Thursday, April 23, 2015

BACM 2007-5: shorting to class D and another 2% goes in the hopper

Transaction: BACM 2007-5
Property: Cypress I
City/State: Cypress, CA
Property Type: Office
Balance: $20,440,016
Percentage of Deal: 1.77%
Maturity Date: November 10, 2017
MS: KeyBank Real Estate Capital
SS: C-III Asset Management LLC
Reason for Transfer: Imminent Default
On Servicer Watchlist Prior to Transfer: Yes
Previously in Special Servicing: No
Previously Modified: No

3/4/2015    WatchList Comments from Berkadia Shared Services II:     3/4/2015    The subject property is 144,963-sf office building that was built in 1987 and is located in Cypress, CA.    03/03/2015  The DSCR as per 12/31/2014 was at 0.87 which increased by 13% when compared to 12/31/2013 analysis where DSCR was at 0.77.  The DSCR has been below the threshold since 3Q12 due to fluctuations in occupancy and decrease in rental rates from $21.74 psf as of 06/30/2013 to $14.76 psf as of 12/31/2014.  Per borrower reports, occupancy as of 12/31/2014 was at 82%.  Per the borrower, concessions are offered in the form of tenant improvement allowance for new tenants $5 - $25 psf and one month free rent for every three years lease renewal.  The vacant spaces are advertised through email blasts, cold calling and brokers.  To increase the revenue, they have been signing new leasing team of DAUM a total of 10,300 sf of new space has been leased and a total of 7,700 sf of renewal has been signed.  The new best maintenance practice has been implemented to reduce overall operating costs.     3/4/2015    The borrower plans to improve cash flow by leasing the remaining vacancy and enforce the terms of the existing leases.  Per inspection report dated 01/15/2015, the property performance is average when compared to similar properties in the area.  The average market vacancy is 8% and the average rent paid is $18 psf to $24 psf.  The building is currently under new management and common areas have been upgraded.  Vacant units are lease ready and being marketed.  The overall trend in the area is stable.      110/06/2014  Per borrower reports, tenant Focus Diagnostics Inc, which occupies 59,437 sf or 41% of GLA, had a lease which expired on 03/31/2014.  The borrower will be contacted for leasing updates.      09/01/2014  Per borrower reports, occupancy as of 06/01/2014 was at 75%.  The borrower has been contacted for a property performance update.         08/04/2014  Per borrower reports, occupancy has increased from 71% as of rent roll dated 03/31/2013 to 76% as of rent roll dated 03/31/2014.     3/4/2015    The borrower will be contacted for property updates.         05/02/2014  The borrower has been contacted for a property performance update and awaiting a response.      11/06/2013  Per the borrower, Focus Diagnostics, Inc has extended its lease to 03/31/15.  The demand for the office property in the area is poor and there is an abundance of vacant space in the West Orange County, California market.  The occupancy and rental rates are down.  They are heavily discounting the first months rent on long term leases and are offering bonuses of up to $1.00 psf to brokers that bring in new tenants.  Lease rates are in line with the market rates and the overall sluggish economy has impacted the demand for space in the area.  Rental rates are approximately 40% off the peak rate and are stable.  The borrower expects that favorable property tax relief would improve cash flow.     3/4/2015    Occupancy and rental rates would improve as the overal

1 comment:

crabsofsteel said...

Along with the $20MM Cypress I loan, another $6MM loan which was previously modified, Monroe Office Portfolio, is back with the special. Great deal!