NEW YORK--(BUSINESS WIRE)--C-III Asset Management LLC today provided additional information pertaining to the modification of two loans, secured by Phase I (BSCMS 2005-PWR10) and Phase II (BSCMS 2007-PWR15) of the World Market Center property located in Las Vegas, NV. The Phase I loan had an original principal balance of $225MM and a maturity date of 2015. The Phase II loan had a $345MM original principal balance and a 2017 maturity date.
The World Market Center is a multi-tenant home and furniture showroom, trade market and design center. The tenant mix is highly dependent on the national housing market, and the market’s severe downturn in 2008 led to a significant deterioration of rents, collections and occupancy. The Phase I and Phase II loans were transferred into special servicing in September 2009.
C-III, as special servicer, effectuated a modification with a new sponsor which included (1) a required contribution of $28 million of fresh equity to pay all past due interest and expenses, (2) a pledge of additional collateral to buttress the credit support of the modified loan in the form of a grant of security interest in a 48.9% ownership interest, valued at approximately $100MM, in the unencumbered Phase III of the property, (3) a reduction of the principal balances and a split into A/B structures with the A-note amounts approximating the 2010 appraised values and (4) an incentive to improve the position and value of the properties.
The principal balance of the Phase I debt was modified by $10.7MM to $200MM, evidenced by an A-note of $94MM and a B-note of $106MM. The Phase II loan principal balance was modified by $71.9MM to $273MM, evidenced by an A-note of $73MM and a B-note of $200MM. The modification required full repayment of the A-notes. The B-notes’ interest rates were zero, but received 80% of excess cash flow after payment to the A-notes. Prior to payoff, approximately $14MM for Phase I and $17MM for Phase II had been applied to the B-notes’ principal balances.
On August 15, 2014, both the A and B notes for Phase I and Phase II were paid off in accordance with the loan documents. Total proceeds received by PWR10 and PWR15 Trusts, including B-note amortization payments, was approximately $230MM, roughly $62MM of which was allocated to the B-notes.
“There is no doubt that this workout strategy maximized recovery for bondholders versus what could have occurred in a liquidation scenario,” said Robert C. Lieber, Executive Managing Director, C-III Capital Partners LLC. “The modification worked exactly as designed by enabling the value and operations of the property to improve over time.”
About C-III Asset Management LLC
C-III Asset Management LLC, a wholly owned subsidiary of C-III Capital Partners, is a highly rated loan servicer (primary and special) of commercial real estate loans. C-III Asset Management is the named special servicer for approximately $116 billion and the primary servicer for over $17 billion of commercial real estate loans. C-III Asset Management is rated “Strong” for special servicing and “Above Average” for primary servicing by S&P and “CSS1” and “CPS2”, respectively, by Fitch. C-III Asset Management also has the highest ranking from Morningstar for special servicers, “MOR CS1.”