Commercial Real Estate Direct Staff Report

The $119.5 million CMBS loan against Summit Office Campus, a 1 million-square-foot property in the Kansas City suburb of Lee's Summit, Mo., has been modified, opening it up to prepayment.

The loan, with a coupon of 6.25 percent, was securitized through Banc of America Commercial Mortgage Trust, 2007-5, and is senior to a $20 million mezzanine loan that pays a rate of 10.45 percent. It had transferred to special servicer C-III Asset Management last August because of the expectation that it would default.

Its modification, highlighted by Nomura Securities in a research note, is extremely unusual in that neither the loan's rate nor its maturity has been changed. Only the loan's prepayment provisions were modified. Typical CMBS loan modifications provide for some sort of payment relief, in exchange for principal repayment, allowing borrowers to keep their debt current.

Now, the senior loan can be prepaid any time as long as a 1 percent fee...