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Wednesday, 14 August 2019

Owner of Queens, N.Y., Mixed-Use Complex Strikes Deal to Resolve Troubled CMBS Loan

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Commercial Real Estate Direct Staff Report

The owner of 179,186 square feet at the Queens Crossing mixed-use complex in Flushing, N.Y., has agreed to put up a $2 million letter of credit and allowed for a cash sweep of up to $4 million in order to get the property's $68.7 million CMBS loan out of special servicing.

The loan, securitized through GS Mortgage Securities Trust, 2013-GCJ12, remains with Rialto Capital Advisors, but is expected to transfer out in the coming months.

It had transferred to Rialto in July as cash flow at the collateral space had declined and expectations were that the loan would default.

The space is comprised of a two-level underground parking garage with 84,549 sf that has a 401-vehicle capacity, 79,875 sf of retail space on three lower floors and 14,762 sf of office space on the 12-story building's top floor that is occupied by the property's owner. The loan also is secured by the property's exterior signage. The remainder of the building - 213,999 sf of office space on eight remaining floors - is separately owned and doesn't back the loan.

The space is owned by F&T Group, which is led by Michael Lee and Sunny Chiu, Taiwanese immigrants responsible for most of the development in recent years in the Flushing area of Queens, N.Y.

F&T also owns the property's largest tenant, which leased and operated the parking garage, and two other tenants: Rose House Restaurant and E888 International Inc. The parking space was generating $1.1 million of annual rent, or more than 12 percent of the property's total rental income, under a lease that matured at the end of last year.

When that leased rolled, a new operator was brought in and cash flow immediately plunged as rental revenue declined to market levels. F&T evidently was paying above-market rates when it had operated the garage. The thinking was that as the spaces that had been occupied by Rose House and E888 were backfilled, revenue would increase.

Last year, cash flow was on track to hit $6.2 million, up from the $4.9 million generated in 2017, but on par with the $6.2 million posted in 2016.

The Queens Center loan is one of two in special servicing in the GSMS 2013-GC12 transaction.

The other is the $56.5 million loan against Eagle Ridge Village, a 648-unit military-housing property outside of Fort Drum in Evans Mills in New York State's north country. That loan suffered in 2017 as a result of soldier deployments and a glut of new area housing.

The loan was modified in February, with its amortization requirement suspended for 83 months. It previously was amortizing on a 30-year schedule. It pays a coupon of 5.36 percent. The loan has remained current or less than 30-days late nearly consistently since its modification. Cash flow has been steadily increasing since 2016. This year through the first quarter, it was on track to hit $3.4 million, up from $3.3 million last year and $2.7 million in 2017. The property in May was re-appraised at a value of only $46.9 million, down from its original $84.5 million.

Cash flow had peaked in 2013 at $5 million. However, the loan was underwritten with the assumption that the property, at 26095 Kestrel Drive, would operate at full occupancy and generate $5.9 million in cash flow. It hasn't operated at an occupancy level of more than 90 percent since then.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.



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Additional Info

  • Syndicate to Realpoint: No
  • Cities: New York City
  • States: New York
  • Sector: Mixed-Use
  • Subject: Commercial MBS (CMBS)
  • Deal Name: GS Mortgage Securities Corp. II, 2013-GCJ12
  • Private: No
  • bloombergDealName: GSMS 2013-GC12
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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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

 

RCA CPPI

 

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CMBS 2.0 Spreads

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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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