Trilogy Apartments - $137.5mm loan - BSCMS 2005-PWR9

This is just the kind of bad news that will temper the sharp tightening seen last week, as soon as it makes the general press.

Trilogy Apartments accounts for over 6.5% of the deal, and is only (not) covering at 0.57x debt service. The property consists of just over 1,000 units, and is located in north Philly. It was a partial IO (rolled at 36 months), and has not been profitable since 2007. It has a monthly shortfall between $200k and $300k, and the current owners have told the special that they will no longer fund shortfalls. The loan matures July 1st, 2010.

Our rough analysis puts the properties value at 35 - 40% of the outstanding senior balance, implying a 60-65% loss (impacts class J)! Realpoint published an update last week that used a blended net cash flow (higher than the most recently reported) and a lower cap rate of 8.5% (we used 9%), and came up with a 40% loss severity (impacts class L).