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Monday, 30 September 2019

New Jersey Apartment Owner Defaults on $105.4Mln of Freddie Loans

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Commercial Real Estate Direct Staff Report

Affiliates of New Jersey investor Seth Levine have defaulted on 40 Freddie Mac loans totaling $105.4 million.

While on its face the total is a relatively hefty sum, it amounts to a mere 0.04 percent of the housing-finance agency's $288 billion portfolio. But if all the loans were to default, it would more than double the $86.4 million of Freddie loans that currently are delinquent. Those amount to 0.03 percent of its overall portfolio. Even with the new defaults, the Freddie portfolio's performance is solid when compared with the 2.43 percent delinquency rate of multifamily loans securitized through private-label CMBS deals.

The 40 loans against Levine-owned properties are all classified as small balance and were originated by lenders that include Orix USA's Red Mortgage Capital, Greystone, Hunt Real Estate Capital and Sabal Capital Partners.

Freddie holds two of the loans, with a balance of $3.4 million, on its balance sheet and has securitized the remaining 38, with a balance of $102.1 million, through 11 small balance transactions. According to analysis by JPMorgan Securities, which highlighted the defaults last Friday, FRESB, 2019-SB59 has the largest exposure at $18.1 million. That amounts to 2.9 percent of the deal's $622.6 million overall balance.

Other deals with substantial exposures include FRESB, 2018-SB57, with $16.4 million, or 2.9 percent of its $569.1 million balance; FRESB, 2018-SB48, with $15.2 million, or 2.9 percent of its $528.5 million balance; and FRESB, 2018-SB51, with $14.3 million, or 2.9 percent of its balance.

Levine, whose investment affiliate operates as Norse Holdings, has effectively abandoned the properties, according to a lawsuit that Freddie Mac has filed in the U.S. District Court for the District of New Jersey. That lawsuit involves the two properties that serve as collateral for a $2 million loan against 9 Bentley Ave., with 17 units in Jersey City, N.J., and a $1.4 million loan against 314-320 Watson Ave., with 14 units in Perth Amboy, N.J., both of which are on the agency's balance sheet.

Freddie has declared its two loans to be in nonmonetary default because Levine, who lives in Teaneck, N.J., has failed to maintain the condition of their collateral and evidently has abandoned them.

The loans were late for their August payments. Meanwhile, utilities to certain Levine properties, for instance, have been turned off because of nonpayment. As a result, Freddie and the special servicers for the securitized loans have asked the court to install Colliers International as a receiver to ensure the collateral properties don't deteriorate any further.

Some of the collateral properties inspected by Hunt, which services loans it wrote, are in need of structural repairs.

While the loans Freddie funded were non-recourse, they were written with carve-outs that would trigger personal guarantees. The agency can try to enforce those as a result of nonpayment of taxes, insurance premiums and utilities.

Levine also evidently is under criminal investigation by the Federal Bureau of Investigation, which had executed a search warrant on his Hackensack, N.J., office last month. His office also has been abandoned. According to Freddie's suit, his civil attorney had confirmed that Levine had retained criminal counsel.

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

 



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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
  • Sector: Multifamily
  • Private: No
Read 742 times Last modified on Monday, 07 October 2019

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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