The Five Largest Office Loans That Are Now 90+ Days Delinquent

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Following our recent coverage of loans marked 90+ days behind payment (delinquent) in the retail and multifamily sectors, we are back this week with a focus on the office commercial real estate market. The sector has seen a marginal increase in delinquency rates since January, not yet facing significant distress. In fact, in July the office CMBS delinquency rate declined by 26 basis points to 2.40%.

With a sudden move to the work-from-home business model, many industry watchers and participants wonder if the transition would soon become permanent as businesses manage to operate efficiently in the current environment. While most of the loans in the office CMBS universe have continued to make timely payments, some have not. Below we have compiled a list of office loans that missed another monthly payment in July 2020 and were marked 90+ days delinquent.

401 South State Street

The largest office loan to be marked 90+ days delinquent was the $29.95 million 401 South State Street loan which makes up 4.27% of CGCMT 2016-P4.

The underlying collateral for the loan is a 487,022-square-foot office property located in Chicago, IL. The property also backs another $14.75 million 401 South State Street loan which makes up 2.17% of CD 2016-CD1. Both deals are part of CMBX 10.

The borrower’s last debt service payment for the loans were in March 2020, following which the loans were transferred to the special servicer in June.

Recent commentary mentions that the single tenant that occupied 75% of the property vacated and stopped paying rent in April 2020. The special servicer is currently reviewing files to determine workout strategy for the pari-passu loans going forward. Q1 2020 DSCR (NCF) was 1.80x.

48 West 48th Street

The $22.35 million 48 West 48th Street loan was the second-largest loan to be marked with a 90+ days delinquency status in July and makes up 2.35% of MSBAM 2013-C9.

The loan is backed by a 137,000 square foot office property located around Midtown Manhattan.

Recent servicer commentary indicates that the loan was transferred to the special servicer in June 2020 due to missed payments. The office property was 100% occupied as of May 1, 2020.

The loan recorded a DSCR (NCF) of 2.13x in 2019 and is set to mature in April 2023.

iPark Hudson Building 3

The next loan on our list is the $18.3 million iPark Hudson Building 3 which makes up 1.80% of COMM 2013-CR8. The loan is backed by a 149,138-square-foot six-story office building located in downtown Yonkers, NY.

August special servicer commentary reveals that the loan was transferred to the special servicer in June. The last payment was made in April of this year. Legal counsel has been retained and the lender is waiting for the borrower to provide due diligence documents.

The commentary also mentions that a Cash Trap Period has been in-place since 2017 due to the City of Yonkers' lease originally being set to expire on January 2018. The lease was subsequently renewed until December 2022, but only for 10,000 square foot.

The loan recorded a DSCR (NCF) of 1.69x and an occupancy rate of 97% in 2019.

Centre City Tower

Next on the list is the $15.5 million Centre City Tower loan which makes up 2.26% of MSC 2016-UB11. That deal is a part of CMBX 10.

The loan is backed by a 336,000-square-foot office property (built in 1970 and renovated in 1997) located in Pittsburgh, PA.

According to Trepp data, the borrower has not made their monthly debt service payment since March 2020. The loan recorded a DSCR (NCF) of 1.09x in 2019.

Recent commentary reveals that the loan was transferred to the special servicer in April. The property was only 61% occupied in June, down from 76% occupancy in February of this year. Additionally, the note will be marked for sale in the near future.

24 Commerce Street

 

Last on our list is the $14.5 million 24 Commerce Street loan which makes up 1.59% of the WFCM 2019-C50 CMBS deal. That deal is part of CMBX 13.

The Federal Trust Building is a 156,902-square-foot landmarked historic Class B office building situated on a 0.4 acre site in downtown Newark, NJ.

The loan was transferred to the special servicer in May due to imminent monetary default. Recent commentary states that the special servicer has sent out the pre-negotiation letters (PNL) but has not received the signed PNL and/or the requested due diligence items from the borrower. The special servicer will dual track settlement and enforcement of loan documents.

The loan was initially on the watchlist due to non-receipt of monthly mortgage payments for September and October, which were finally made by November 2019. In the first nine months of 2019, the loan recorded a DSCR (NCF) of 2.07x and an occupancy of 84%.

For more information on CMBS loans that are categorized as 90+ days delinquent, contact Trepp at info@trepp.com or 212-754-1010.

The information provided is based on information generally available to the public from sources believed to be reliable.

Source: info.trepp.com

The Five Largest Office Loans That Are Now 90+ Days Delinquent