Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Friday, 10 June 2016

CMBS Servicers Sued in Fair-Value Option Case for 'Flawed' Appraisal

An investor in a 2007 CMBS transaction has sued the deal's master and special servicers, arguing that they breached their obligations under the deal's pooling and servicing agreement when they allowed a collateral $84.8 million loan to be sold using a fair-value purchase option. It's the latest of what's expected to be a growing list of suits related to the option, which allows holders of CMBS deals' controlling classes to buy defaulted loans at their fair-market value.

Commercial Real Estate Direct Staff Report

An investor in a 2007 CMBS transaction has sued the deal's master and special servicers, arguing that they breached their obligations under the deal's pooling and servicing agreement when they allowed a collateral $84.8 million loan to be sold using a fair-value purchase option.

The investor, Alden Global Value Recovery Master Fund, initially had tried to compel the deal's trustee to file suit against special servicer KeyBank and master servicer Berkadia Commercial Mortgage. But when the trustee, Wells Fargo Bank, declined to do so, it filed suit derivatively on behalf of the CMBS trust, JPMorgan Chase Commercial Mortgage Securities Trust, 2007-CIBC18. The suit was filed in New York State Supreme Court.

The loan that was sold was backed by the 129-room Bryant Park Hotel at 40 West 40th St. in midtown Manhattan. It was purchased by Mission Peak Capital, a Kansas City, Mo., investor led by a former Midland Loan Services executive, for $59 million, after fees and other costs, according to the suit.

Alden argued in its suit that the price paid for the loan, which was determined by Key, was based on an appraisal that it argues was flawed. The loan, it said in its suit, should have been worth substantially more, perhaps $94 million, based on comparable sales. The sale resulted in a loss of more than $25.5 million to the trust.

"These losses would not have been realized by the trust and its certificate holders but for the improper conduct of Key and Berkadia … in breach of their contractual duties," Alden argued in its suit. It's being...





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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 - 2016
Investment Bank #Deals Vol$mln MktShr%
JPMorgan Securities 14.94 10,350.16 15.14
Deutsche Bank 14.21 9,926.60 14.52
Wells Fargo Securities 13.36 9,513.96 13.92
Citigroup 10.87 8,061.79 11.80
Goldman Sachs 10.05 7,563.72 11.07

 

MOODY'S/RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2016
Lender #Loans Vol$mln MktShr%
JPMorgan Chase Bank 133.67 8,670.33 13.34
Goldman Sachs 156.20 7,418.37 11.41
Deutsche Bank 178.17 6,510.75 10.02
Citigroup 184.41 5,512.20 8.48
Morgan Stanley 113.18 4,130.53 6.35

 

 

 

REITCafe

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