| FREE WRITING PROSPECTUS | ||
| FILED PURSUANT TO RULE 433 | ||
| REGISTRATION FILE NO.: 333-226486-21 | ||
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Free Writing Prospectus
Structural and Collateral Term Sheet
$748,633,043
(Approximate Initial Pool Balance)
Wells Fargo Commercial Mortgage Trust 2021-C60
as Issuing Entity
Wells Fargo Commercial Mortgage Securities, Inc.
as Depositor
LMF Commercial, LLC
Wells Fargo Bank, National Association
Column Financial, Inc.
UBS AG
BSPRT CMBS Finance, LLC
Ladder Capital Finance LLC
as Sponsors and Mortgage Loan Sellers
Commercial
Mortgage Pass-Through Certificates
Series 2021-C60
July 8, 2021
WELLS FARGO SECURITIES
Co-Lead Manager and Joint Bookrunner |
CREDIT SUISSE
Co-Lead Manager and Joint Bookrunner |
UBS SECURITIES LLC
Co-Lead Manager and Joint Bookrunner |
Academy Securities Co-Manager |
Drexel Hamilton Co-Manager |
Siebert Williams Shank Co-Manager |
STATEMENT REGARDING THIS FREE WRITING PROSPECTUS
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-226486) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus after filing if you request it by calling toll free 1-800-745-2063 (8 a.m. – 5 p.m. EST) or by emailing wfs.cmbs@wellsfargo.com.
Nothing in this document constitutes an offer of securities for sale in any jurisdiction where the offer or sale is not permitted. The information contained herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities. These materials are subject to change, completion, supplement or amendment from time to time.
This free writing prospectus has been prepared by the underwriters for information purposes only and does not constitute, in whole or in part, a prospectus for the purposes of (i) Regulation (EU) 2017/1129 (as amended), (ii) such Regulation as it forms part of UK domestic law, or (iii) Part VI of the UK Financial Services and Markets Act 2000, as amended; and does not constitute an offering document for any other purpose.
STATEMENT REGARDING ASSUMPTIONS AS TO SECURITIES, PRICING ESTIMATES AND OTHER INFORMATION
The attached information contains certain tables and other statistical analyses (the “Computational Materials”) which have been prepared in reliance upon information furnished by the Mortgage Loan Sellers. Numerous assumptions were used in preparing the Computational Materials, which may or may not be reflected herein. As such, no assurance can be given as to the Computational Materials’ accuracy, appropriateness or completeness in any particular context; or as to whether the Computational Materials and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Computational Materials should not be construed as either projections or predictions or as legal, tax, financial or accounting advice. You should consult your own counsel, accountant and other advisors as to the legal, tax, business, financial and related aspects of a purchase of these securities. Any weighted average lives, yields and principal payment periods shown in the Computational Materials are based on prepayment and/or loss assumptions, and changes in such prepayment and/or loss assumptions may dramatically affect such weighted average lives, yields and principal payment periods. In addition, it is possible that prepayments or losses on the underlying assets will occur at rates higher or lower than the rates shown in the attached Computational Materials. The specific characteristics of the securities may differ from those shown in the Computational Materials due to differences between the final underlying assets and the preliminary underlying assets used in preparing the Computational Materials. The principal amount and designation of any security described in the Computational Materials are subject to change prior to issuance. None of Wells Fargo Securities, LLC, Credit Suisse Securities (USA) LLC, UBS Securities LLC, Academy Securities, Inc., Drexel Hamilton, LLC, Siebert Williams Shank & Co., LLC or any of their respective affiliates, make any representation or warranty as to the actual rate or timing of payments or losses on any of the underlying assets or the payments or yield on the securities. The information in this presentation is based upon management forecasts and reflects prevailing conditions and management’s views as of this date, all of which are subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Mortgage Loan Sellers or which was otherwise reviewed by us.
This free writing prospectus contains certain forward-looking statements. If and when included in this free writing prospectus, the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions and all statements that are not historical facts, including statements about our beliefs or expectations, are intended to identify forward-looking statements. Any forward-looking statements are made subject to risks and uncertainties which could cause actual results to differ materially from those stated. Those risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering. The forward-looking statements made in this free writing prospectus are made as of the date stated on the cover. We have no obligation to update or revise any forward-looking statement.
Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.
IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES
The information herein is preliminary and may be supplemented or amended prior to the time of sale. In addition, the Offered Certificates referred to in these materials and the asset pool backing them are subject to modification or revision (including the possibility that one or more classes of certificates may be split, combined or eliminated at any time prior to issuance or availability of a final prospectus) and are offered on a “when, as and if issued” basis.
The underwriters described in these materials may from time to time perform investment banking services for, or solicit investment banking business from, any company named in these materials. The underwriters and/or their affiliates or respective employees may from time to time have a long or short position in any security or contract discussed in these materials.
The information contained herein supersedes any previous such information delivered to any prospective investor and will be superseded by information delivered to such prospective investor prior to the time of sale.
