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Trepp LLC : The Five Largest CMBS Loan Losses from May 2021

06/11/2021 | 02:55pm EDT

$236.0 million across 16 loans were resolved with $223.8 million in losses in May - carrying an average loss severity of 94.82%. This was a slight drop in volume from the month prior, but lead to higher total losses as a variety of large REO retail and lodging assets resolved.

The 12-month average disposition balance rose to $254.7 million, while the 12-month moving average loss severity climbed to 66.19%, up from 64.17% in April.

See our list of the five largest loan losses from May below.

1.The Shoreham Hotel (New York, NY)

The largest loan loss in my belongs to the $32.9 million Shoreham Hotel, which wrote off with $77.9 million in losses and a loss severity of 237.18%.

The hotel was backed by a two-building 177-room boutique hotel in the Midtown West part of Manhattan. At securitization, the hotel was valued at $72 million but in June 2020 the collateral was re-appraised at $4 million.

The property struggled with the onset of the pandemic, reducing staff to a skeleton crew with management working the front desk shifts. The loan was put on Ten-X in September 2020 and ultimately purchased by a private investor.

The loan represented 17.80% of CMSC 2007-C1 at the time of resolution and liquidated with $836,993 in proceeds and $45.9 million in expenses.

2. The Fashion Outlets of Las Vegas (Primm, NV)

The second-largest loss in May belongs to the $62.2 million Fashion Outlets of Las Vegas, which resolved with a full write-off and a loss severity of 100%.

Now known as the Prizm Outlets Mall in Primm, Nevada the 375,0000-square-foot mall was built in 1998 as the Fashion Outlets of Las Vegas, and was renovated in 2004. As we noted in TreppWire, the property was an REO asset of CMBX 6, deal COMM 2012-CR4, and ultimately resolved with a bigger loss than expected. The top bid in the January auction was under $2 million despite its most recent valuation going into the auction being $28.2 million. The loss wiped out the 'F' and G' classes from COMM 2012-CR4 and severely depleted its 'E' class as well.

In May the servicer took $1 million in principal to pay interest on the bonds, while another $11.4 million in unreimbursed advances still need to be paid back to the servicer. Ultimately the loan resolved with $401,880 in proceeds and $12.9 million in expenses.

3. Pinnacle at Tutwiler (Trussville, AL)

The second-largest loss in May was the $48.5 million Pinnacle at Tutwiler, which resolved with a $43 million write-off and a loss severity of 88.64%.

The property is a 248,988-square-foot community shopping center that was built in 2006 in Trussville, Alabama. At securitization, the property was valued at $60.7 million but after being lowered multiple times over the past few years, the property valuation had dropped to its most recent valuation of $17.8 million - which servicer commentary noted was likely aggressive due to lower occupancy and NOI as a result of the pandemic.

The loan represented 26.27% of CSMC 2007-C1 at the time of resolution and liquidated with $12.8 million in proceeds and $7.3 million in expenses.

4. World Houston Plaza (Houston, TX)

The fourth-largest loan loss in May is the $16.3 million World Houston Plaza which resolved with $12.4 million in losses - a 75.54% loss severity.

The collateral is a 216,889-square-foot office in Houston, Texas. Constructed in 1986, the eight-story building is a short drive from the George Bush Intercontinental Airport. At securitization, the collateral was valued at $27 million and after re-appraisals in 2018 and 2019, the property's final valuation in 2020 valued the collateral at $8.05 million.

The property began to experience distress when Weatherford U.S., its top tenant (50.46% GLA) and was unable to renew due to the downturn in the oil market. On Twitter (!) it was confirmed the property's top bid was $7 million.

At resolution, the loan was 1.90% of the CMBX 8 deal, COMM 2014-LC17. The loan liquidated with $6.9 million in proceeds and $2.9 million in expenses.

5. Harbor Square (Egg Harbor Township, NJ)

The fifth-largest loan loss in May was the $15.6 million Harbor Square which wrote off $7.4 million in losses - a loss severity of 47.49%.

The collateral is a 344,823-square-foot retail center in Egg Harbor Township, NJ. The property was built in 1968 and renovated in 2013. The property was initially 90% occupied by a Boscov's Department Store(52% GLA) and a Burlington Coat Factory(24.65% GLA, 25.7% monthly rent). Burlington's lease ran through 2019, and the company decided not to renew at the location vacating in November 2019. Watchlist commentary notes that without Burlington DSCR in 2019 would have dropped from above 1.00x to 0.67x and occupancy would drop to 73.6%. The borrower later noted that the struggling local retail market meant that re-leasing the property was increasingly difficult and its overall performance would no longer support the debt.

The loan was transferred to Special Servicing in February 2021 for imminent monetary default and a sale was closed in late April.

The loan was 2.09% of CGCMT 2014-GC21 at the time of resolution. It liquidated with $9.5 million in proceeds and $1.3 million in expenses.

For more information on CMBS loans that have been disposed with losses, contact Trepp at info@trepp.com or 212-754-1010

Editor's Note: The information referenced in this blog post with regards to the CMBS loans, deals, and properties is sourced from the corresponding monthly remittance reports published by the CMBS trust. The loan names are given by the issuer at securitization and may not indicate borrower or owner affiliation.

The information provided is based on information generally available to the public from sources believed to be reliable.


Trepp LLC published this content on 11 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 June 2021 18:54:06 UTC.

© Publicnow 2021
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