• CLO Market Round-up: Issuance Picks Up; Could the US-China Trade War Affect CLOs? 16 hours ago

    On the heels of a surprisingly low new issuance total, the CLO market rebounded to a more moderate pace last week. A total of eight deals priced during the week of May 13th, which was up from three during the week of May 6th. Despite the increase, last week’s tally still fell short of the 12 pricings completed during the week of April 30th. Of last week’s eight pricings, seven came from US desks and one was issued in Europe. 

    The US pricings were comprised of four new deals, two resets, and one refi. The tightest execution for a new deal’s AAA spread came from the TICP XIII issue, which is managed by TICP and was arranged by Goldman Sachs. Its AAA class printed at L+130, which was an improvement from the prior week’s best execution of a new issue AAA (L+140). In fact, the L+130 spread was the best print for a newly issued AAA in several months.

    For several weeks, new issue "bests" (or the tightest levels of all deals in a given week) were locked in at L+133. The downside of last week's new issue pricing is that the widest AAA prints were outside the "wides" (widest spreads of all deals) we saw during the last several months. The range of new issue AAA prints last week was L+130 to L+157. It has been a while since a new issue AAA has priced north of L+150.

    The one European pricing was a new deal. That issue’s AAA execution came in at E+100, which was 14 basis points tighter than the previous week's best.


    The pricing data above is from Creditflux.

    The Wall Street Journal published an interesting article last week that discussed the challenges facing the CLO market. The story covers several areas – from the declining attractiveness of floating rate paper to the ongoing scrutiny of regulators – but it does add one new wrinkle. That wrinkle is the US-China trade war and its potential impact on the CLO and leveraged loan recoveries that started earlier this year.

    Barron's had a similar take in a story that notes leveraged loans issued to "tariff-sensitive industries" could become problematic. The piece cites UBS research.

    On the more positive side, Fed Chair Jerome Powell noted that leveraged loan lending is not threatening to pull down the market in the same way subprime mortgages were a decade ago. (How's that for damning a market with faint praise.) Bloomberg covers Powell's remarks here. The remarks seemed triggered by recent criticism from legislators and the press that the CLO market resembles the CDO market of 2007.


    The information provided is based on information generally available to the public from sources believed to be reliable.

  • PRISM 2019 Award Winners Announced In Nashville 17 hours ago

    Anthony Buonicore Inducted into the Industry Hall of Fame

    Nine winners of the prestigious 2019 PRISM industry awards were celebrated on May 8th at a ceremony during the annual PRISM conference in Nashville, TN. The PRISM conference is sponsored by …

    The post PRISM 2019 Award Winners Announced In Nashville appeared first on EDRnet.

  • The Lease Lowdown: Boeing Renews at Large Office; Move Coming for Government Agency? 1 day ago

    May’s remittance data revealed a huge, positive development for a 2014 single-asset deal. The $675 million COMM 2014-TWC issue was backed by the Time Warner Center, a 1.1 million-square-foot office space in Manhattan that serves as Time Warner’s headquarters. The media giant’s lease at the office was due to expire earlier this year and no mention of a renewal was made in the subsequent months. Additionally, the debt was slated to mature around the same time, so the loan was placed on the servicer watchlist as it had yet to be paid off.  However, May’s remittance revealed that the entire debt total was paid in full, alleviating the concerns surrounding Time Warner’s lease. To give our readers some insight into similar stories regarding CMBS loans with large expiring leases, we’ve found three loans that feature sizable leases that are due to expire this month. 

    Our criteria for entries in this blog series are loans greater than $25 million in outstanding, which also contain leases that represent 25% or more of the property’s net rentable area and expire within the next 12 months. To see more loans with expiring leases, sign up for a free trial.

    1. Aerospace Manufacturer Remains Grounded in Oklahoma

    First-time servicer watchlist for the $57.5 million Boeing Office Campus loan revealed that Boeing, the collateral’s sole tenant, extended its lease for five years. We noted in TreppWire that this should come as a relief to investors in UBSBB 2012-C4 and CMBX 6 longs. The collateral is a 529,822 square-foot office complex in Oklahoma City, Oklahoma. According to servicer data, Boeing is the sole tenant with leases that ended in April 2019 and will end in April 2020. April servicer watchlist notes indicate that Boeing has extended its 2019 lease from 2019 to 2024. That lease is for 320,000 square feet which is 60.4% of the square footage. (Nothing was said about the 2020 lease, but it’s worth noting that securitization data show all 530,000 square feet were slated to expire in 2019.) Boeing will pay $16.20 per square foot in base rent on the new lease which is up from $15.25 per square foot on that parcel. The loan makes up 4.62% of UBSBB 2012-C4.

    2. Denver Office Loses Another Large Tenant

    As we noted for TreppWire clients in early April, the Zayo Group will be moving its Denver offices from 1621 18th Street to 1401 Wynkoop Street. Zayo is currently the second-largest tenant at the 18th Street location with about 31,000 square feet on a lease that ends in September 2019. The footprint represents 27.6% of the 111,852 square-foot office behind the $27 million 18th Street Atrium loan. The property was built in 1919 and renovated in 1983. This leasing news is noteworthy because the 18th Street Atrium office lost its former top tenant, Intrawest US Holdings, when the firm’s lease expired at the end of November 2018. That move landed the loan on the servicer watchlist. The property was 100% occupied in 2016, but that figure came in at 68.7% at year-end 2018. The loan makes up 3.39% of WFCM 2015-LC20 and it matures in April 2025.

    3. Will Government Agency Keep Its Current Charm City Digs?

    During the spring of 2018, we noted in a TreppWire report that the Maryland Insurance Administration was gearing up to move its corporate headquarters from 200 Saint Paul Street in downtown Baltimore, Maryland. The government agency was hoping to move to a new space in the Montgomery Park area, pending formal approval from the state Board of Public Works. The agency was, and still is the second-largest tenant at the 261,867 square-foot office that secures the $33.5 million St. Paul Plaza Office Tower loan. That lease is slated to expire at the end of May. Built in 1989, the underlying asset is a 28-story, class-A office facility with a 12-story parking garage. The Maryland Insurance Administration currently occupies 26.2% of the collateral's net rentable area. Other major tenants at the property include the Maryland Attorney General (42.3% of the net rentable area) and the US Drug Enforcement Administration (14.0%). Property occupancy has remained at 98% since 2014 while DSCR (NCF) on the loan has ranged between 1.11 and 1.42x during this time. The loan matures in January 2021 and makes up 3.06% of MSBAM 2014-C14.