IMPORTANT NOTICE RELATING TO AUTOMATICALLY-GENERATED EMAIL DISCLAIMERS
Any legends, disclaimers or other notices that may appear at the bottom of any email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) any representation that these materials are accurate or complete and may not be updated or (3) these materials possibly being confidential, are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
2
| Wells Fargo Commercial Mortgage Trust 2021-C60 | Transaction Highlights |
I. Transaction Highlights
Mortgage Loan Sellers:
| Mortgage Loan Seller | Number
of Mortgage Loans | Number
of Mortgaged Properties | Aggregate Cut-off Date Balance | %
of Initial Pool Balance | ||||||||
| LMF Commercial, LLC | 24 | 27 | $226,356,953 | 30.2 | % | |||||||
| Wells Fargo Bank, National Association | 10 | 23 | 181,540,000 | 24.2 | ||||||||
| Column Financial, Inc. | 4 | 4 | 102,741,723 | 13.7 | ||||||||
| UBS AG | 6 | 26 | 89,110,000 | 11.9 | ||||||||
| BSPRT CMBS Finance, LLC | 10 | 10 | 75,807,589 | 10.1 | ||||||||
| Ladder Capital Finance LLC | 7 | 17 | 73,076,778 | 9.8 | ||||||||
Total | 61 | 107 | $748,633,043 | 100.0 | % | |||||||
Loan Pool:
| Initial Pool Balance: | $748,633,043 |
| Number of Mortgage Loans: | 61 |
| Average Cut-off Date Balance per Mortgage Loan: | $12,272,673 |
| Number of Mortgaged Properties: | 107 |
| Average Cut-off Date Balance per Mortgaged Property(1): | $6,996,570 |
| Weighted Average Mortgage Interest Rate: | 3.766% |
| Ten Largest Mortgage Loans as % of Initial Pool Balance: | 46.5% |
| Weighted Average Original Term to Maturity or ARD (months): | 116 |
| Weighted Average Remaining Term to Maturity or ARD (months): | 114 |
| Weighted Average Original Amortization Term (months)(2): | 357 |
| Weighted Average Remaining Amortization Term (months)(2): | 356 |
| Weighted Average Seasoning (months): | 2 |
| (1) | Information regarding mortgage loans secured by multiple properties is based on an allocation according to relative appraised values or the allocated loan amounts or property-specific release prices set forth in the related loan documents or such other allocation as the related mortgage loan seller deemed appropriate. |
| (2) | Excludes any mortgage loan that does not amortize. |
Credit Statistics:
| Weighted Average U/W Net Cash Flow DSCR(1)(2): | 2.32x |
| Weighted Average U/W Net Operating Income Debt Yield(1)(2): | 10.0% |
| Weighted Average Cut-off Date Loan-to-Value Ratio(1)(2): | 59.1% |
| Weighted Average Balloon or ARD Loan-to-Value Ratio(1)(2): | 55.3% |
| % of Mortgage Loans with Additional Subordinate Debt(3): | 9.4% |
| % of Mortgage Loans with Single Tenants(4): | 9.4% |
| (1) | With respect to any mortgage loan that is part of a whole loan, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). The debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property), that currently exists or is allowed under the terms of any mortgage loan. The information for each mortgaged property that relates to a mortgage loan that is cross-collateralized or cross-defaulted with one or more other mortgage loans is based upon the principal balance of that mortgage loan, except that the applicable loan-to-value ratio, debt service coverage ratio, and debt yield for each such mortgage loan is based upon the ratio or yield (as applicable) for the aggregate indebtedness evidenced by all loans in the group (without regard to any limitation on the amount of indebtedness secured by any mortgaged property in such cross-collateralized group). See “Description of the Mortgage Pool—Mortgage Pool Characteristics” in the Preliminary Prospectus and Annex A-1 to the Preliminary Prospectus. |
| (2) | For certain of the mortgage loans, underwritten net cash flow, underwritten net operating income and appraised values of the related mortgaged properties were determined, or were calculated based on information as of a date, prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and the loan-to-value, debt service coverage and debt yield metrics presented in this term sheet may not reflect current market conditions. |
| (3) | The percentage figure expressed as “% of Mortgage Loans with Additional Subordinate Debt” is determined as a percentage of the initial pool balance and does not take into account any future subordinate debt (whether or not secured by the mortgaged property), if any, that may be permitted under the terms of any mortgage loan or the pooling and servicing agreement. See “Description of the Mortgage Pool—Additional Indebtedness” in the Preliminary Prospectus. |
| (4) | Excludes mortgage loans that are secured by multiple single tenant properties. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2021-C60 | Transaction Highlights |
II. COVID-19 Update
The following table contains information regarding the status of the mortgage loans and mortgaged properties provided by the respective borrowers as of the date set forth in the “Information As Of Date” column. The information from the borrowers has not been independently verified by the Mortgage Loan Sellers, the Underwriters or any other party, and there can be no assurance that the status of the Mortgage Loans and of the related Mortgaged Properties has not changed since the date in the “Information As-Of Date” column. The cumulative effects of the COVID-19 emergency on the global economy may cause tenants to be unable to pay their rent and borrowers to be unable to pay debt service under the mortgage loans. As a result, we cannot assure you that the information in the following table is indicative of future performance or that tenants or borrowers will not seek rent or debt service relief (including forbearance arrangements) or other lease or loan modifications in the future. Such actions may lead to shortfalls and losses on the certificates. Any information in the following table will be superseded by the information contained under the heading “Description of the Mortgage Pool—COVID-19 Considerations” in the Preliminary Prospectus.
Mortgage Loan Seller |
Information As Of Date |
Origination Date |
Mortgaged Property Name |
Mortgaged Property Type |
April Debt Service Payment Received (Y/N) |
May Debt Service Payment Received (Y/N) |
June Debt Service Payment Received (Y/N) |
Forbearance or Other Debt Service Relief Requested (Y/N) |
Other Loan Modification Requested (Y/N) |
