2007-T28 at the time of resolution.

2. Marriott -Farmington (Farmington, CT)

The second-largest loss in June is the $32.9 million Marriott -Farmington, which resolved with $31.2 million in losses and a loss severity of 94.89%.

The 381-unit full-service Marriott was built in 1982 and renovated in 2006. In 2017, the loan was sent to special servicing ahead of its March 2017 maturity date. In that same year, the value of the hotel was lowered to $26.5 million from its securitization appraisal value of $56.8 million. In November 2020 the value was lowered further, to $9.2 million.

Year-end 2020 financials indicate that DSCR (NCF) was -0.81x and occupancy was just 21%.

The loan comprised almost 74% of the CMBX 4deal, JPMCC 2007-CB19 at the time of resolution. It was liquidated with $9.7 million in proceeds and $8 million in expenses.

3. Lakeland Town Center (Lakeland, FL)

The third-largest loss in June was the $25.1 million Lakeland Town Center. The grocery-store anchored shopping center resolved with $18.6 million in losses -a loss severity of 74.19%.

The property is a 304,375-square-foot shopping center that was built in 1964 and was renovated in 2003. The loan was transferred to special servicing in October 2016 for imminent monetary default. The loan matured in June 2017 and was not paid off. In the following months, a default letter was sent and the property filed for foreclosure.

After initiating the process for a sale, the property was taken off the market in May 2020.

YE 2020 financials indicated that DSCR (NCF) was 0.35x and occupancy was 50%. Recently updated servicer commentary noted that they were working on relief amendments and renewals with Save-A-Lot and Family Dollar.

The loan represented 8.74% of LBUBS 2007-C6at the time of resolution. It resolved with $12.5 million in proceeds and $6.1 million in expenses.

4. Islandia Shopping Center - A+B Notes (Islandia, NY)

The next largest loan loss belongs to the A+B notes of the $65.9 million Islandia Shopping Center. The B note resolved with a full write-off while the A note wrote off $980,00 in losses.

The 376,774-square-foot grocery centered is anchored by a 128,755-square-foot Wal-Mart. The loan was sent to special servicing in 2015 but was modified to extend its maturity date to July 2021 and split it into an A+B note in order to adjust the cash management waterfall and account for the four major tenants. In January of this year, the loan was once again transferred to special servicing due to imminent monetary default as the borrower informed the Master Servicer they would not be coming out of pocket to fund its shortfall. A default notice was sent in January 2021 and the loan was expected to discuss further foreclosure/ workout alternatives as the New York state foreclosure moratorium lifted.

At resolution, the A + B Notes represented 23% of the CMBX 5deal, LBUS 2007-C6.

5. 350 East Fordham Road (Bronx, NY)

The fifth-largest loan loss in June was the $17.3 million 350 East Fordham Road. The loan resolved with $8.6 million in losses and a loss severity of 49.94%.

The collateral is 44,960 square feet of a single-tenant retail center backed by department store America's Kids.

The loan was transferred to Special Servicing in February 2021 for imminent monetary default and a sale was closed in late April. The loan was initially transferred to special servicing as a result of the Covid-19 pandemic. Servicer data notes that a DPO resolution was reached with the borrower in June.

The loan was 1.61% of COMM 2015-LC21at the time of resolution and liquidated with $8.9 million in proceeds and $244k in expenses.

For more information on CMBS loans that have been disposed with losses, contact Trepp at [email protected] or 212-754-1010

Editor's Note: The information referenced in this blog post with regards to the CMBS loans, deals, and properties is sourced from the corresponding monthly remittance reports published by the CMBS trust. The loan names are given by the issuer at securitization and may not indicate borrower or owner affiliation.

The information provided is based on information generally available to the public from sources believed to be reliable.