    The information provided is based on information generally available to the public from sources believed to be reliable.

  • CMBS Week in Review: Latest Conduit Deal Prices Wider Than Anticipated 2 days ago

    Friday brought word that the $936.7 million BBCMS 2019-C3 priced with AAA spreads that cleared at S+89. Benchmark spreads for this deal were initially estimated at about 85 basis points, but they ended up pricing wider than expected due to the recent rally in the 10-year Treasury yield. The largest asset in the transaction is the $57.2 million portion of a portfolio backed by ten SmartStop self-storage facilities. 

    CMBS BWIC data provided to us by Solve Advisors show that the three largest bid lists (containing non-agency paper) that circulated last week had a combined face amount of about $660 million. The largest listing for the week, which made an appearance on Friday’s roster, was a $410 million batch of recent vintage conduit AAA IOs. On Monday, a separate $216 million list of bonds from the CGCMT shelf and a $47 million group of CMBS 2.0/3.0 conduit LCF AAAs circulated among investors. When agency and IO paper are excluded from the week’s totals, overall trading volume clocked in at roughly $540 million. Trading activity slowed after Wednesday as investors shifted their focus to the flood of new deals in the market.

    The indexes outperformed CMBS cash last week. CMBX 6-12 AAA spreads remained relatively unchanged while BBB- spreads closed anywhere from five basis points tighter to two basis points wider. On the other hand, CMBS cash posted some modest losses with LCF AAA conduit spreads moving out by two to three basis points. BBB- spreads widened 13 to 14 basis points.

    As an interesting side note for our readers who collect CMBS trivia, a CMBS transaction was recently resolved only just one month after its first bond payment was made. (We believe it may be the very first deal to accomplish this feat.) Secured by 18 Cloverleaf Cold Storage facilities, the single-borrower CCST 2019-CHL2 deal made its very first interest payment in April and was resolved with the May remittance cycle. The Sioux City Journal reported that Atlanta-based Americold Realty Trust recently agreed to purchase Cloverleaf in a deal scheduled to close in the second quarter of 2019, which may have something to do with the payoff.


    Top Credit Stories from the Week

    Trading Alert: Large Houston Office Could Become REO This Month - According to first-time special servicer comments received late last week, the office behind the $79.7 million Three Westlake Park note could be turned over to the lenders this month. The commentary indicates that the DPO and A&B restructure proposals submitted by the borrower were deemed to be not viable by the lender. 

    Trading Alert: Sole Tenant Behind CMBX 8 Loan Exercises Early Termination (COMM 2014-LC17) - According to first-time servicer watchlist notes for the $32.5 million 50 Crosby Drive loan, the sole tenant at the collateral has exercised its early termination and will be vacating in about a year.

    Follow-up: Value of Michigan Mall Behind 2015 Loan Slashed Again (COMM 2005-LP5 & GECMC 2005-C1) - A few months ago, we noted that the appraisal reduction amount (ARA) on the $120.4 million Lakeside Mall REO (face amount) asset seemed light. This month, the value of the asset was cut again and the appraisal reduction was bumped up. 

    Sears Replacement Tenants Confirmed at CMBX 7 Minnesota Mall (GSMS 2013-GC13) - According to the SC Times, an Ulta Beauty location will be opening at the Crossroads Center in Saint Cloud, Minnesota this August. The beauty and cosmetics seller, along with discount retail chains HomeGoods and DSW Shoes, are slated to serve as replacement tenants for the former Sears space at the shopping center.

    Disclaimer: The information provided is based on information generally available to the public from sources believed to be reliable. 

  • Investor Teams with New York Life to Acquire $1 Billion of Apartments by 2022 5 days ago

    Jefferson Apartment Group has formed a venture with New York Life Real Estate Investors to acquire apartment properties in major and secondary markets across the Eastern United States. The venture is under contract to buy its first property, an unidentified Boston apartment complex, in a deal that is expected to close this month. It plans to invest $50,000 per unit renovating the property, which includes changing the electrical systems and updating the unit interiors and common areas.

    New York Life has already committed $90 million to the venture, while Jefferson has pitched in $10 million. The companies will partner with pension funds and other institutional investors to obtain debt from banks and agency lenders.

    All told, the venture expects to invest about $1 billion and acquire 4,000 units by 2022. It is targeting cities where it expects the employment rate to remain high if and when economic conditions in the US worsen. For instance, it was attracted to the Boston property because it is in an area with a large percentage of college-educated residents and those who work in the technology and healthcare fields.

    "We're doing this knowing there will be some dislocation in the economy over the next couple of years," said Jim Butz, Jefferson's President and CEO. "We want to be in a position with a large financial partner where we will be able to buy when there is a down market."

    Jefferson, of McLean, Virginia, was formed in 2009 when a group led by Butz acquired the East Coast division of JPI, an Irving, Texas developer. He had been the division's Chief Executive.

    Butz's partners in the deal included fellow JPI East Coast executives Greg Lamb, Bob Timmins, and James N. Duncan, all of whom remain partners at Jefferson. Also part of the venture was Akridge, a Washington, D.C. developer, but the company recently bought out most of Akridge's stake in Jefferson.

    Besides acquiring properties, Jefferson also develops and manages them. It has seven apartment buildings currently under construction that will have a combined 2,000 units.

    Jefferson's venture with New York Life will pursue older properties that need major renovations as well as core-plus properties that were built in the last 15 years. The properties will have between 100 and 500 units and be located in such cities as Boston, Miami, Orlando, Philadelphia, and Washington, D.C.

    Jefferson had a similar arrangement with Starwood Capital Group of Greenwich, Connecticut in 2012. The two companies invested $350 million to acquire East Coast apartments. Jefferson and Starwood disposed of its final property last June, selling the 243-unit Jefferson Lighthouse Place apartments in Pompano Beach, Florida to a venture of Harbor Group International and Azure Partners for $55 million.