Lease Modification or Rent Relief Requested (Y/N) |
Total SF or Unit Count Making Full May Rent Payment (%) |
UW May Base Rent Paid (%) |
Total SF or Unit Count Making Full June Rent Payment (%) |
UW June Base Rent Paid (%) |
| WFB | 6/29/2021 | 6/28/2021 | Velocity Industrial Portfolio | Industrial | NAP(4) | NAP(4) | NAP(4) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| Column | 6/24/2021 | 11/17/2020 | The Grace Building(1) | Office | Y | Y | Y | N | N | Y | 97.0% | 97.0% | 95.5% | 94.0% |
| LMF | 6/30/2021 | 5/6/2021 | Malibu Colony Plaza | Retail | NAP(2) | NAP(2) | Y | N | N | Y(3) | 93.9%(3) | 83.0%(3) | 93.9%(3) | 97.5%(2) |
| UBS AG | 6/25/2021 | 6/30/2021 | Mason Multifamily Portfolio | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | 94.8% | 92.2% | 95.6% | 94.7% |
| WFB | 6/22/2021 | 6/11/2021 | Gramercy Plaza | Office | NAP(5) | NAP(5) | NAP(5) | N | N | Y(6) | 100.0% | 100.0% | 100.0% | 100.0% |
| Column | 6/21/2021 | 11/24/2020 | Bell Towne Centre(7) | Retail | Y | Y | Y | N | N | N | 98.2% | 98.3% | 98.2% | 98.3% |
| UBS AG | 6/24/2021 | 5/13/2021 | Rollins Portfolio | Various | NAP(5) | NAP(5) | NAP(5) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/30/2021 | 6/3/2021 | 1010 Building and Heinen’s Rotunda Building | Mixed Use | NAP(4) | NAP(4) | NAP(4) | N | N | N | 98.9% | 99.7% | 93.3% | 96.9% |
| LCF | 7/2/2021 | 6/30/2021 | 2302 Webster | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | NAV | NAV | 100% | 100% |
| LMF | 6/14/2021 | 6/25/2021 | The Wyatt at Northern Lights | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | 100.0% | 100.0% | 96.7% | 98.6% |
| LCF | 6/30/2021 | 7/1/2021 | Trader Joe’s LIC | Retail | NAP(4) | NAP(4) | NAP(4) | N | N | N | 100% | 100% | 100% | 100% |
| Column | 6/21/2021 | 1/21/2021 | The Westchester(8) | Retail | Y | Y | Y | N | N | Y | NAV | NAV | NAV | NAV |
| WFB | 6/28/2021 | 6/17/2021 | Metro Crossing | Retail | NAP(4) | NAP(4) | NAP(4) | N | N | Y(12) | 100.0% | 100.0% | 100.0% | 100.0% |
| WFB | 6/28/2021 | 6/4/2021 | ExchangeRight 47 | Various | NAP(5) | NAP(5) | NAP(5) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| BSPRT | 7/2/2021 | 4/5/2021 | Seacrest Homes | Multifamily | NAP(24) | Y | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/22/2021 | 6/18/2021 | Ranch Self Storage | Self Storage | NAP(4) | NAP(4) | NAP(4) | N | N | N | (9) | (9) | (9) | (9) |
| UBS AG | 6/25/2021 | 6/25/2021 | Elmwood Distribution Center | Industrial | NAP(4) | NAP(4) | NAP(4) | N | N | Y(10) | 97.0% | 99.1% | 98.8% | 99.8% |
| BSPRT | 7/2/2021 | 3/24/2021 | Herndon Square | Office | NAP(24) | Y | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| WFB | 6/18/2021 | 6/29/2021 | The Plaza at Williams Centre | Retail | NAP(4) | NAP(4) | NAP(4) | N | N | Y(11) | 100.0% | 102.3% | 100.0% | 102.3% |
| BSPRT | 7/2/2021 | 6/30/2021 | Lafayette Arms Apartments | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | 94.0% | NAV | 85.0% | NAV |
| LMF | 6/22/2021 | 6/25/2021 | 231 Hudson Leased Fee | Other | NAP(4) | NAP(4) | NAP(4) | N | N | Y(26) | 100.0% | 100.0% | 100.0% | 100.0% |
| LCF | 7/2/2021 | 7/2/2021 | The Woodlands of Charlottesville | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | NAV | NAV | 98.6% | 98.6% |
| LMF | 6/21/2021 | 5/26/2021 | 884 Riverside Drive | Multifamily | NAP(5) | NAP(5) | NAP(5) | N | N | N | 100.0% | 100.0% | 84.7% | 92.9% |
| WFB | 6/24/2021 | 5/10/2021 | Securlock HAC Self-Storage Portfolio | Self Storage | NAP(2) | NAP(2) | Y | N | N | N | N/A | 98.7% | N/A | 98.7% |
| LMF | 6/30/2021 | 2/20/2020 | TownePlace Suites - La Place | Hospitality | Y | Y | Y | Y(13) | N | N | (14) | (14) | (14) | (14) |
| WFB | 6/28/2021 | 6/7/2021 | Envy Self Storage and RV | Self Storage | NAP(5) | NAP(5) | NAP(5) | N | N | N | N/A | 99.9% | N/A | N/A |
| LMF | 6/24/2021 | 5/25/2021 | Interstate Self Storage | Self Storage | NAP(5) | NAP(5) | NAP(5) | N | N | N | (12) | (12) | (12) | (12) |
| LCF | 7/2/2021 | 3/11/2020 | 122nd Street Portfolio | Multifamily | Y | Y | Y | N | N | N | 100% | 100% | 91.7% | 91.7% |
| LMF | 6/25/2021 | 6/17/2021 | Heights Marketplace | Retail | NAP(4) | NAP(4) | NAP(4) | N | N | Y(15) | 100.0% | 100.0% | 100.0% | 100.0% |
| WFB | 6/13/2021 | 6/29/2021 | TownePlace Suites The Villages | Hospitality | NAP(4) | NAP(4) | NAP(4) | N | N | N | (23) | (23) | (23) | (23) |
| UBS AG | 6/25/2021 | 6/15/2021 | Garver Little Rock | Office | NAP(4) | NAP(4) | NAP(4) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| BSPRT | 7/2/2021 | 5/7/2021 | Home2Suites Hilton Head | Hospitality | NAP(5) | NAP(5) | NAP(5) | N | N | N | (25) | (25) | (25) | (25) |
| LMF | 6/28/2021 | 6/18/2021 | Lowy Bronx Multifamily Portfolio | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | 93.2% | 93.2% | 86.4% | 85.3% |
| LMF | 6/21/2021 | 3/5/2021 | Arizona Pavilions | Retail | Y | Y | Y | N | N | Y(16) | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/30/2021 | 6/24/2021 | Boonton Industrial | Industrial | NAP(4) | NAP(4) | NAP(4) | N | N | N | (17) | (17) | (17) | (17) |
| Column | 6/23/2021 | 5/19/2021 | Leisure Living | Manufactured Housing | NAP(5) | NAP(5) | NAP(5) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| BSPRT | 7/2/2021 | 5/18/2021 | Walmart Deland | Other | NAP(5) | NAP(5) | NAP(5) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/30/2021 | 5/14/2021 | Bronxwood Mixed Use | Mixed Use | NAP(5) | NAP(5) | NAP(5) | N | N | Y(18) | 80.5% | 83.7% | 74.8% | 76.3% |
| LMF | 6/23/2021 | 4/22/2021 | Lost River Self Storage | Self Storage | NAP(2) | NAP(2) | Y | N | N | N | (19) | (19) | (19) | (19) |
| LMF | 6/18/2021 | 4/28/2021 | Clara Point Apartments | Multifamily | NAP(2) | NAP(2) | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LCF | 6/30/2021 | 4/22/2021 | Belamere Suites II | Hospitality | NAP(2) | NAP(2) | Y | N | N | N | 100% | 100% | 100% | 100% |
| WFB | 7/2/2021 | 6/1/2021 | AC Self Storage - Missouri City | Self Storage | NAP(5) | NAP(5) | NAP(5) | N | N | N | 99.6% | 99.4% | 99.1% | 98.6% |
| WFB | 7/2/2021 | 5/27/2021 | AC Self Storage – Arlington, TX | Self Storage | NAP(5) | NAP(5) | NAP(5) | N | N | N | 99.3% | 99.4% | 99.2% | 99.2% |
| BSPRT | 7/2/2021 | 3/31/2021 | Walgreens – Newport News, VA | Retail | NAP(24) | Y | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| BSPRT | 7/2/2021 | 5/24/2021 | Walgreens San Tan Valley | Retail | NAP(5) | NAP(5) | NAP(5) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/30/2021 | 4/19/2021 | Amidon Place Apartments | Multifamily | NAP(2) | NAP(2) | Y | N | N | N | 98.2% | 96.3% | 92.9% | 91.1% |
