A $17 million appraisal reduction on an Atlanta office building is shocking one CMBS loan, while a Pennsylvania mall challenges another CMBS deal, Trepp Analytics said Wednesday.
The CMBS analytics firm said the Peachtree Street Office building in Atlanta faced a steep appraisal reduction. That reduction is impacting a loan serving as collateral for the $2.4 billion BACM 2006-2 deal. The same CMBS deal already felt the impact of a $41.5 million appraisal reduction and a 100% bond loss on its M through P tranches.
Trepp said if the appraisal reduction ends up being a loss, it could wipe out the L class and effect 64% of the K tranche within the CMBS deal.
The property in question is a 300,000-square-foot, 26-story office building in Atlanta. It was originally appraised for $48.2 million in 2006. A January 2011 valuation placed the building’s value at $22.7 million.
The building was 81.4% occupied in March and had a debt service coverage ratio of 0.96x.
Meanwhile, in Philadelphia, the Simon-Cheltenham Square Mall’s $52.9 million loan was sent to a special servicer in June due to a threat of imminent default. The loan represents 9.67% of the BACM-2004-5 CMBS transaction and is now 30 days past due. The property is valued at $29 million, compared to its 2004 appraisal value of $71.5 million. The special servicer blames tenancy figures and property challenges for the loan’s recent troubles.
The borrower on the loan has asked for a modification and is waiting for a response, Trepp said.