    "It worked well with Starwood, so we were happy to do it again (with New York Life)," Butz said.


    Disclaimer: The information provided is based on information generally available to the public from sources believed to be reliable. 

  • NEW InCheck Feature: Supercharge Your Company’s Operating Manual 6 days ago
    Meet InCheck's Standard Operating Procedures Page!

    No more rifling through pages to find out details about your team’s work processes. With InCheck’s latest feature, you’ll know the exact steps for how your team handles work across your portfolio (and exactly how often they handle it) in seconds.

    Orchestrate And Assess Your Most Critical Building Processes From One Place

    Creating a Library of Standard Operating Procedures is just the first step to ensuring your team is always adhering to the latest best practices. If you’re looking to continue ramping up efficiency across your organization, you’ll want to make sure you can regularly review and assess your SOPs. The easiest way to see and evaluate all your processes in one place is InCheck’s brand new Standard Operating Procedures page. 

    InCheck’s SOP Page lets company Admins review their entire catalog of Workflows at-a-glance, quickly seeing which processes you’ve built, what properties they’re associated with, and how they’re triggered. For example, you’ll be able to see in seconds how many Workflows are on an automatic recurring schedule, and how many your team can manually trigger on-demand. This way, you can assess how many regular monthly inspections your team is performing (too many? too few?) compared to work they’re doing on the fly.

    Even better, you can update these triggers, as well as the Workflows themselves, directly from the Standard Operating Procedures page. You’ll also be able to see the last “modified” date for each Workflow, so you’ll know which Workflows might be in danger of getting stale and need an update.

    And if you’re missing an SOP for something critical – maybe, how to quickly respond to a heat or hot water request? No problem – create new Workflows directly from the page, without having to go into your Company Settings.

    It’s the best and quickest way for you to evaluate and improve your company’s operating manual, as often as you’d like!

    Ready To Take Your Company's Operations Digital?

    Questions about how to review your company’s Standard Operating Procedures in InCheck? We’re happy to help! Reach out to

    The post NEW InCheck Feature: Supercharge Your Company’s Operating Manual appeared first on SiteCompli.

  • CMBS Special Servicing Rate Increases for First Time in 10 Months 6 days ago

    The percentage of CMBS debt that is in special servicing increased in April. This is the first rise in the Special Servicing Rate since July 2018, and it is the highest reading in the last two years. While special servicing rates for all five major property types climbed last month, the retail sector featured the greatest month-over-month change. Despite April’s increase, the rate has fallen 115 basis points year over year.

    The Trepp CMBS Special Servicing Rate climbed 11 basis points to 3.53% in April. A total of 26 loans were newly sent to servicing last month. That is the same amount of fresh transfers as there were in March, but the new servicing balance surged from $340.9 million to $910.2 million month over month.

    Special servicing readings for all five major property segments increased last month, but no increase was larger than that of the retail sector. The retail special servicing rate surged 24 basis points to 5.73% in April. Although the lodging segment is still the best performing major property type, it incurred the month’s second-greatest jump, rising nine basis points to 2.25%. Lodging loans in CMBS 1.0 featured a very sharp incline in servicing transfers, as that segment’s reading soared by more than 1,000 basis points.


    The percentage of post-crisis, or CMBS 2.0+, debt that was in special servicing last month rose 16 basis points to 1.27%. Retail and multifamily servicing events pushed the overall 2.0+ rate higher, as those individual rates climbed 47 and 16 basis points, respectively, last month. The CMBS 1.0 special servicing rate, which looks at any loans issued before the 2008 financial crisis, surged 167 basis points to 50.05% in April.

    The information provided is based on information generally available to the public from sources believed to be reliable.

  • CLO Market Round-up: Issuance Volume Tumbles; Could the Leveraged Loan Market Freeze? 1 week ago

    Total CLO pricing volume the week of May 6th clocked in at its most disappointing figure in a few months. Only three deals priced last week, which is down from 12 issued during the prior week. (The latter figure was the highest total in about a month.) Heading into the week of May 6th, President Trump announced that the US was going to impose tariffs on additional Chinese products while increasing the percentage on those already subject to a tariff. That news led to an upswing in volatility across asset classes, which likely spurred the drop-off in CLO pricings last week. 

    In addition, AAA spreads for CLOs widened last week as they did for most fixed income products after the new tariffs were announced.

    Two of the three pricings came from the US while one was a European transaction. The tally of two US pricings was down from six issued during the prior week. The one European pricing was up from the prior week’s goose egg. The two US pricings came from one new deal and one refi. Europe’s lone deal was a new issue.

    The AAA execution for the new US deal came in at L+140. That was seven basis points wider than the best execution from the prior week. Benchmark spreads for the new European deal came in at E+114.


    The pricing data above is from Creditflux.

    Bloomberg highlighted something to watch for in the CLO market. The article notes that JPMorgan Chase has been sued for securities fraud related to a leveraged loan arranged by JPM for Millennium Health in 2014. In short, the plaintiffs are claiming that leveraged loan disclosure requirements should be treated as those of securities. (The issue is applied broadly to all leveraged loan offerings.) The market could freeze if the plaintiffs win the argument; Bloomberg notes that banks could have to divest nearly $90 billion of CLO assets and the market for leveraged loans would dry up. Investors might want to keep an eye on this in the coming months.

    Meanwhile, Asset Securitization Report published a piece noting that investors are split on whether it's time to head for the CLO exits for or whether now is the time to jump in. The story notes that CLOs have largely evaded the spread tightening trend that has benefited many other fixed income categories.


    The information provided is based on information generally available to the public from sources believed to be reliable.

  • Natural Disasters Contribute to Shift in Maintenance Activity: April BuildFax Housing Health Report 1 week ago

    The April BuildFax Housing Health Report (BHHR) revealed an increase in maintenance activity after five months of decreases, while single-family housing authorizations continued to decline.  Maintenance activity increases are owed, in part, to severe convective storms across the U.S. With hurricane season on the horizon, BuildFax anticipates inclement weather to continue to impact maintenance volumes, despite the housing slowdown.

