This week, CRED iQ calculated real-time valuations for 5 distressed properties that have transferred to special servicing within the past 3 months, including a regional mall located in Lancaster, PA and 2 mixed-used properties located in Lower Manhattan. One of the highlighted properties, a medical condo located in the Upper East Side of Manhattan, transferred to special servicing only 8 months after origination and may have raised some eyebrows in the process.
The CRED iQ valuations factor in a base-case (Most Likely), a downside (significant loss of tenants), and dark scenarios (100% vacant). For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
Park City Center
1.4 million sf, Regional Mall, Lancaster, PA 17601
This $115.5 million loan failed to pay off at maturity on September 9, 2021 and transferred to special servicing. The borrower, Brookfield Property Partners, requested an extension, and KeyBank, as special servicer, is reviewing the request. The loan maturity was previously extended through a November 2020 modification agreement that required Brookfield to curtail $13.5 million in principal. Despite the maturity default, an additional $6.0 million in principal was curtailed in September, which could be related to a second extension. Overall, the loan has de-levered by approximately 14% from its original balance of $135.0 million. Unfortunately, the decline in value of the collateral property since origination may have been steeper than the principal paydowns to date.
The loan is secured by Park City Center, a regional mall located in Lancaster, PA that is anchored by JCPenney, Boscov’s, Kohl’s, and Round1 Entertainment – although Boscov’s owns its land and improvements. These tenants may serve as traditional anchors but much of the foot traffic is derived from the Apple Store, which had plans at loan origination to expand its space into an updated store concept. The presence of the Apple Store is one of the few positives for the asset, which was hit hard by the pandemic and co-tenancy clauses from previous closures of Sears and The Bon-Ton. Since loan origination, the following tenants have vacated or no longer have a presence at Park City Center: Williams-Sonoma, TGI Friday’s, Justice, GNC, Christopher & Banks, Finish Line, The Walking Company, Motherhood Maternity, and Clarks. Net cash flow at the property declined approximately 37% from TTM June 2019 through year-end 2020, which corresponded to a significant decline in value for the property. A June 2019 appraisal for the property indicated an LTV of 53%; however, CRED iQ’s Base-Case valuation implies a more conservative LTV closer to 70% even after reductions in principal over the past 2 years. With Brookfield actively looking for refinancing, leverage levels and the potential contribution of additional equity could be key factors for getting a deal done for mortgage originators and other lenders. For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
| Property Name | Park City Center |
| Address | 142 Park City Center Lancaster, PA 17601 |
| Outstanding Balance | $115,500,000 |
| Interest Rate | 4.11% |
| Maturity Date | 9/9/2021 |
| Most Recent Appraisal | $254,400,000 |
| Most Recent Appraisal Date | 6/27/2019 |
428 Broadway
53,418 sf, Mixed-Used (Office/Retail), New York, NY 10013
This $60.0 million loan transferred to special servicing on September 2, 2021 due to delinquency. This distressed loan is yet another product of the fallout from the struggles of WeWork, which served as a primary tenant. WeWork had leased 77% of the collateral property’s GLA at origination, but a lease termination was approved by the lender. The lease termination fee may have been in excess of $3.0 million, according to servicer data. Multiple workouts are being evaluated including foreclosure or a note sale.
The floating-rate loan was originated in March 2020 by LoanCore Capital as bridge financing to allow the borrower to recapitalize the collateral property, which is a mixed-use office building with ground floor retail located in the SoHo submarket of Manhattan. The loan sponsor, Jacob Chetrit, had planned to lease the ground-floor and below-grade retail space, which totaled 12,203 sf and was vacant at origination. However, the retail space remains vacant with a tough leasing environment for high-street retail in Manhattan. The departure of WeWork now leaves the entire building vacant. For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
| Property Name | 428 Broadway |
| Address | 428 Broadway New York, NY 10013 |
| Outstanding Balance | $60,000,000 |
| Interest Rate | 4.90% |
| Maturity Date | 4/9/2023 |
| Most Recent Appraisal | $95,000,000 |
| Most Recent Appraisal Date | 2/6/2018 |
Shops At Mauna Lani
78,301 sf, Retail, Waimea, HI 96743
This $19.6 million loan transferred to special servicing on July 23, 2021 and is a potential refinance opportunity. The loan failed to pay off at maturity in April 2021 and the borrower, Arciterra, requested an extension that was approved. However, the loan originator, Money360, Inc., was concurrently working on a refinance solution. Both extension and refinancing alternatives are being evaluated.
