Member News

Ahold to Close Upstate New York Warehouse

According to the Buffalo News, supermarket operator Ahold USA will be closing two New York warehouse facilities some time this year.

The story notes that the firm will lay off 600 employees by August and close locations in Cheektowaga and Lancaster, New York. The location to watch is the one in Cheektowaga. The Meridian Business Center at 1 Scrivner Drive is the current location of Ahold’s American Sales warehouse, which is one of the two slated for closure.

The Meridian Business Center backs an $8 million CMBS loan which makes up 0.93% of the collateral behind MLCFC 2006-2. The loan is slated to mature in February, so we should know shortly if this news has any impact on the note. American Sales is the top tenant with 65% of the space and a lease that ends this month. Servicer watchlist notes indicate the firm has an option to extend the loan one year.

The property was built in 1960 and contains 429,476 square feet of space.

 

Collin Creek Mall Has Value Cut Again, Appraisal Reduction Upped

According to January servicer data, the largest asset behind the JPMCC 2001-CIB2 deal had its value reduced again. The $55.6 million Collin Creek mall loan is one of four remaining behind the CIB2 deal and represents over 93% of the remaining collateral. (Two of the other three remaining loans are defeased).

Collin Creek is an REO asset of the CIB2 deal. As of December, the collateral had been valued at $25 million and the note was carrying an appraisal reduction of $32.7 million. This month, the value was reduced to $18.5 million and the appraisal reduction was upped to $40.2 million.

In November 2014, the loan was shipped to special servicing for the second time. One month later, it was revealed that the asset could be headed for a deed-in-lieu foreclosure. In February 2015, servicer data indicated that the value of the property had been cut by more than 70% and the appraisal reduction on the loan had been doubled.

In October 2013 it was reported that Dilllard’s would be closing its store at the Plano, Texas mall. At one point, the borrower offered to include ownership to the Dillard’s parcel and three other undeveloped parcels in return for the lender taking the property back via a deed-in-lieu.

The property has had weak performance for a number of years and has not been above 1.0x since 2010. DSCR was 0.60x in 2014 and 0.20x for the first 11 months of 2015.

Sponsored by General Growth Properties, the loan was retained by GGP when the firm came out of bankruptcy. When the firm was restructured, the loan was granted a five-year extension, pushing the loan’s maturity date to July 2016. The mall was later spun off by GGP into a REIT called Rouse Properties in 2011.

The mall contains over 1.1 million square feet, but only the in-line stores serve as collateral for the loan. The mall‘s website lists Macy’s, JC Penney, and Sears as anchors.

 

Value of Assets Behind Large GSA Portfolio Cut

According to January servicer data, the value of the collateral behind the $197.4 million NGP Rubicon GSA Pool has been cut to the point where the collateral could now be underwater. (See our notes below for the caveats.) The loan is split into two equal parts. One $98.7 million piece makes up 96% of the remaining collateral behind WBCMT 2005-C20. The other slice makes up almost 23% of the collateral behind WBCMT 2005-C21.

We believe the outstanding loan was recently backed by nine office properties and one industrial property, although there one of the properties was sold late last year. The value of the underlying properties was cut from $211.9 million in December to $159.5 million this month. That latest value would seem to put the loan underwater at this point and there is no current appraisal reduction on the loan.

That being said, this might not necessarily be a case where the loan is underwater. It is possible that the lower value reflects the sale of a property last late month, but the balance of the loan has not yet been reduced (and that there will be a true up at some point). According special servicer notes, “the Burlington, NJ property closed on 12/28/15. The Burlington property will be released and 100% of net proceeds will be applied to pay down the debt.” The Burlington property was the largest property by allocated loan balance.

For now, if trading either deal, you will want some clarity on the situation before pulling the trigger. (We will reach out to the trustee, but can’t promise we will get an answer.) Over time, it hasn’t been uncommon to see the values of the collateral behind large portfolio loans bounce around from month to month as assets are shed. This fluctuation does not always remain consistent with shifts in the loan balance.

The last reported full-year DSCR was 0.75x in 2014. The latest special servicing notes indicate the portfolio is 87% leased and 42% occupied.

 Compliments of TREPP, LLC – A member of the EACCNY