    New and Existing Housing Supply

    On a national level, single-family housing authorizations, which are correlated to historical recessions, trended down for the sixth consecutive month. Meanwhile, maintenance activity saw its first year-over-year increase since November 2018. While there is typically a spotlight on new construction, maintenance is also a must-watch indicator as it represents the health of the existing housing stock, which accounts for more than 90% of all U.S. properties.

    New and Existing Housing Supply Activity, April 2019

    • Single-family housing authorizations decreased 8.23% year over year.
    • Existing housing maintenance volume increased 2.45% year over year.
    • Existing housing remodel volume decreased 0.95% year over year.

    Amid Slowdown, Hurricane-Related Maintenance Activity Persists

    Ahead of this year’s hurricane season, carriers are increasingly looking to verify properties impacted last year have completed necessary construction. While North Carolina and South Carolina saw year-over-year increases in maintenance activity this month, maintenance in Florida declined. This is, in part, due to complexities of overlapping storm recovery – Hurricane Michael, which made landfall in October 2018, came on the heels of a greater and more severe Hurricane Irma, which made landfall in August 2017.

    See the full analysis here.

    Five Factors to Impact 2019 Hurricane recovery

    An analysis of 11 hurricanes between 2000 and 2018 revealed the average hurricane recovery timeline lasts 10.7 months. While early hurricane forecasts suggest a below-average season, five key factors determine how hurricane rebuilding timelines might be amplified amidst a housing slowdown. This is particularly important for carriers looking ahead to the 2019 hurricane season.

    For more insight on the health of the U.S. housing market and the impact of natural disasters on the housing stock, download the April 2019 report.

    The post Natural Disasters Contribute to Shift in Maintenance Activity: April BuildFax Housing Health Report appeared first on BuildFax Property Condition.


    If you want to know how broader mega trends are impacting commercial real estate investment, you can’t do better than CBRE’s Spencer Levy. We were the lucky ones to have him deliver the opening keynote at EDR’s PRISM conference at …

    The post PRISM 2019: CBRE’s SPENCER LEVY CONNECTS THE DOTS ON MEGA TRENDS appeared first on EDRnet.

  • Catastrophe Reinsurance Rates to Rise at June Renewals, Signaling Need for Increased Property Intelligence 1 week ago

    Catastrophe reinsurance rate increases didn’t come to fruition in 2018, however, this year Florida reinsurers are expecting a shift in the market. Analysts reported catastrophe reinsurers have added inflation factors into their pricing following two years of impactful hurricane seasons and external pressures from increasing loss creep. The effect of loss creep was made particularly apparent after recent Florida hurricanes when some carriers saw claims costs double from assignment of benefits (AOB) complexities and higher loss adjustment expenses.

    After two years of milder Florida catastrophe reinsurance renewals, carriers that leverage new data sets and technologies to validate portfolio risk will enter these discussions with the resources to negotiate a fair rate while ensuring full coverage of their book of business. More so than in years prior, analysts argue catastrophe reinsurers are prioritizing carriers that provide increased transparency into the risks on their book.

    Hurricane Recovery is a Major Blind Spot for Carriers

    While 2019’s hurricane forecast suggests slightly below-average activity, states impacted by 2018 hurricanes are still experiencing the tail end of rebuilding activity. The average rebuilding period for a severe hurricane is 10.7 months, according to a recent report by BuildFax. This is particularly tangible in states like Florida, where recovery activity is almost continuous as a result of back-to-back severe weather events.

    For large storms with mounting costs, accurate data can prove invaluable. Following Hurricane Irma, BuildFax analyzed claims data for a major Florida carrier and found that 50% of properties had not completed repairs. This is a major blind spot on a carrier’s book of business, as properties that go without repairs see increased risk heading into the next hurricane season.

    As reinsurance becomes an increasingly data-driven industry, carriers can use this to their advantage. Leveraging a trusted third-party data provider can help provide a clear understanding of how hurricane recovery activity has impacted an insurance carrier’s book. With the most up-to-date data points to feed critical modifiers, like roof age, year of construction and effective year of construction, BuildFax helps carriers recognize their exposure to drive more accurate PML calculations.

    Preventive Maintenance Activity Sheds Light on Opportunities for Better Rates

    Damages from increased hurricane activity can also be mitigated with the right preventive maintenance. BuildFax research found that in 2018 alone, storm shutter installations, which lower the extent of hurricane damage on a property, increased 24.81% in the U.S. On a state-level, these increases were accentuated in hurricane-prone states. Year over year, storm shutter activity grew 38.83% in Florida, 212.86% in North Carolina and 192.24% in Texas.

    Given the substantial increase in preventive maintenance activity, carriers may find their book is less risky than initially anticipated.

    Interested in incorporating BuildFax property intelligence into your PML analytics and assessments ahead of June 1 placements? Contact us today for more information.

    The post Catastrophe Reinsurance Rates to Rise at June Renewals, Signaling Need for Increased Property Intelligence appeared first on BuildFax Property Condition.

  • The Five Largest CMBS Loan Losses from April 2019 1 week ago

    CMBS liquidation activity accelerated in April as 31 loans were written off with losses. That tally is up from the 14 notes disposed in March. In total, $497.6 million in outstanding debt was liquidated with more than $374.2 million in losses, amounting to a 75.2% severity. That severity is the highest level in nearly a year, and the second-highest severity seen since January 2010. The retail sector was stung badly, as 17 of April’s 31 disposals were backed by retail properties. We’ve compiled a list of the loans that were written down with the five largest losses last month.

    1. MSKP Retail Portfolio - A - A-2 note

    Backed by eight shopping centers across the state of Florida, the A-2 note for the MSKP Retail Portfolio - A incurred April’s largest loss. The $93.1 million loan was closed out with a 100% loss last month. A $129.5 million A-1 note was also backed by theses collateral properties, but it was paid off in full in late March. Originally issued as a single $223.4 million loan in 2007, the MSKP Retail Portfolio - A was modified in 2012 with a bifurcation and an extended maturity date. The A-2 note was sent to special servicing in January 2019 due to its maturity in March 2019. However, the A-1 note was put on the watchlist in July 2015 and remained there until its transfer to special servicing in January. Watchlist commentary states that the A-1 note “remained on the watchlist as performance was below watchlist thresholds.” The A-2 note backed 29.9% of MLCFC 2007-6 prior to disposal, a deal which has lost 18.2% of its original collateral to write-downs.


