ROCKVILLE, MD–Another month, another Washington DC area building that has made it onto Trepp's list of the top five largest CMBS loans that have become delinquent in the past 30 days.
For November, Trepp reports that a $56.2 million loan backing the 251,430 square-foot Gateway Office Building at 412 N. Washington St. in Rockville, Md., has been tagged with a non-performing beyond maturity status.
For what it is worth, the DC area buildings' frequent appearance on this list does not appear to be an underlying sign that something is amiss in the market. Rather they are one-off situations or investments that for their individual reasons, went south.
In the case of the Gateway Office Building, Trepp writes that:
The loan has been on the watchlist since November 2012 after a major tenant's lease was set to expire in 2013. The tenant renewed their lease, but loan financials slipped in the years after. DSCR (NCF) and occupancy hit respective levels of 1.21x and 85% at the end of 2012, but those numbers fell to 0.98x and 83% in 2014. Through the first six months of 2015, DSCR and occupancy clocked in at 1.16 and 89%, respectively. As the loan came due in November and no payoff was made, the note was tagged with a non-performing beyond maturity status.
EY Extends Lease at 1101 New York Ave., NW
Trepp also reported that, per November servicer watchlist notes, Ernst & Young has extended its lease at 1101 New York Ave., NW. The property backs a $212.1 million loan, which is split between a $106 million note and another $106 million piece.
Ernst & Young is the building's top tenant, occupying 30.6% of the space. EY's lease previously expired in June 2017, but the firm has now extended until 2028.
Trepp reports that:
The loan was added to the watchlist due to a low DSCR below the required threshold. As of the third quarter, DSCR (NCF) is 0.87x at 86% occupancy, compared to 0.90x at the close of 2015. The decrease in DSCR is due to an increase in janitorial and repair maintenance expenses. Both notes are current and are slated to mature in July 2017.
ROCKVILLE, MD–Another month, another Washington DC area building that has made it onto Trepp's list of the top five largest CMBS loans that have become delinquent in the past 30 days.
For November, Trepp reports that a $56.2 million loan backing the 251,430 square-foot Gateway Office Building at 412 N. Washington St. in Rockville, Md., has been tagged with a non-performing beyond maturity status.
For what it is worth, the DC area buildings' frequent appearance on this list does not appear to be an underlying sign that something is amiss in the market. Rather they are one-off situations or investments that for their individual reasons, went south.
In the case of the Gateway Office Building, Trepp writes that:
The loan has been on the watchlist since November 2012 after a major tenant's lease was set to expire in 2013. The tenant renewed their lease, but loan financials slipped in the years after. DSCR (NCF) and occupancy hit respective levels of 1.21x and 85% at the end of 2012, but those numbers fell to 0.98x and 83% in 2014. Through the first six months of 2015, DSCR and occupancy clocked in at 1.16 and 89%, respectively. As the loan came due in November and no payoff was made, the note was tagged with a non-performing beyond maturity status.
EY Extends Lease at 1101
Trepp also reported that, per November servicer watchlist notes,
Trepp reports that:
The loan was added to the watchlist due to a low DSCR below the required threshold. As of the third quarter, DSCR (NCF) is 0.87x at 86% occupancy, compared to 0.90x at the close of 2015. The decrease in DSCR is due to an increase in janitorial and repair maintenance expenses. Both notes are current and are slated to mature in July 2017.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
