Chapter News, News

CMBS Investors May Not Be in “Good Hands”

Long Island Mall Loan Facing Default Sent to Special Servicing

Jericho Plaza (I & II), a $163.8 million loan that backs 8.7% of CSMC 2007-C5, is now with the special servicer for “imminent monetary default” according to a Fitch note circulated late Friday. The loan is backed by a pair of offices building in Jericho, New York on Long Island. Built in 1978, the buildings total 638,216 square feet.

After posting a DSCR of 1.0x in 2013, the loan reported a DSCR of 0.75x in the first quarter of 2014 on 85% occupancy. A 2007 appraisal valued the office building at $230 million for a 5.7% cap rate. Full year 2013 NOI was $10.0 million, down from $13 million at securitization due to higher expenses and lower reimbursements.

New York Community Bank occupies 11% of the space with a lease expiration at the end of this year. Watch list comments make no mention of the lease ending or if NYCB plans to re-up.

The loan is due to mature in 2017 and was current as of September (the CSMC deal should report today). CSMC 2007-C5 has taken 10% in cumulative bond loss so far, making the D class the current first loss tranche. Shortfalls reached the A-J tranche as of September.

 

Big Previously Modified Stamford Office Loan Pays Off

Another big Stamford office loan was paid off last week, removing one more sizable Stamford worry for CMBS investors. The $68.5 million Harbor Plaza loan was paid off this month with only a 1% special servicing fee loss. Prior to the payoff, the note made up 45% of the collateral behind JPMCC 2004-CB8. Given the concerns over the Stamford market, this payoff certainly represents a hopeful sign for the area.

The property is a 731,000 square-foot office that was built in 1981. Last year we wrote about a plan by George Comfort to inject $40 million of fresh capital into the property despite the fact that the office had lost several tenants (occupancy sank to 35%) and saw DSCR dip to 0.11x. In 2013, the loan was granted a one year extension. The loan first went into special servicing in 2011.

 

Another Sears Slated to Close

Time to add another CMBS loan to your Sears Closing cheat sheet. The Sears at the Lebanon Plaza in Lebanon, Pennsylvania will be closing in January according to a story in the Lebanon Daily News. The mall backs a $23.2 million loan that makes up 0.87% of the collateral behind GECMC 2007-C1. Sears is the top tenant in the property with 28% of the space and a lease that ends in early 2016. DSCR on the loan was 1.56x in 2013 on occupancy of 97%. Sears will begin its liquidation sale on October 31.