    2A & 2B. SBC - Hoffman Estates

    The two notes for the $113.7 million SBC - Hoffman Estates loan were disposed with the second- and third-largest losses, respectively, in April. (Since the notes back the same collateral and their losses were very close in amount, we’ve combined them here for the #2 spot.) We suggested as early as 2013 for TreppWire readers to keep watch on the SBC - Hoffman Estates loan. The collateral, an office complex in suburban Chicago, was once 100% occupied by telecommunications firm SBC. SBC adopted the AT&T moniker after the two companies merged together several years ago, and it later vacated the property at the end of its lease in August 2016. The property entered foreclosure shortly after the firm departed and the property was sold for $21 million last month. Before the resolution, the loan was split into a $58.0 million piece that made up 57.1% of MSC 2006-T21 and a $55.7 million piece that backed 62.2% of BSCMS 2006-PW11.


    3. Kimco PNP - Cheyenne Commons

    Third on our list of largest loan losses from April is the $55 million Kimco PNP - Cheyenne Commons loan. This REO asset was resolved with a $27.9 million write-off for a 50.6% loss severity. The collateral was a 361,486 square-foot, open-air retail property located in Las Vegas, Nevada. In June 2016, the loan was sent to special servicing after the borrower stated that it would “not be able to refinance the loan at maturity" and that the property “lost significant value.” The collateral’s occupancy rate fell in every financial reporting period from 2013 to 2018, most recently clocking in at 60%. After reaching 1.31x in FY 2012, DSCR (NCF) fell to 1.09x in 2013 and it failed to climb above the 1.0x threshold during the remainder of its life. The REO asset's face value made up 9.4% of the collateral behind JPMCC 2006-LDP9. More than 12% of that deal’s bond balance has been disposed.


    4. Egizii Portfolio

    April’s fourth-largest loss was tied to the $19.4 million Egizii Portfolio as its balance was written off in full. Collateral for the debt was a collection of five offices and two industrial properties located in central Illinois. The State of Illinois occupied all seven properties through various branches and agencies. Payment issues landed the loan with its special servicer in January 2013, but it failed to emerge from servicing during any point of its life. The borrower’s struggle with the debt service never improved, as portfolio occupancy fell to 40% in April 2016 and the lender reclaimed the asset in 2018. Originally appraised for $28.9 million at securitization, the collateral’s value was down to $9.7 million prior to the resolution. The loan most recently backed 74.9% of CSMC 2007-C4, a deal which has lost nearly 12% of its original balance to disposals.


    5. Copper Beech Townhomes II – Columbia

    Our list concludes with the $29.8 million Copper Beech Townhomes II – Columbia note, which was disposed with a $14.6 million loss for a 49.2% severity. The loan was collateralized by a 278-unit, 824-bed townhouse community located in Columbia, South Carolina. The property is approximately 2.5 miles from the University of South Carolina. This loan’s trouble began in early 2013 as higher repair expenses and student turnover caused DSCR (NCF) to dip. DSCR never reached the 1.10x threshold, and eventually turned negative in 2017. After clocking in at 96% for the 2014 fiscal year, the occupancy rate slid to a paltry 47% two years later. Despite a modification in 2016, the note never left servicing and became REO in May 2017. The loan represented 51.6% of CGCMT 2008-C7 before it was disposed.


    You can access all of our previous loss recaps here. For more info on CMBS loans that have been disposed with losses, contact us at

    Editor's Note: The information referenced in this blog post with regards to the CMBS loans, deals, and properties is sourced from the corresponding monthly remittance reports published by the CMBS trust. The loan names are given by the issuer at securitization and may not indicate borrower or owner affiliation. 

    The information provided is based on information generally available to the public from sources believed to be reliable.

  • LightBox Announces Acquisitions of Real Capital Markets and Digital Map Products 1 week ago


    May 13, 2019 – Advancing its mission to empower decision makers through every step of the real estate workflow, LightBox today announced the acquisition of two leading …

    The post LightBox Announces Acquisitions of Real Capital Markets and Digital Map Products appeared first on EDRnet.

  • CMBS Week in Review: Party City to Shutter 45 Stores; Latest Conduit Prices at Tight Levels 1 week ago

    Last Thursday, the $802.5 million GSMS 2019-GC39 priced with the LCF AAA and BBB-settling at S+80 and S+335, respectively, which was seen as a solid showing considering the week’s volatility. This compares to an AAA spread level of S+86 for the previous two conduit offerings that priced in April and S+91 for the latest GSMS deal to come to market in February. Organized by a team from Goldman and Citi, the hybrid risk retention deal features the $77.5 million loan piece written against the 1.25 million-square-foot San Francisco office tower at 101 California Street as its largest asset. 

    In the broader US market, the S&P 500 and Nasdaq logged their worst weekly performance in 2019 thus far after Washington unveiled plans to increase tariffs on $200 billion in Chinese goods from 10% to 25%.

    According to CMBS BWIC data provided to us by Solve Advisors, the three largest bid lists (containing non-Agency paper) that circulated last week had a combined face amount of almost $380 million. The largest listing, which was shown on Wednesday’s trading roster, included CMBS 3.0 LCF AAAs totaling $74 million. Another separate $248 million batch of 2014-2018 conduit AAA bonds and a $57 million single-asset list made the rounds between Wednesday and Thursday. When agency and IO paper are excluded from the week’s trading activity, overall volume came in at nearly $600 million.

    Cash outperformed the CMBX indexes over the past week: cash spreads tightened by one to two basis points at the top and middle portions of the stack while BBB and below spreads came in by 12 basis points. For CMBX, AAA spreads for the post-crisis indexes widened by two to four basis points. CMBX 7-12 BBB- spreads were out by nine to 12 basis points.

    Retail Round-up: Last Thursday, Party City announced that it will shutter 45 of its 870 store footprint by the end of this year. Six of the confirmed store closure addresses have been released by Business Insider (one of which touches CMBS).

    With the release of its Q1 earnings report earlier this month, CVS revealed that the retailer recently closed 46 underperforming US locations as part of its corporate strategy to focus on the health care services sector. We published a follow-up story which details CMBS loans backed by the latest round of 46 CVS closures.

