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Wednesday, 14 April 2010

College Buys Martinsburg Mall; Purchase of 3 Other Lightstone Malls Nixed

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Commercial Real Estate Direct Staff Report

The Martinsburg Mall, one of four shopping centers owned by Lightstone Group that have been delinquent on their $91.4 million of debt for 18 months, has been sold.

But the prospective buyer for the remaining three properties has backed out of its proposed $21.3 million purchase.

Mountain State University paid $11 million for the Martinsburg property, which has 552,212 square feet in Martinsburg, W.Va., where the college operates a campus in a former 45,000-sf outlet center that it bought in 1999. It said it will continue to run the property as a shopping mall, but would use about 45,000 sf of its space for a university learning center that it would develop in space next to one of the property's anchor stores.

The property's outparcels could eventually be developed into student housing and athletic fields.

The property, along with the 507,836-sf Shenango Valley Mall in Hermitage, Pa.; the 476,778-sf Mount Berry Square Mall in Rome, Ga., and Bradley Square Mall, with 406,845 sf in Cleveland, Tenn., collateralized $73.2 million of debt that was securitized through JPMorgan Chase Commercial Mortgage Securities Trust, 2006-CIBC15. They also were encumbered by another $18.2 million of mezzanine and secondary debt.

Lightstone had acquired the four properties, along with the West Manchester Mall in York, Pa., in 2004 from Pennsylvania REIT for $110.7 million. The properties defaulted on their debt in September 2008 and Lightstone offered to turn them over to JER Partners, the CMBS deal's special servicer, in a deed-in-lieu of foreclosure.

In order to make the properties attractive to investors, JER pushed them into receivership, allowing it to offer them for sale with assumable financing. Jones Lang LaSalle was tapped as receiver and last year launched a marketing campaign.

Evidently, it had struck a preliminary agreement to sell the Shenango Valley, Mount Berry and Bradley Square properties to Morrison Group for $21.3 million, with 20 percent of that in cash and the rest in assumed debt, according to an earlier report from the trustee for the CMBS deal that owns the debt. But, according to the trustee's most recent report, the prospective investor, which could not be reached, tried to lower its proposed purchase price. JER balked and the deal was killed.

Even if another investor steps in at near the price Morrison was to purchase the three properties, the CMBS deal will take a substantial hit.

According to analysis by Realpoint, the loan already has been assessed an appraisal reduction of $15.5 million. It estimated that the loan's resolution would result in a loss of roughly $36 million. That will likely increase as a result of the Martinsburg property's sale.

That loss alone would wipe out the deal's unrated class, which last month had a balance of $26.8 million and nearly wiped out the two more senior classes, which originally were rated B- and B, respectively. That would leave a balance of only about $21.6 million in the deal's B-piece. When that gets eaten away, JER could lose its special servicing rights.

And that could happen eventually.

Another $280 million of loans in the deal's collateral pool are in special servicing. Realpoint expects the CMBS transaction to ultimately suffer losses that would eat away at all the classes subordinate to the class originally rated A- and A3 by Fitch and Moody's, respectively.

Comments? E-mail Orest Mandzy or call him at (267) 247-0112, Ext. 211.

Copyright 2010 Commercial Real Estate Direct www.crenews.com


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“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

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Additional Info

  • Syndicate to Realpoint: No
  • States: West Virginia
  • Sector: Retail
  • Subject: Property Acquisitions (ACQ)
  • Deal Name: Wachovia Bank Commercial Mortgage Trust, 2007-C34
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Data Digest







Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44




cppichart FP



CMBS 2.0 Spreads


Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41





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