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Monday, 29 October 2018

Washington Prime Gears Up to Give 2 Malls Back to Lenders

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Commercial Real Estate Direct Staff Report

Washington Prime Group is planning to turn over the deeds to its West Ridge Mall in Topeka, Kan., and Towne West Square shopping center in Wichita, Kan., both of which it says are over-leveraged.

That would bring the number of malls turned over by the Columbus, Ohio, REIT in recent weeks to three. Earlier this month, it turned over its Rushmore Mall in Rapid City, S.D., which had defaulted against a $94 million CMBS loan that was securitized through Banc of America Commercial Mortgage Trust, 2006-3. That property is the sole remaining asset in the CMBS deal's collateral pool.

West Ridge Mall is a 1 million-square-foot shopping center that serves as collateral for a $50.6 million loan securitized through COMM, 2014-CCRE16. The loan is paying as expected and isn't in special servicing. But that's expected to change within the coming months as a result of a handful of major vacancies.

Washington Prime cited the property's low debt yield - 9.8 percent, based on last year's financials, which don't take into account the recent loss of anchors Toys R Us and Burlington - as reason enough to abandon it.

"These transitions afford us a nice opportunity to efficiently de-lever," explained Mark Yale, Washington Prime's chief financial officer, who spoke on a conference call with analysts last week.

When the CMBS loan was written, the property had generate $7 million of cash flow, according to servicer data compiled by Trepp LLC. That dropped to $4.9 million last year and likely declined this year as Burlington, which leased 112,700 sf, closed its store last January when its lease matured. Meanwhile, Old Navy, which leases 22,446 sf, earlier this year extended its agreement by two years through January 2020.

Anchors at the property are Dillard's, JCPenney, Sears, Target and Furniture Mall of Kansas, each of which own the spaces they occupy.

Towne West Square, meanwhile, backs a $46.7 million mortgage securitized through Morgan Stanley Capital I Inc., 2011-C2. Unlike the West Ridge Mall loan, the Towne West loan has been with special servicer Strategic Asset Services for more than a year and in April was deemed to be in default as Washington Prime failed to fund a reserve account, according to servicer notes. The property is now being overseen by a court-appointed receiver. Washington Prime expects the property to transfer to the CMBS trust some time in the first half of the year.

The Towne West property was appraised in 2011, when it generated $5.6 million of net cash flow, at a value of $81 million. Cash flow last year was $3.6 million, and this year through June it was $1.4 million, for an annualized $2.8 million.

The enclosed property is anchored by a Dick's Sporting Goods, which occupies nearly 49,000 sf under a lease that runs through October 2040; PetSmart, in 27,000 sf through January 2019, and Convergys, which took 32,362 sf of the 122,736 sf that previously had been occupied by Sears.

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



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Additional Info

  • Syndicate to Realpoint: No
  • States: Kansas
  • Sector: Retail
  • Subject: Commercial MBS (CMBS), Property Acquisitions (ACQ)
  • Private: No
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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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