    The Wall Street Journal published an article earlier this week about the decline in ground-floor retail rents for Manhattan’s Fifth Ave shopping district over the past year as tenant rollover and vacancies have steadily climbed. As a courtesy for our readers, we created a list of CMBS loans backed by Fifth Avenue retail that can be found in our In the Spotlight page under the 'Manhattan Fifth Ave Retail' drop-down. (The list is not purely retail and also includes large office and mixed-use properties for which there is street-level retail supporting the loan as a top five tenant).


    Top Credit Stories from the Week

    Severity Spikes on Distressed Legacy Office and Retail Disposals - The month of April brought a significant spike for the CMBS market in terms of average loss severity, as legacy debt tacked with heavy servicing fees paid off following lengthy recovery periods. Roughly $497.6 million across 31 notes were disposed with losses in April at an average loan size of $16.1 million. 

    Large Grocery Giant to Vacate New Jersey Office (COMM 2015-DC1) - According to, Whole Foods Market will be moving its Englewood Cliffs, New Jersey office behind the $59.6 million the Sylvan Corporate Center to a nearby office in Jersey City.

    Midtown Manhattan Office Behind Big CMBX 7 Loan Sold (GSMS 2013-GC13) - According to The Commercial Observer, RFR Holding is in the process of selling the Manhattan office at 345 Park Avenue South. Deerfield Management, which is reportedly the buyer, is seeking $525 million in new financing for the acquisition and renovation of the property.

    REIT Acquires DMV-Area Multifamily Portfolio For $379.1 Million (FREMF 2016-KF24) - According to Real Estate Business Online, the Washington Real Estate Investment Trust (WashREIT) has acquired a multifamily portfolio in Northern Virginia for $379.1 million.

    April Payoff Report: CMBS Payoff Rate Dips After Full Maturity Resolution in March - The percentage of loans which paid off at maturity in April was 81.7%, down from 100% in March. Of the $276.6 million that reached their maturity date in April, 97.5% by balance were CMBS 2.0 loans.


    Disclaimer: The information provided is based on information generally available to the public from sources believed to be reliable. 

  • What Property Managers Are Planning: Top Scheduled Routines In InCheck 1 week ago
    What kinds of work are property managers scheduling on a recurring basis at their buildings?

    Last week we took a peek at some of the most frequently-assigned Tasks in InCheck. This week, we’re looking at routines. Here’s what people are automating across their portfolios:

    Required Annual Inspections

    Annual Inspections can be required by law (like NYC’s Local Law 55) or mandated by your organization. In either case, it’s never a bad idea to document the health of your assets regularly. Some of the scheduled Inspections we’re seeing are for things like basic elevator operations and cleanliness, boiler room reviews, or amenity area inspections (pool area, gym rooms, etc.). Pro tip: InCheck has over 20 different inspection input fields (and growing), so you can customize the types of information your team regularly collects. Customer satisfaction scores, ratings, choices, numbers, and more – it’s easy to always capture what you need, and make sure it’s saved.

    Seasonal Grounds Inspections and Maintenance

    Spring has sprung, and with it comes regular grounds inspections and maintenance! We’re seeing a lot of lawn care, pest control, and gardening routines being performed by team members and vendors alike. Another pro tip: if you’re performing a visual review of the grounds and building exterior, create an Inspection template in InCheck. If you’re performing work directly, creative a Preventive Maintenance template you can use and re-use. That way, you’ll be able to track how much mulch was laid down, what exactly was cut and trimmed, and more – every time your grounds routine is performed.

    Regular Vendor Appointments and Reminders

    With InCheck Workflows, it’s easy to remember what has to get done every time you reach out to a specific vendor. Do you need to collect renewed insurance documents? Speak with a particular person? Every part in your process is laid out in InCheck, step by step. Scheduling your vendor appointments for regular occurrence automatically assigns each step to the person or team responsible for handling the job. So when it’s time for your monthly window washing, your finance team can take care of processing payments while your property manager coordinates the right date, all without you having to reach out and give them more information. Your team will know exactly what to do (and when it’s due) so you can actually get it done.

    What kinds of Workflows are you scheduling with InCheck? Let us know at And learn more about Tasks and Workflows here. Want to stay ahead of the game?
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  • What Property Managers Are Doing Every Day: The Most Tracked Tasks In InCheck 1 week ago
    Ever been curious about what’s at the top of your fellow property managers’ to-do lists? We were!

    So we asked several InCheck teams what their most frequently issued Tasks were, and spotted three huge patterns:

    Tenant Requests

    From paint to plumbing, and everything in between – individual tenant requests take up a number of open and in-progress Tasks across every InCheck portfolio. It makes sense – when you’re collecting all your tenant requests in InCheck, it’s easy to make them all actionable by turning them into Tasks as you evaluate them.

    Here’s a best practice we noticed: add a label to the title of your Task to denote things as a Minor Issue or a Major Issue (or any other type of rating your team uses). This helps your colleagues quickly see if you’re dealing with a lot of small issues, a few major ones, or a combination of all of the above. Also, the more specific your Task title, the easier it is to prioritize without drilling down to get more details.

    Signature Task Types

    Task Types require your team to capture specific information within InCheck in order to close a Task (instead of just checking it off when you’re complete). For example, you can capture a picture, save an Inspection, log a maintenance routine, and more. One of the most frequently used Task Types is the Signature Task Type, which (as you can probably guess) requires whoever’s performing the Task to collect a signature. Tenants, vendors, visitors, whoever you need – signatures are captured and saved in InCheck, ensuring your team is covered should you need them down the road.

    Local Laws – Violations, Requirements, and More

    Whether you’re renewing permits in Chicago or dealing with Local Law 55 in NYC, InCheck users are assigning super-specific Tasks to their team members to both prevent and deal with local law regulations. This way, if you’re addressing the issue onsite or gathering paperwork back at your desk, you know the exact steps to deal with every local compliance issue.

    Of course, this is just the tip of the Tasks iceberg – one of the best things about InCheck Tasks is they’re entirely flexible to the way you and your team handle work! To learn more about what you can do with InCheck Tasks and Workflows, click here. Want to stay ahead of the game?
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  • Don’t Leave Your Bank’s Risk Ratings Up to Chance 1 week ago

    Since the nadir of the credit crisis, there has been more credence paid to the idea that banks and risk management departments should have a dual risk rating system. A dual risk rating generally takes into account the forward-looking probability of default (PD) as well as the potential loss severity, or loss given default (LGD). Inputs that drive those forecasts can include loan level, property level, borrower level, and economic expectations. Furthermore, qualitative factors driven by the story of the property, the borrower, and the relationship history with the lender play a role in generating risk ratings.

    PDs are a concept that lenders often assign at the borrower level. In other words, if a borrower is delinquent on one obligation, it would be reasonable to assume that additional delinquencies are likely to occur on any other loans they have outstanding. However, LGD is a concept that exists at the asset and loan levels and can be affected by many things, most notably collateral value and seniority. Modeling the probability of default for a borrower is difficult in and of itself without having to forecast losses at the loan level, if and when you begin to experience delinquencies. But risk managers who ignore the potential loss given default are turning a blind eye to a very important part of truly understanding their exposure. In order to conceptualize the importance of estimating your LGD, we turn to the bane of any good statistician: the roulette wheel.

    For this example, we are going to assume we have a roulette wheel that only has red and black squares (no numbers), and the casino in question has no table limit for your bet. Given this setup, one of the easiest ways to win $100 is to employ the Martingale betting strategy. The Martingale strategy works when you have unlimited capital and a repeatable bet that has a 50/50 outcome. To compare this to a dual risk rating, the bet is your LGD since that is the amount of capital you stand to lose if your bet fails, and the PD is based on the 50/50 odds because you have a 50% probability of losing money if the bet fails.

    In this scenario, the bettor will place $100 on black. If the ball lands on a black square they will collect their $200 payout and be on their way. If the ball lands on red, rather than calling it a night at a $100 loss, they will double their bet for the next round and place $200 on black. If they win their second-round bet, they will take their $400 and head home with a profit of $100. If they lose their second bet, they will double their bet again for round 3 and so on. If you have an unlimited amount of money and the good fortune to be dealing with a very lax pit boss, this strategy is almost guaranteed to net you $100. After all, the roulette ball cannot conceivably land on red for infinite spins of the wheel. However, since most of us do not have unlimited capital, let’s look at this strategy with the assumption that we have ~100k in cash. That is enough to play 10 rounds of this game. While it is highly unlikely that you will see a roulette ball on red ten times in a row, it is not out of the realm of our imagination. The table below should help to visualize this 10-round scenario.

    As you can see this strategy only has a 0.098% chance of failing, i.e. a 0.098% probably of default. That sounds pretty good; you have a 99.9% of winning $100. However, only looking at the PD understates the risk involved. In this strategy, the losses pile up exponentially, with a LGD of just more than $100,000.  

    A fearless gambler might employ the Martingale system that incorporates just one risk metric, but it is important to disregard that theory when stratifying your loan book and incorporate a dual risk rating. Without a solid measure of LGD, you are only seeing half of the picture and could become susceptible to blind spots in your risk management strategy. Many banks’ risk rating systems currently operate without much loan and property data. Learn more about how Trepp can help your bank build its own PD and LGD models. 

    The information provided is based on information generally available to the public from sources believed to be reliable.

  • How To Build Your Team’s Standard Operating Procedures Library 2 weeks ago
    Why Standard Operating Procedures Are A No-Brainer

    Before we get started, let’s recap why you absolutely, unquestionably should take the time to build a Standard Operating Procedures Library for your building operations team:

    • SOPs reduce risk by enforcing consistency in all key situations at every building
    • You can spend less time telling your team members what needs to get done (and how), and more time focusing on how to grow your business
    • Addressing the lack of SOPs at your organization can lead to a 30% reduction in overall costs and a 23% percent reduction in business risk – find out more in our Standard Operating Procedures brief

    If you want to learn more, listen to a recap from our session at the BuildingsNY Learning Stage – we talk all about why implementing Standard Operating Procedures across your portfolio is critical and will help your company scale for success.


    But how exactly do we build an SOP library? Here are a few key tips to get you started:

    Activate the Hive Mind

    I know – it sounds more like something you might hear in an Avengers movie (no spoilers!), but it’s actually a great strategy for gathering the very best of your team’s best practices. Collecting information from key team members at each property gives you a starting point for figuring out the best way to do things every time.

    And it’s not just what your team is doing – it’s how they’re doing it. You can build a survey, schedule team interviews, or spend a day at each property shadowing your team. In any case, putting in the time to build these SOPs will save you countless hours down the road. Plus, getting that initial input from your staff means they’re more likely to buy into your final set of Standard Operating Procedures.

    Sketch It Out

    Once you’ve got ideas from your staff, it’s time to start drafting your SOPs. Start out with critical procedures or even processes that may be complicated – things your team and company will benefit from the most if they’re organized and standardized. You can always add more SOPs to your Library going forward (and you’ll probably want to, once you start gathering ideas together).

    Sketch each SOP out by listing what you want to happen for each specific scenario or process, step-by-step. For example, let’s say your team’s move-out process has several steps that always need to happen, including a review of the lease by the legal department, a final walkthrough inspection with the tenant, and a same-day lock change (among other things). Write down every single one of those steps, along with any key details, for your move-out SOP. Repeat “step-sketching” for each SOP, building out your Library.

    Cover Your Bases

    Remember the 5 W’s of information gathering? For those of us who weren’t journalism majors, it’s who, what, when, where, and why (with “how” sometimes making an appearance).

    These are key questions to ask yourself for each SOP in your Library once you’ve sketched it out:

    • Who: Can individual steps in this process be performed by anyone within a team, or do specific people need to handle specific work? How can we manage coverage if anyone is out, or there’s a staffing change?
    • What: Is this a unique process? Does it capture everything (every single step) I need my team members to do for this process?
    • When: Does this need to be automatically done at a certain interval of time or on a regular basis? Is this a seasonal process, with slightly different steps for each season?
    • Where: Is this SOP property-specific, or does the same process apply to all my buildings, portfolio-wide? If my portfolio has buildings in dispersed locations, is this a regionally specific thing?
    • Why: Will this help your team make sure the right things are done?