The loan is secured by a leasehold interest in a retail property located in Waimea, HI on the Big Island. The property serves as a captive retail destination for travelers staying at the Mauna Lani resort and features primarily restaurant and apparel tenants. Although Hawaii tourism levels continue to improve from pandemic lockdown lows in 2020, the property has hasn’t improved occupancy greater than 83%. Occupancy was approximately 91% at loan origination. Further complicating matters, annual ground rent for the property is in excess of $800,000.
Using CRED iQ’s newly launched COMPS software, our team identified King’s Shops as a highly relevant comparable property. Similar to the Shops At Mauna Lani, King’s Shops is a captive retail development that serves guests of the Waikoloa Beach Marriott Resort & Spa. The King’s Shops recently went into receivership following its own struggles with the disruption of Hawaiian tourism caused by the pandemic. For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
| Property Name | Shops At Mauna Lani |
| Address | 68-1330 Mauna Lani Drive Waimea, HI 96743 |
| Outstanding Balance | $19,625,000 |
| Interest Rate | 8.00% |
| Maturity Date | 4/1/2021 |
| Most Recent Appraisal | $30,950,000 |
| Most Recent Appraisal Date | 3/1/2019 |
394 Broadway
32,285 sf, Mixed-Use (Retail/Office), New York, NY 10013
This $18.65 million loan transferred to special servicing on July 9, 2021 for the purpose of inking a loan modification. The collateral property had been adversely impacted by the pandemic and occupancy has declined since loan origination in March 2019. The loan modification was negotiated with LNR Securities Holdings as special servicer and will likely be designed to provide relief and give the borrower an opportunity to address the property’s vacancy.
The collateral property is a 32,285-sf mixed-used building located in the Tribeca submarket of Manhattan. With a high volume of vacancies up and down Broadway, the ground-floor retail portion of the building may take relatively longer to lease compared to any vacant office space. The property was 67% occupied at the time of its transfer to special servicing. For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
| Property Name | 394 Broadway |
| Address | 394 Broadway New York, NY 10013 |
| Outstanding Balance | $18,650,000 |
| Interest Rate | 5.41% |
| Maturity Date | 4/1/2029 |
| Most Recent Appraisal | $29,500,000 |
| Most Recent Appraisal Date | 1/14/2019 |
1049 5th Avenue
7,751 sf, Office, New York, NY 10028
This $4.5 million loan transferred to specially servicing on August 24, 2021, just 9 months after origination. Special servicer commentary indicated a receiver was appointed for the collateral property. It is worth noting that the borrower sponsor, Jean-Francois Simon, was subject to ongoing litigation at the time of loan origination in December 2020. The loan is secured by a 7,751-sf medical office condominium unit located in the Upper East Side of Manhattan. The office condominium is on the ground floor and is part of a larger residential building with 67 units and 2 other office units. The property is leased to Fifth Avenue Surgery Center, Inc. through December 2025. For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
| Property Name | 1049 5th Avenue |
| Address | 1049 5th Avenue New York, NY 10028 |
| Outstanding Balance | $4,500,000 |
| Interest Rate | 4.32% |
| Maturity Date | 1/1/2031 |
| Most Recent Appraisal | $10,800,000 |
| Most Recent Appraisal Date | 8/24/2020 |
CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers to CRED iQ use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities. For full access to our loan database and valuation platform, sign up for a free trial below:
