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Thursday, 18 June 2020

More CMBS Loans Against Regional Malls Transfer to Special Servicing

The coronavirus pandemic continues to hammer the retail mall sector, as 21 large CMBS loans totaling $4.1 billion recently transferred to special servicing. The transfers shouldn't be surprising as many malls across the country have been shuttered for more than two months.

Commercial Real Estate Direct Staff Report

The coronavirus pandemic continues to hammer the retail mall sector, as 22 large CMBS loans totaling $4.2 billion recently transferred to special servicing.

That would sharply increase the total volume of retail loans in special servicing. As of the end of May, that volume stood at $12.5 billion, or just more than 9 percent of all retail loans in the CMBS universe. The latest additions count only loans against malls, so it understates the true increase in the volume of troubled retail loans.

The transfers shouldn't be surprising, as many malls across the country were shuttered as a result of the coronavirus pandemic for more than two months, and only now are beginning to reopen. That's pressured their ability to stay current on their indebtedness.

For instance, Brookfield Property Partners, which owns 122 retail properties, many assumed through its purchase two years ago of GGP Inc., said that last month it had collected only 20 percent of the rents due at its properties. It also said it had asked its lenders to extend, by 12 months, the term of any loans maturing this year.

Most of the recent transfers previously had been classified by their servicers as being beyond their 30-day grace periods. All but two are now classified as being more than 30-days late in their payments.

One of the two still classified as being current is the $70.1 million mortgage against the Brunswick Square Mall in East Brunswick, N.J., which is owned by Washington Prime Group. The loan is securitized through WFRBS Commercial Mortgage Trust, 2014-C20, which holds a $42.7 million piece, and WFRBS 2014-C19, which holds the remaining a $27.3 million. It doesn't mature until 2024. Special servicing is handled by LNR Partners.

The property had been suffering a decline in cash flow even before the pandemic hit. DBRS Morningstar late last year had placed the debt on its watchlist as store sales had steadily declined, pushing rental income lower. Cash flow last year was $5.9 million, according to data compiled by Trepp LLC. That was down from the $6.8 million recorded in 2018 and $7.5 million in 2014.

The other, with a balance of $274.5 million and securitized through COMM, 2013-GAM, is backed by the 1.8 million-square-foot Green Acres Mall in Valley Stream, N.Y. The property is owned by Macerich Co., a Santa Monica, Calif., REIT that last month said it would try to get any loans with nearing maturities extended by a year. KeyBank is the loan's special servicer.

That wasn't the only loan against a Macerich-owned mall to transfer. The $152.8 million piece of a $174.1 million mortgage against 343,910 sf at the Deptford Mall in Deptford, N.J., transferred to KeyBank as the REIT, which owns the 1 million-sf property with Heitman LLC, has sought payment relief. The loan, securitized through GS Mortgage Securities Corp., 2013-G1, doesn't mature until 2023.

The biggest recent transfer to special servicing was the $1.4 billion loan against the Mall of America in Bloomington, Minn. The loan, securitized through Credit Suisse Mortgage Trust, 2014-USA, is classified as being more than 60-days late. CWCapital Asset Management is the special servicer.

The massive mall, owned by Triple Five Group, was shuttered on March 17 and reopened on June 10,...





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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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