    And if you use InCheck, you can create, store, and manage your Standard Operating Procedures Library directly in-app, making it easy to trigger work anytime you need something done (or automatically schedule it on a recurring basis going forward). You can even copy and modify templates developed from property managers around the country.

    Questions? We’re happy to walk you through what other teams are doing to build out their Standard Operating Procedure libraries. Reach out at

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  • CLO Market Round-up: 12 Deals Price as Market Activity Picks Back Up 2 weeks ago

    The CLO market picked up considerably last week after a slight lull the prior two weeks. Twelve deals priced last week, up from seven last week and six the week before. It was the best total since the week of April 8th when 13 deals priced. Of the seven pricings, six came from the US and one from Europe. 

    The six US pricings was up from three the prior week. The one European pricing was down from three the prior week. All 12 pricings, surprisingly, came from the US as the European market was shut out. Of those 12 deals, nine were new deals, two were refi's and one was a re-issue.

    The best AAA execution for new US deals once again came in at L+133. That was the same as the best execution the prior six weeks. That L+133 spreads was achieved by three separate issues. The range on AAA execution for the new deals last week ranged from L+133 to L+149 which compares to L+133 to L+148 for the prior week. As we noted last week, spreads over the last two months has been remarkably consistent.


    The pricing data above is from Creditflux.

    Last week we noted (citing Bloomberg), that the leveraged loan market was lagging other fixed income asset classes in rebounding from December's sell off. Reuters, however, indicates the rebound seen a full recovery at this point. In a piece indicating that Regions Bank was growing its loan trading team, Reuters notes that after falling 4% in Q4 2018, the prices of the top 100 most widely held loans (represented by the LCP 100) have risen by 4.1% so far in 2019.

    Meanwhile, The Wall Street Journal wrote recently that the Federal Reserve singled out leverage loan market (again) as "a top vulnerability" to the financial markets. This is the second time over the last six months that the Fed has indicated its concerns for the space. Separately, Forbes put out a brief piece noting that the SEC has informed Senator Elizabeth Warren that it is "monitoring the CLO markets."


    The information provided is based on information generally available to the public from sources believed to be reliable.

  • Trepp Forecast of CRE Spreads and Yields: Regional Leaders and Laggards 2 weeks ago

    While some high-profile economists have questioned the relevance of the yield curve as a predictor of economic downturns in a post-quantitative easing world, other major indicators have posted similar troubling results. In order to properly assess the relationship between market volatility and the CRE industry, Trepp began publishing a monthly CRE Loan Scorecard in September 2018 which calculates average loan spreads and debt yields for newly issued loans. But we wanted to dig a little deeper and find a way to project average spreads and debt yields for loans that will be issued in the immediate future. As a result, we’ve created a CRE Loan Forecast that predicts how loans will price this year and how the CRE and CMBS markets might perform.

    Defining Loan Spread and Debt Yield

    A loan’s spread is calculated by subtracting the 10-year Treasury yield from the loan rate. The 10-year Treasury yield typically serves as an indicator of investor confidence because it has been tightly correlated with the long-term growth of the economy historically, while the loan rate is dependent on factors such as supply in the loan market, demand for newly issued loans, and the inherent riskiness of the underlying property. Wider loan spreads are indicative of a distressed loan market, while tighter spreads signal a healthier new issuance sector.

    A loan’s debt yield is calculated by taking the underlying property’s net operating income (NOI) and dividing it by the loan’s balance. In simpler terms, the debt yield is the return a lender would receive if it were to foreclose on the property on day one. A lower debt yield may signal either stronger lender confidence or greater lending activity since lenders are willing to provide more loan proceeds for a given NOI. Typically, lenders seek debt yields around 10% or more as a margin of safety on their investment, but the minimum required debt yield varies across markets and property types.

    Spread and Debt Yield Movements for CMBS 2.0/3.0 Loans

    For this analysis, we measured new CMBS issuance across the nine US Census Bureau divisions. According to the Census Bureau, the nine divisions are “intended to represent relatively homogenous areas that are subdivisions of the four census geographic regions.” Figure 1 below displays a map of the United States segmented by the nine divisions.


    Figure 3 tracks historical loan spreads for newly issued loans across the nine Census divisions. In general, average loan spreads in 2010 and early 2011 were tight as the economy rebounded from the recession. Toward the end of 2011 and into 2012, average loan spreads widened severely, which can be partially attributed to an increase in loan rates. Loan rates decreased between 2012 and 2015 as investor confidence improved, but spreads were temporarily throttled in 2016 when oil prices dropped significantly, which lowered high-yield prices and pulled CMBS spreads wider. Once oil prices rebounded in the latter part of 2016, loan spreads gradually tightened and reached post-crisis lows.


    The Pacific region had the tightest pricings with a median spread that clocked in at 187 basis points in 2018. A series of tightly priced multifamily and office loans from July and August of 2018 pulled the division’s average loan spread tighter. The East and West South Central divisions featured the widest average loan spreads in 2018.

    Movements in average debt yields across divisions were far more varied than movements in average loan spreads. Based on the variables used to calculate loan spread and debt yield, it makes sense that debt yields would be more influenced by divisions compared to loan spreads, since properties in different regions can generate higher or lower loan proceeds as a function of their net operating income. Take the Middle Atlantic, which includes large cities like New York City, as an example. Lenders are competing heavily for loans and are typically comfortable with lower debt yields because they view the area as less risky.


    Average debt yields across the nine divisions fell anywhere between 9% and 23%. In general, the trend typically sat somewhere between 10% and 12.5%. Divisions like the Pacific, East North Central, and West South Central exhibited the strongest decline in debt yields over time, while the Middle Atlantic, New England, and West North Central remained relatively constant.

    Forecasting Average Loan Spreads and Debt Yields by Division

    Using the historic movements in loan spreads and debt yields of newly issued loans, we conducted AutoRegressive Integrated Moving Average (ARIMA) forecasts to project new issuance pricing patterns over the next six months by division. Click here to download our complete projections for average spreads and debt yields for loans that will be issued over the next six months.

    The information provided is based on information generally available to the public from sources believed to be reliable.