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Update: New Jersey Office Assigned Appraisal Reduction

According to January servicer data, the $47.9 million Novo Nordisk Headquarters took a $24.3 million appraisal reduction amount. The loan backs 5.4% of CGCMT 2005-C3, a deal that has taken 3.2% in cumulative bond loss.

Back in September 2013 we wrote about the eponymous tenant’s planned departure from the property. Novo Nordisk, which currently occupies 77% of space, will be vacating upon lease expiration in December of this year. Despite solid financial performance (1.75x DSCR in the first half of 2013), the loan has been in default since being unable to payoff at maturity in 2010. The workout strategy is listed as real estate owned and its most recent appraised value from February 2013 is $28.1 million, down from $71.5 million in 2005. The loan is paid through July of last year.

The note is backed by a 225,651 square-foot office building is located in Princeton, New Jersey. The loan is the largest in the CGCMT deal. It is carrying about $1.7 million in advances and ASER, which taken together with the new appraisal reduction, imply a loss of close to $26 million. That would wipe out the J and H tranches and about 80% of the G class.

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