| LMF | 6/30/2021 | 4/29/2021 | Estrella Crossroads | Retail | NAP(2) | NAP(2) | Y | N | N | Y(20) | (27) | (27) | (27) | (27) |
| LCF | 6/30/2021 | 12/12/2019 | Federales Chicago | Retail | Y | Y | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/24/2021 | 5/3/2021 | Shops at Valle Vista | Retail | NAP(2) | NAP(2) | Y | N | N | Y(21) | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/9/2021 | 6/25/2021 | Villas at the Woodlands | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | 98.4% | 99.4% | 90.5% | 89.8% |
| UBS AG | 6/25/2021 | 6/30/2021 | Turtle Creek Apartments | Multifamily | NAP(4) | NAP(4) | NAP(4) | N | N | N | 92.8% | 94.6% | 91.2% | 93.1% |
| BSPRT | 7/2/2021 | 5/3/2021 | FleetPride Industrial | Industrial | NAP(2) | NAP(2) | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/30/2021 | 5/4/2021 | Walgreens Cambridge | Retail | NAP(2) | NAP(2) | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| BSPRT | 7/2/2021 | 5/7/2021 | Parq on 8th Apartments | Multifamily | NAP(5) | NAP(5) | NAP(5) | N | N | N | 95.1% | 95.1% | 95.1% | 95.1% |
| LMF | 6/24/2021 | 4/14/2021 | Lord Duplin Apartments | Multifamily | NAP(2) | NAP(2) | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
4
| Wells Fargo Commercial Mortgage Trust 2021-C60 | Transaction Highlights |
Mortgage Loan Seller |
Information As Of Date |
Origination Date |
Mortgaged Property Name |
Mortgaged Property Type |
April Debt Service Payment Received (Y/N) |
May Debt Service Payment Received (Y/N) |
June Debt Service Payment Received (Y/N) |
Forbearance or Other Debt Service Relief Requested (Y/N) |
Other Loan Modification Requested (Y/N) |
Lease Modification or Rent Relief Requested (Y/N) |
Total SF or Unit Count Making Full May Rent Payment (%) |
UW May Base Rent Paid (%) |
Total SF or Unit Count Making Full June Rent Payment (%) |
UW June Base Rent Paid (%) |
| LMF | 6/15/2021 | 6/15/2021 | Oak Hill & City Walk MHC Portfolio | Manufactured Housing | NAP(4) | NAP(4) | NAP(4) | N | N | N | 96.3% | 97.7% | 78.5%(22) | 83.4%(22) |
| LMF | 6/24/2021 | 6/7/2021 | 4070 Butler Pike Office | Office | NAP(5) | NAP(5) | NAP(5) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| BSPRT | 7/2/2021 | 5/6/2021 | 7-Eleven Tampa | Retail | NAP(2) | NAP(2) | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 6/30/2021 | 5/11/2021 | CVS Mars Hill | Retail | NAP(2) | NAP(2) | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| UBS AG | 6/25/2021 | 6/25/2021 | 5800 Brookhollow | Industrial | NAP(4) | NAP(4) | NAP(4) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LCF | 6/30/2021 | 6/29/2021 | Dollar General-Siginaw (E. Washington Road) | Retail | NAP(4) | NAP(4) | NAP(4) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| (1) | With respect to The Grace Building Mortgage Loan, four (4) retail tenants, representing 1.8% of net rentable area and 2.5% of underwritten base rent, have not made rent payments for the past several months. The borrower sponsor is in the process of negotiating rent deferrals with full rental payments anticipated to commence in late 2021 or early 2022. The parking tenant has not paid the required monthly rental payments since March 2020 and an event of default is continuing under the lease. The borrower sponsor is in the process of replacing the current operator and plans to employ a new operator under a management agreement. The borrower deposited $1,608,940 with the lender at origination for anticipated parking rent shortfalls. |
| (2) | The related Mortgage Loans have their first due date in June 2021. |
| (3) | With respect to the Malibu Colony Plaza Mortgaged Property, seven tenants totaling 14,830 square feet (13.0% of net rentable area and 32.6% of underwritten base rent) received rent deferral. The guarantors of the Malibu Colony Plaza Mortgage Loan signed master leases for a term of 10 years for each of these seven spaces, agreeing to pay any shortfalls for rent not paid by any of these tenants for the term of the Malibu Colony Plaza Mortgage Loan. |
| (4) | The related Mortgage Loans have their first due date in August 2021. |
| (5) | The related Mortgage Loans have their first due date in July 2021. |
| (6) | With respect to the Gramercy Plaza Mortgage Loan, one (1) tenant, representing 0.8% of net rentable area and 0.8% of underwritten base rent, received a three month rent deferral. |
| (7) | With respect to the Bell Towne Centre Mortgage Loan, the borrower sponsor had granted various rent relief/rent deferrals to select tenants in relation to spring and early summer payments due. All tenants are current on rent with the exception of Sylvan Learning (1.6% of net rentable area). |
| (8) | With respect to The Westchester Mortgage Loan, as of December 1, 2020 all stores have reopened including the Nordstrom and Neiman Marcus anchors. The borrower sponsor had granted various rent relief/rent deferrals to select tenants in relation to spring and early summer payments due. Short term rent relief was given to several tenants in exchange for waiving co-tenancy provisions in their lease through December 2021. Rent deferrals are expected to be paid back in equal monthly installments starting in 2021, with a few tenants electing to make one lump sum payment. The Westchester Mortgaged Property is 92.2% as of May 11, 2021 occupied. The sponsor collected 84% to 86% of tenant rents monthly from October 2020 through January 2021 and since their portfolio has returned to pre-COVID property collections they are no longer tracking monthly collections. |
| (9) | With respect to the Ranch Self Storage Mortgage Loan, as of June 22, 2021, 0.8% of underwritten base rents were 31-60 days overdue, 0.1% of underwritten base rents were 61-90 days overdue and 0.1% of underwritten base rents were 91-120 days overdue. |
