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Featured Case Study:

Fee Reduction due to Maturity Default

 

Asset Details:

 

  • Property Type: Unanchored Retail
  • Property Size: 45,795 square feet
  • Origination: 2007
  • Maturity: 2017
  • Current Loan Balance: $8,799,918
  • Occupancy: 93%
  • Debt Service Coverage Ratio: .94
  • Loan Status: Maturity Default 

Problem:

 

The loan was transferred to special servicing due to a maturity default while take-out financing was being secured.  Anticipating a closing to occur shortly after maturity, the Sponsor requested the payoff statement, only to find the special servicer assessed an exorbitant fee designated as “Noteholder Costs” for holding the note in special servicing for 30 days.

 

Result:

 

The Hart team was successful in a reduction of “Noteholder Costs” due to its claim the fee was an onerous charge to the Borrower, resulting in a savings of over $76,000 for our Client.  Hart had the knowledge, experience and understanding of CMBS loan documents, as well as the Pooling and Servicing Agreement governing the loan, to make a valid argument as to why these costs were unjustified.  Additionally, Hart’s business model allows for continuous interaction with Special Servicers allowing it to experience first-hand the changes in Special Servicing requirements in this evolving market.  These changes are driven in large part by the large waive of loan maturities for vintage loans, as well as the loss in servicing rights within the securitization, and the rapid decline in the ability to fund asset expenses. 

 

 

Discounted Payoff - CMBS

Discounted Payoff of under $12.6 million, a 36% discount from the current unpaid principal.

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Loan Assumption - CMBS

Obtained final approval from all required parties within 51 business days.

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A/B Note Structure – CMBS

Negotiated an A/B structure for a previously modified loan, 50% debt and interest rate reduction.

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Loan Assumption - CMBS

The controlling class was received in 73 business days from the date of submission.

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Assumption Situation

The controlling class was received in 73 business days from the date of submission.

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A/B Note - CMBS

A/B note, A note at current market value, a 32% discount to the original note balance.

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Note Sale - CMBS

13% discount via note sale on Auction.com.

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Note Sale - CMBS

Borrower purchased the note at a 35% discount to principal.

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Discounted Payoff - CMBS

Debt forgiveness of Mezzanine and reduction of senior debt of 25%

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Discounted Payoff - CMBS

The new loan closed in 90 days from the servicer approval.

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Discounted Payoff - CMBS

The Borrower was able to pay all cash and the loan closed in two weeks.

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Maturity Extension and Modification – Non-CMBS

The overall savings to the Borrower for the extension and term was over $1MM.

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