The loan is collateralized by the 756,471-square-3foot mixed-use development consisting of a 626,012-square-foot, open-air shopping center, a 54-unit multifamily component and 56 loft-style office spaces totaling 72,556 square feet located above the ground level retail. Thus far, the property has not generated enough cash flow to cover the annual debt service.

The CityPlace mixed-use project opened in October 2000 to great fanfare after years of being in the works. It was the centerpiece of downtown West Palm Beach's renaissance. Over 20 years ago, when the city first contemplated redeveloping the area, it was filled with rundown housing and was crime-ridden. Today, it is almost a city within a city full of upscale housing, class A office space and entertainment.

Anchors of CityPlace include an 110,00-square-foot Macy's and a 92,000-square-foot Muvico Theater, which own their own spaces. Other major tenants include a Barnes & Noble bookstore, a Publix grocery store and a Ruth's Chris Steakhouse.

According to a Fitch Ratings report on the $150 million CityPlace loan, entitled "US CMBS Focus Peformance Report on the Credit Suisse Commercial Mortgage Trust, Series 2007-C1," dated November 17, 2009, "sales at the center have declined since issuance (of the loan), but remain above the national average for in-line retail space."

A statement put out on May 3 by CityPlace Partners, said that the retail debt is not delinquent and remains current on its debt service payments. "CityPlace has proactively engaged the special servicer in an effort to seek flexibility from our lenders and ensure the long-term success at CityPlace. This request is specific to the retail loan at" the property, according to the statement. The special servicer is Miami Beach-based LNR Partners.

According to DBR, Trepp, a New York City-based company which tracks CMBS loans, states that although the New York City-based Related Cos., which owns CityPlace, was current on loan payments as of April, in recent correspondence the company indicated that the property was experiencing financial difficulties and wanted a loan modification. The net cash flow on the property has remained "well below" the level necessary to cover the $9.6 million annual debt service payment on the mortgage.

According to Trepp, CityPlace generated about $23.4 million in revenue last year and has about $18 million in expenses plus the $9.6 million in debt service, which left more than $4.2 million to be subsidized by the owner of the property. Revenue for the property also declined from $25 million in 2008.

In the letter alluded to above by Trepp, the sponsors of the loan said they were no longer willing to subsidize the debt service payments "without a financially viable exit strategy in place." The CityPlace loan was scheduled to mature in October 2016, according to Trepp.