| (10) | With respect to the Elmwood Distribution Center Mortgage Loan, according to the borrower sponsor, six (6) tenants, representing 8.1% of net rentable area and 10.8% of underwritten base rent, were granted rent deferrals, including Tiffany & Co Dance Studio, The Leather Factory LP, Triumph Fitness LLC, V Solar Nails, Pioneer Wine & Spirits of LA and Coleman American Moving Srvcs. Tiffany & Co received three months of rent deferral for the months of May, June and July 2020, with the six-month rent payback period beginning October 2020. The Leather Factory received three months of rent deferral for the months of April, May and June 2020, with the six-month rent payback period beginning October 2020. Triumph received two months of rent deferral for the months of May and June 2020, with the six-month rent payback period beginning December 2020. V Solar Nails (no longer in occupancy) received three months of rent deferral for the months of April, May and June 2020, with the nine-month rent payback period beginning October 2020. LA Spirit Cheer received three months of rent deferral for the months of April, May and June 2020, with the nine-month rent payback period beginning October 2020. Coleman Moving received three months of rent deferral for the months of April, May and June 2020, with the nine-month rent payback period beginning October 2020. The Sponsor confirmed that the six (6) tenants who received rent deferrals are all current on their respective payback schedules. Tiffany & Co has already paid back all deferred rent ahead of their expected rent payback schedule (paid back by November 2020). |
| (11) | With respect to The Plaza at Williams Centre Mortgage Loan, 11 tenants, representing 25.1% of net rentable area and 29.4% of underwritten base rent, received rent deferral or modification. |
| (12) | With respect to the Metro Crossing Mortgage Loan, 18 tenants, representing 33.3% of net rentable area and 39.9% of underwritten base rent requested and received rent relief. |
| (13) | With respect to the TownePlace Suites - La Place Mortgaged Property, the borrower received forbearance which deferred interest payments for six months from April through October 2020 (the total amount deferred was $209,300). The borrower is required to pay $209,300 in monthly installments of $16,852.22, starting January 2021. The borrower is current on its repayments. |
| (14) | With respect to the TownePlace Suites - La Place Mortgaged Property, for the trailing 12 months as of May 31, 2021, occupancy, ADR and RevPAR information was 54.9%, $100.42 and $55.11, respectively. |
| (15) | With respect to the Heights Marketplace Mortgaged Property, six (6) tenants deferred rent. Lovett Dental (approximately 14.7% of the net rentable area) deferred base rent for April 2020, which was repaid in full from September to December 2020. Citrus Nail Spa (approximately 12.7% of net rentable area) deferred base rent for May 2020, which was repaid in full from June to August 2020. Smashburger (approximately 12.1% of the net rentable area) deferred rent from April through June 2020, extended its lease for an additional three years and agreed to pay an additional $775.25 per month for the remainder of its lease term. Jimmy John’s (approximately 7.3% of the net rentable area) deferred rent for April and May 2020, which was repaid in full by February 2021. The Joint (approximately 5.2% of the net rentable area) deferred rent for April 2020, which was repaid in May 2020. Aqua Cleaners (approximately 4.5% of the net rentable area) deferred full rent in April and May 2020 and partial rent in June, July and December 2020 and January 2021, which deferred rent was repaid in full by May 2021. |
| (16) | With respect to the Arizona Pavilions Mortgaged Property, two (2) tenants deferred rent. Mattress Firm (approximately 16.4% of the net rentable area) was late on approximately three months of rent in 2020, however all amounts due were repaid in 2020 and Mattress Firm executed its second renewal option in December 2020. Sport Clips (approximately 4.5% of the net rentable area) deferred 50% of its rent from June through December 2020, repayment of which was included in an executed lease extension. |
| (17) | With respect to the Boonton Industrial Mortgaged Loan, the lease between the Boonton Industrial borrower and J. Supor Realty LLC commenced on June 24, 2021. |
| (18) | With respect to the Bronxwood Mixed Use Mortgaged Property, Michael Angelo Studio (approximately 12.0% of the net rentable area) is delinquent on approximately one year of rent. The tenant recently extended its lease for five years to 2026. One year of rent totaling $35,400 was reserved at loan origination, which will be released to the borrower when Michael Angelo Studio pays 12 consecutive months of full unabated rent. |
| (19) | With respect to the Lost River Self Storage Mortgaged Loan, as of June 23, 2021, 3.3% of underwritten base rents were 31-60 days overdue, 0.8% of underwritten base rents were 61-90 days overdue and 0.7% of underwritten base rents were 91-120 days overdue. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
5
| Wells Fargo Commercial Mortgage Trust 2021-C60 | Transaction Highlights |
| (20) | With respect to the Estrella Crossroads Mortgaged Property, three (3) leases were amended in 2020. Pretty Nails & Spa (approximately 9.6% of the net rentable area) received free rent in April, May and June 2020. The borrower waived payment of the April, May and June 2020 rent upon tenant’s execution of a lease modification that extended its lease for five years. Sammy’s Burgers (approximately 7.9% of the net rentable area) received free rent in July 2020. The borrower waived payment of the July 2020 rent upon tenant’s execution of a lease modification that extended its lease for five years]. Subway (approximately 5.7% of the net rentable area) received a rent abatement of base rent in April and May 2020. The borrower waived payment of the April and May 2020 rent upon tenant’s execution of a lease modification that extended its lease for four months. |
| (21) | With respect to the Shops at Valle Vista Mortgaged Property, three (3) tenants deferred rent. Freddy’s Frozen Custard (approximately 23.1% of the net rentable area) deferred 50% of rent for May, June and July 2020, which is required to be repaid in monthly installments of $1,186.72 from January 2021 through December 2021. Visionworks (approximately 20.4% of the net rentable area) deferred base rent in May and June 2020, which is required to be repaid in monthly installments of $158.13 from July 2020 through November 2028. All-Star Nutrition (approximately 9.1% of the net rentable area) deferred rent in May 2020 . The borrower waived payment of the May 2020 rent upon tenant’s execution of a lease modification extending the lease term for one additional month. |
| (22) | With respect to the Oak Hill & City Walk MHC Portfolio, the borrower acquired the properties on June 15, 2021 and is in the process of transitioning to a new payment system. As such, the reported numbers are as-of June 15, 2021 and do not include a full month of collections. |
| (23) | With respect to the TownePlace Suites The Villages mortgage loan, the May 2021 occupancy, ADR and RevPAR information was 79.7%, $100.76 and $80.28. Occupancy, ADR and RevPAR information is due to the lender 30 days after month’s end; therefore, June 2021 information is not yet available. |
| (24) | The related Mortgage Loans have their first due date in May 2021. |
| (25) | With respect to the Home2Suites Hilton Head Mortgage Loan, the May 2021 occupancy, ADR and RevPAR information was 66.1%, $162.11 and $107.17. Occupancy, ADR and RevPAR information for June 2021 is not yet available. |
| (26) | With respect to the 231 Hudson Leased Fee Mortgaged Property, the borrower and the tenant entered into a lease modification agreement dated April 8, 2020, pursuant to which rents were deferred by $25,000 per month for April 2020 and May 2020. Deferred rent totaling $50,000 has been paid back in full in monthly installments of $4,166.66, in addition to base rent, from June 2020 through May 2021. |
| (27) | With respect to the Estrella Crossroads Mortgage Loan, the sponsor acquired the Mortgaged Property in April 2021. Five tenants (representing 35.0% of the net rentable area and 41.5% of underwritten base rent) have made rent payments due in May and June 2021. Three tenants (Walgreens, Firestone and JP Morgan Chase, collectively representing 65.0% of net rentable area and 58.5% of underwritten base rent) encountered administrative delays in redirecting their rental payments to the sponsor (as new landlord) following the sponsor’s acquisition of the property. The lender has reviewed correspondence between the sponsor and the three respective tenants and all outstanding rental payments are anticipated to be fully paid in July 2021. The borrower is fully current on principal and interest payments due under the mortgage loan. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
6
| Wells Fargo Commercial Mortgage Trust 2021-C60 | Characteristics of the Mortgage Pool |
III. Summary of the Whole Loans
| No. | Loan Name | Mortgage Loan Seller in WFCM 2020-C58 |
Trust Cut-off Date Balance | Aggregate Pari Passu Companion Loan Cut-off Date Balance(1) | Controlling Pooling/Trust & Servicing Agreement | Master Servicer | Special Servicer | Related Pari Passu Companion Loan(s) Securitizations | Related Pari Passu Companion Loan(s) Original Balance |
| 1 | Velocity Industrial Portfolio | WFB | $65,000,000 | $75,000,000
|
WFCM 2021-C60 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank National Association | Future Securitization(s) | $10,000,000 |
| 2 | The Grace Building | Column | $50,000,000 | $883,000,000 | GRACE 2020-GRCE | Wells Fargo Bank, National Association | Situs Holdings, LLC | GRACE 2020-GRCE | $383,000,000 |
| BANK 2020-BNK29 | $75,000,000 | ||||||||
| BANK 2020-BNK30 | $60,000,000 | ||||||||
| BMARK 2020-B21 | $100,000,000 | ||||||||
| BMARK 2020-B22 | $80,000,000 | ||||||||
| BMARK 2020-B23 | $60,000,000 | ||||||||
| CSAIL 2021-C20 | $60,000,000 | ||||||||
| BANK 2021-BNK33 | $15,000,000 | ||||||||
| 7 | Rollins Portfolio | UBS AG | $24,400,000 | $39,400,000 | WFCM 2021-C60 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank National Association | Future Securitization(s) | $15,000,000 |
| 12 | The Westchester | Column | $20,000,000 | $343,000,000 | CSCM 2020-WEST | Midland Loan Services, a Division of PNC Bank National Association | Pacific Life Insurance Company | CSCM 2020-WEST | $193,000,000 |
| CSAIL 2020-C19 | $50,000,000 | ||||||||
| CSAIL 2021-C20 | $35,000,000 | ||||||||
| Future Securitization(s) | $45,000,000 | ||||||||
| 13 | Metro Crossing | WFB | $20,000,000 | $34,450,000 | WFCM 2021-C60 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank National Association | Future Securitization(s) | $14,450,000 |
| 15 | Seacrest Homes | BSPRT | $18,000,000 | $48,000,000 | WFCM 2021-C59 | Wells Fargo Bank, National Association | Argentic Services Company LP | WFCM 2021-C59 | $30,000,000 |
| 18 | Herndon Square | BSPRT | $14,936,855 | $30,371,606 | WFCM 2021-C59 | Wells Fargo Bank, National Association | Argentic Services Company LP | WFCM 2021-C59 | $15,434,751 |
| 28 | 122nd Street Portfolio | LCF | $8,000,000 | $23,000,000 | WFCM 2020-C57 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank National Association | WFCM 2020-C57 | $15,000,000 |
| (1) | The Aggregate Pari Passu Companion Loan Cut-off Date Balance excludes any related Subordinate Companion Loans. |
| (2) | The related whole loan is expected to initially be serviced under the BMARK 2020-B21 securitization pooling and servicing agreement until the securitization of the related “lead” pari passu note, after which the related whole loan will be serviced under the pooling and servicing agreement governing such securitization of the related “lead” pari passu note. The master servicer and special servicer for such securitization will be identified in a notice, report or statement to holders of the WFCM 2020-C58 certificates after the closing of such securitization. Control rights with respect to the related whole loan will be exercised by the holder of the “lead” pari passu note. |
| (3) | Control rights are currently exercised by the holder of the related Subordinate Companion Loan until the occurrence and during the continuation of a control appraisal period for the related whole loan, as described under “Description of the Mortgage Pool--The Whole Loans--The Non-Serviced A/B Whole Loans--MGM Grand & Mandalay Bay” in the Preliminary Prospectus |
| (4) | The BMARK 2020-B21 transaction is expected to close on or about November 30, 2020. |
| (5) | The BANK 2020-BNK29 transaction is expected to close on or about November 30, 2020. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
7
| Wells Fargo Commercial Mortgage Trust 2021-C60 | Characteristics of the Mortgage Pool |
IV. Property Type Distribution(1)
| Property Type | Number of Mortgaged Properties | Aggregate
Cut-off Date Balance ($) | %
of Initial Pool Balance (%) | Weighted
Average Cut-off Date LTV Ratio (%) | Weighted
Average Balloon LTV Ratio (%) | Weighted
Average U/W NCF DSCR (x) | Weighted Average U/W NOI Debt Yield (%) | Weighted Average U/W NCF Debt Yield (%) | Weighted Average Mortgage Rate (%) | ||||||||||||||||||
| Retail | 27 | $213,069,272 | 28.5 | % | 58.9 | % | 55.0 | % | 2.22 | x | 9.8 | % | 9.5 | % | 3.684 | % | |||||||||||
| Anchored | 3 | 72,600,000 | 9.7 | 54.9 | 52.8 | 2.09 | 9.4 | 9.0 | 3.640 | ||||||||||||||||||
| Unanchored | 3 | 42,300,000 | 5.7 | 66.6 | 60.2 | 1.69 | 8.7 | 8.5 | 3.806 | ||||||||||||||||||
| Single Tenant | 17 | 41,339,470 | 5.5 | 58.5 | 58.5 | 2.68 | 9.5 | 9.4 | 3.696 | ||||||||||||||||||
| Shadow Anchored | 3 | 36,829,802 | 4.9 | 61.4 | 50.5 | 1.82 | 11.1 | 10.2 | 3.853 | ||||||||||||||||||
| Super-Regional Mall | 1 | 20,000,000 | 2.7 | 53.0 | 53.0 | 3.61 | 12.3 | 11.9 | 3.250 | ||||||||||||||||||
| Multifamily | 34 | 172,065,653 | 23.0 | 65.9 | 61.7 | 1.74 | 8.6 | 8.3 | 4.035 | ||||||||||||||||||
| Garden | 16 | 94,556,653 | 12.6 | 68.3 | 62.6 | 1.69 | 9.1 | 8.7 | 4.114 | ||||||||||||||||||
| Mid Rise | 18 | 77,509,000 | 10.4 | 63.0 | 60.5 | 1.79 | 8.0 | 7.9 | 3.937 | ||||||||||||||||||
| Industrial | 20 | 116,329,705 | 15.5 | 57.6 | 56.5 | 2.89 | 10.1 | 9.6 | 3.299 | ||||||||||||||||||
| Warehouse | 3 | 71,500,000 | 9.6 | 58.7 | 57.6 | 2.63 | 9.5 | 9.1 | 3.382 | ||||||||||||||||||
| Flex | 14 | 24,400,000 | 3.3 | 65.4 | 65.4 | 2.94 | 9.6 | 9.6 | 3.210 | ||||||||||||||||||
| Warehouse Distribution | 2 | 17,000,000 | 2.3 | 40.5 | 40.5 | 4.20 | 13.4 | 12.1 | 2.850 | ||||||||||||||||||
| Warehouse / Distribution | 1 | 3,429,705 | 0.5 | 63.5 | 49.4 | 1.44 | 9.7 | 9.1 | 4.430 | ||||||||||||||||||
| Office | 6 | 103,336,103 | 13.8 | 51.7 | 49.5 | 3.53 | 11.5 | 11.1 | 3.107 | ||||||||||||||||||
| Suburban | 4 | 51,893,515 | 6.9 | 61.9 | 57.4 | 2.83 | 11.3 | 10.7 | 3.512 | ||||||||||||||||||
| CBD | 1 | 50,000,000 | 6.7 | 41.1 | 41.1 | 4.25 | 11.8 | 11.6 | 2.692 | ||||||||||||||||||
| Medical | 1 | 1,442,588 | 0.2 | 53.0 | 53.0 | 3.63 | 10.8 | 10.7 | 2.900 | ||||||||||||||||||
| Self Storage | 9 | 58,540,000 | 7.8 | 60.5 | 57.4 | 1.99 | 9.0 | 8.8 | 4.161 | ||||||||||||||||||
| Self Storage | 9 | 58,540,000 | 7.8 | 60.5 | 57.4 | 1.99 | 9.0 | 8.8 | 4.161 | ||||||||||||||||||
| Mixed Use | 2 | 30,250,000 | 4.0 | 58.6 | 49.1 | 1.39 | 8.8 | 8.6 | 4.621 | ||||||||||||||||||
| Multifamily/Retail/Office | 1 | 24,250,000 | 3.2 | 57.0 | 46.5 | 1.38 | 8.8 | 8.6 | 4.680 | ||||||||||||||||||
| Multifamily/Retail | 1 | 6,000,000 | 0.8 | 65.2 | 59.7 | 1.42 | 8.7 | 8.5 | 4.383 | ||||||||||||||||||
| Hospitality | 4 | 29,025,586 | 3.9 | 54.8 | 45.5 | 2.12 | 16.2 | 14.5 | 5.139 | ||||||||||||||||||
| Extended Stay | 3 | 23,445,866 | 3.1 | 57.8 | 49.4 | 2.07 | 14.3 | 12.8 | 4.680 | ||||||||||||||||||
| Limited Service | 1 | 5,579,720 | 0.7 | 42.3 | 29.1 | 2.32 | 24.1 | 21.8 | 7.068 | ||||||||||||||||||
| Other | 2 | 16,750,000 | 2.2 | 50.7 | 44.7 | 1.99 | 9.8 | 9.8 | 3.652 | ||||||||||||||||||
| Leased Fee | 2 | 16,750,000 | 2.2 | 50.7 | 44.7 | 1.99 | 9.8 | 9.8 | 3.652 | ||||||||||||||||||
| Manufactured Housing | 3 | 9,266,723 | 1.2 | 59.5 | 49.6 | 1.37 | 8.4 | 8.3 | 4.491 | ||||||||||||||||||
| Manufactured Housing | 3 | 9,266,723 | 1.2 | 59.5 | 49.6 | 1.37 | 8.4 | 8.3 | 4.491 | ||||||||||||||||||
| Total/Weighted Average: | 107 | $748,633,043 | 100.0 | % | 59.1 | % | 55.3 | % | 2.32 | x | 10.0 | % | 9.6 | % | 3.766 | % | |||||||||||
| (1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate). With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate secured loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
8
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
9
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
10
| No. 1 – Velocity Industrial Portfolio | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Wells Fargo Bank, National Association | Single Asset/Portfolio: | Portfolio | ||||
Credit Assessment (DBRSM/Fitch/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Industrial - Warehouse | ||||
| Original Principal Balance: | $65,000,000 | Location: | Lansdale, PA | ||||
| Cut-off Date Balance(1): | $65,000,000 | Size: | 1,130,782 SF | ||||
| % of Initial Pool Balance: | 8.7% | Cut-off Date Balance Per SF(1): | $66.33 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $66.33 | ||||
| Borrower Sponsor: | Zachary Moore; Anthony Grelli, Jr. | Year Built/Renovated: | Various/2021 | ||||
| Guarantor: | Zachary Moore; Anthony Grelli, Jr. | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.2300% | Property Manager: | Last Mile Management LLC | ||||
| Note Date: | June 28, 2021 | Current Occupancy (As of): | 89.3% (6/23/2021) | ||||
| Seasoning: | 0 months | YE 2020 Occupancy(4): | 49.2% | ||||
| Maturity Date: | July 11, 2031 | YE 2019 Occupancy(4): | 93.7% | ||||
| IO Period: | 120 months | YE 2018 Occupancy(4): | 60.8% | ||||
| Loan Term (Original): | 120 months | As-Is Appraised Value(5): | $129,800,000 | ||||
| Amortization Term (Original): | NAP | As-Is Appraised Value Per SF(5): | $114.79 | ||||
| Loan Amortization Type: | Interest Only | As-Is Appraisal Valuation Date: | April 26, 2021 | ||||
| Call Protection(2): | L(24),D(92),O(4) | ||||||
| Lockbox Type: | Hard/In Place | Underwriting and Financial Information(6) | |||||
| Additional Debt: | Yes | TTM NOI(7): | NAV | ||||
| Additional Debt Type (Balance): | Pari Passu/Mezzanine ($10,000,000/$10,000,000) | YE 2020 NOI(7): | NAV | ||||
| YE 2019 NOI(7): | NAV | ||||||
| YE 2018 NOI(7): | NAV | ||||||
| U/W Revenues: | $9,346,779 | ||||||
| U/W Expenses: | $2,274,576 | ||||||
| Escrows and Reserves(3) | U/W NOI: | $7,072,203 | |||||
| Initial | Monthly | Cap | U/W NCF: | $6,676,429 | |||
| Taxes | $234,923 | $78,308 | NAP | U/W DSCR based on NOI/NCF(1): | 2.88x / 2.72x | ||
| Insurance | $0 | Springing | NAP | U/W Debt Yield based on NOI/NCF(1): | 9.4% / 8.9% | ||
| Replacement Reserve | $0 | $9,423 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 9.4% / 8.9% | ||
| Leasing Reserve | $0 | $23,558 | NAP | Cut-off Date LTV Ratio(1): | 57.8% | ||
| Upfront Leasing Reserve | $4,000,000 | $0 | NAP | LTV Ratio at Maturity: | 57.8% | ||
| Gap Rent Reserve | $784,601 | $0 | NAP | ||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $75,000,000 | 88.2% | Loan payoff(8) | $70,404,507 | 82.8% | |||
