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TREPP Trading Alert: 2004 CMBS Deal Could Catch a Break as IBM Chooses New Buffalo Office Site

Investors in GMACC 2004-C3 might be in luck. For a while now, we have been concerned about the $33.9 million Key Center note. About a year ago a developer was looking to lure the building’s lead tenant–Delaware North–away from the Buffalo, New York property. The hospitality and food service management firm occupies 24% of the space with a lease that ends in the summer of 2015. In October the rumors were proven true when it was reported that Delaware North was headed to a new class-A office building that will be constructed at the corner of Delaware Avenue and Chippewa Street.

The Key Center office is located in downtown Buffalo and contains 436,000 square feet of space. Constructed in 1990, the building serves as collateral for a $33.9 million loan that makes up 7.4% of the collateral behind the GMACC deal. Investors in the deal were hoping that Key Center would not follow the path of the One HSBC Center loan. (The HSBC property that backs a $73.95 million note lost its namesake lead tenant in 2013.The loan is now sitting on a 76% appraisal reduction.)

Buffalo Business First reported yesterday that IBM will be putting 500 employees in 100,000 square feet of the Key Center. That is about the same amount that Delaware North is shedding.

The GMACC deal has not been one of the stronger performers from the class of 2004. Nine classes of bonds have been written off thus far (5.7% of the original balance). The Key Center loan is current and is neither on watchlist nor with the special servicer. The note matures in late 2014.

Compliments of Trepp, LLC – a EACCNY Member