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Friday, 12 October 2018

Vacancies at Houston's Two Westlake Prompt Kroll Downgrades of WFRBS 2014-C24

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Kroll Bond Rating Agency has downgraded two principal-paying classes of WFRBS Commercial Mortgage Trust, 2014-C24, because of the losses it expects to result from the resolution of a number of trouble loans, including a $91 million mortgage against the Two Westlake Park office property in Houston.

The Two Westlake loan, the second largest in the deal's collateral pool, transferred to special servicer Rialto Capital Advisors in July because it was expected to default. Mortgage payments have continued uninterrupted through August.

But the loan was dealt a substantial blow last year when BP PLC, which leases 163,000 square feet at the 450,154-sf collateral building, vacated nearly 96,000 sf when a lease governing that space had matured. It has been subleasing the remaining space it had occupied under a lease that runs through April 2019 and recently signed for 91,000 sf at West Memorial Place II in Houston's Energy Corridor.

Meanwhile, ConocoPhillips Co. leases 207,000 sf under an agreement that matures in November 2019. It has its space up for sublease. The company's former Phillips 66 refining operation, which it had spun off in 2012, had occupied the space, but it relocated to a new building in Houston's Westchase area last year.

Kroll estimates that the Two Westlake loan could suffer a 37.6 percent loss at its resolution - that could change, either up or down, depending on the outcome of possible negotiations between Rialto and the property's owner, Pacific Investment Management Co., which had acquired it four years ago for $120 million.

Meanwhile, Kroll has tagged seven other loans in the CMBS deal's collateral pool as loans of concern, or K-LOCs, three of which are in special servicing. Those have a balance of $15.1 million, and when added to the Two Westlake loan amount to 10.2 percent of the deal's remaining balance.

Kroll downgraded the deal's $10.9 million class F to CCC from B- and the $25.8 million class E to B from BB-. It placed on watch the BBB- rating it has on the $72 million class D. It expects to resolve that action, with a possible downgrade, within the next 90 days when it receives more clarity on plans for the Westlake building.

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



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Additional Info

  • Syndicate to Realpoint: No
  • Subject: CMBS Rating Downgrade (DOWNG)
  • Deal Name: WFRBS Commercial Mortgage Trust, 2014-C24
  • Private: No
  • bloombergDealName: WFRBS 2014-C24
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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

 

cppichart FP

 

 

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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