Wednesday, December 3, 2014

just in time for Xmas - another $200MM goes into special

Transaction: JPMC 2007-LDP10Property: Lafayette Property TrustCity/State: Alexandria, VAProperty Type: OfficeBalance: $203,250,000Percentage of Deal: 7.0%Maturity Date: 3/1/2017MS: Midland Loan Services, Inc.SS: C-III Asset Management, LLCReason for Transfer: Imminent Monetary Default

Of course, the ratings agencies and issuers would have you think that legacy CMBS are behaving just peachy, with delinquency rates below  6%.  Let me ask you this: if a loan has had an A//B note modification, and as is typical the B note pays nothing, isn't that loan partly delinquent?  I would say so, because the trust is not receiving its contracted cashflow from that loan.  But, they don't want to include B-notes in their delinquency numbers because that would just be "bad news" 


crabsofsteel said...

Fitch speaks about the problems with this loan. After rating the AJ class in this deal as AAA (now CC), they have a lot of nerve!

Loan Limelight – JPMCC 2007-LDP10: Lafayette Property Trust - $203.25 million

Lafayette Property Trust, the fourth largest loan in the JPMCC 2007-LDP10 transaction (7% of the pool balance), was transferred to the special servicer last week after the borrower delivered written notice to the master servicer of its inability to make loan payments following the lease expiration of the largest tenant in the portfolio, CNA Corporation (CNA).

CNA vacated 162,316 square feet (19.3% of the portfolio NRA) at the 4825 Mark Center Drive property prior to its August 2015 lease expiration, but will continue to remit payments through the end of its lease term. CNA decided not to renew their lease after moving its headquarters to a newly built-to-suit property located closer to the Metro station in the Alexandria submarket at 3001/3003 Washington Boulevard, which was recently completed and where it occupies the majority of the space. CNA’s rent at the Mark Center Drive property is currently 5% above market at $31.66 per square foot (psf) according to the September 2014 rent roll and accounts for nearly $5.2 million of rental income for the portfolio annually. As of third-quarter 2014, REIS reported asking rents and vacancy in the I-395/Landmark office submarket of Suburban Virginia at $30.12 psf and 24.1%, respectively.

When CNA’s lease expires, the debt service coverage ratio for the portfolio is expected to fall below 1.0x. The borrower has been funding capital costs associated with tenant improvements and leasing commissions from excess cash flow after paying debt service, but has advised it will not be able to do so after CNA’s lease expiration. The borrower has requested a loan modification. The loan is currently performing and has a maturity in March 2017.

The portfolio has experienced a continual decline in occupancy since issuance. As of the September 2014 rent roll, the portfolio was 73.6% leased, down from 78.6% at year-end (YE) 2013, 81.2% at YE 2012, and 93.1% reported at issuance. When CNA’s lease expires, the portfolio is expected to be only 55% leased. Additionally, nearly another 20% of the total portfolio square footage, excluding the CNA space, rolls prior to the loan’s maturity.

The interest-only loan is secured by a portfolio of eight office properties and a single-tenant Clyde’s restaurant located in Alexandria, VA. The collateral totals approximately 840,000 sf and is located within the Mark Center, a 350-acre master-planned community located 10 minutes from the Washington D.C. CBD and Reagan National Airport. The loan sponsor is Lafayette Real Estate, LLC and the properties are currently managed by Duke Realty Corporation.

At the last rating action, Fitch considered the loan to have a high probability of defaulting during the term because of the declining occupancy, the significant rollover risk during the loan term, and the softening market fundamentals. Further rating actions may be warranted if performance continues to decline or if any updated specially serviced valuations fall below Fitch’s expectations.

crabsofsteel said...

Now 60 days delinquent.

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