| Mezzanine Loan | 10,000,000 | 11.8 | Upfront reserves | 5,019,524 | 5.9 | |||
| Closing costs | 1,315,870 | 1.6 | ||||||
| Return of equity | 8,260,099 | 9.7 | ||||||
| Total Sources | $85,000,000 | 100.0% | Total Uses | $85,000,000 | 100.0% | |||
| (1) | The Cut-off Date Balance Per SF, U/W Debt Yield Based on NOI, U/W DSCR based on NCF, and Cut-off Date LTV Ratio based on the Velocity Industrial Portfolio Whole Loan (as defined below) and the Velocity Industrial Portfolio Mezzanine Loan (as defined below) are $75, 8.3%, 1.92x, and 65.5%, respectively. See “Additional Secured Indebtedness (not including trade debts)” below. |
| (2) | At any time after the earlier of (i) June 28, 2025 and (ii) two years from the closing date of the securitization that includes the last pari passu note of the Velocity Industrial Portfolio Whole Loan to be securitized, and prior to April 11, 2031, the borrower has the right to defease the Velocity Industrial Portfolio Whole Loan in whole, but not in part. |
| (3) | See “Escrows” section. |
| (4) | Information obtained from a third party report and represents combined occupancy as of the fourth quarter. |
| (5) | The appraisal for the 1180 Church Road Property (as defined below) excludes an excess parking area that is subject to a free release. See “Partial Release” below. |
| (6) | While the Velocity Industrial Portfolio Whole Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Velocity Industrial Portfolio Whole Loan more severely than assumed in the underwriting of the Velocity Industrial Portfolio Whole Loan. The pandemic and resulting economic disruption could also adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (7) | The Velocity Industrial Portfolio Borrower (as defined below) purchased the 2750 Morris Road Property (as defined below) in September 2020 and the 1180 Church Road Property in December 2020. Historical operating performance is not available. |
| (8) | Includes preferred equity buyout of $31,869,599 to JCR Capital. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
The Mortgage Loan. The largest mortgage loan (the “Velocity Industrial Portfolio Mortgage Loan”) is part of a whole loan (the “Velocity Industrial Portfolio Whole Loan”) that is evidenced by three pari passu promissory notes in the aggregate original principal amount of $75,000,000. The Velocity Industrial Portfolio Whole Loan is secured by a first priority fee mortgage encumbering two industrial properties totaling 1,130,782 square feet, located in Lansdale, Pennsylvania (the “Velocity Industrial Portfolio Properties”). The Velocity Industrial Portfolio Whole Loan will be serviced under the pooling and servicing agreement for the WFCM 2021-C60 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.
Note Summary
| Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
| A-1 | $60,000,000 | $60,000,000 | WFCM 2021-C60 | Yes |
| A-2 | $10,000,000 | $10,000,000 | WFB | No |
| A-3 | $5,000,000 | $5,000,000 | WFCM 2021-C60 | No |
| Total | $75,000,000 | $75,000,000 |
The Borrowers and Borrower Sponsors. The borrowers comprise two single purpose entities: VV2750 LLC and VVChurch LLC (collectively, the “Velocity Industrial Portfolio Borrower”), each a Delaware limited liability company. The Velocity Industrial Portfolio Borrower has two independent directors and legal counsel to the Velocity Industrial Portfolio Borrower delivered a non-consolidation opinion in connection with the origination of the Velocity Industrial Portfolio Whole Loan. The borrower sponsors and nonrecourse carve-out guarantors of the Velocity Industrial Portfolio Whole Loan are Zachary Moore and Anthony Grelli, Jr.
Mr. Moore and Mr. Grelli are founding partners of Velocity Ventures. Velocity Ventures is a Philadelphia-based investment firm that specializes in the acquisition and management of opportunistic industrial real estate assets in the greater Philadelphia area. The company currently owns and manages over 4.0 million square feet of industrial space in the greater Philadelphia area.
The Properties. The Velocity Industrial Portfolio Properties comprise two, class B industrial warehouse properties totaling 1,130,782 square feet located in Lansdale, Pennsylvania. As of June 23, 2021, the portfolio is 89.3% leased to 11 tenants.
2750 Morris Road
The 2750 Morris Road Property is a 681,126 square foot, industrial building located in Lansdale, Pennsylvania (the “2750 Morris Road Property”). Originally constructed in 1989 and renovated between 2015 and 2021, the 2750 Morris Road Property offers recently renovated fully climate-controlled manufacturing space. The net rentable area contains approximately 84.3% warehouse space with 21’-23.5’ clear heights, 35 dock height loading doors and 7 drive-in doors. The remaining 15.7% of the building is office space. The 2750 Morris Road Property is situated on an approximately 84.5-acre site and includes 1,448 surface parking spaces (2.1 spaces per 1,000 square feet). The Velocity Industrial Portfolio Borrower purchased the 2750 Morris Road Property in September 2020 for $33 million, when it was 57% leased. As of June 23, 2021 the 2750 Morris Road Property was 89.5% leased to six tenants.
1180 Church Road
The 1180 Church Road Property is a 449,656 SF, industrial building located in Lansdale, Pennsylvania (the “1180 Church Road Property”). Originally constructed in 1966 and renovated in 2021, the net rentable area contains approximately 63.2% warehouse with 20’-24’ clear heights, 8 dock height loading doors and 3 drive-in doors. The remaining 36.8% of the building is office space. The 1180 Church Road Property is situated on an approximately 37.2-acre site and includes 1,416 surface parking spaces (3.1 spaces per 1,000 SF). The Velocity Industrial Portfolio Borrower purchased the 1180 Church Road Property for $19.5 million in December 2020, when it was 50% leased. As of June 23, 2021 the 1180 Church Road Property was 88.9% leased to five tenants.
The 1180 Church Road Property is one of nine units within a land condominium regime, an alternative to land subdivision. The related owners’ association is responsible for maintenance of a road, detention pond and shared stormwater drainage, and has no building maintenance responsibilities. The Velocity Industrial Portfolio Borrower has a 51.47% voting rights interest in the owners’ association, and the ability to appoint a majority of members to the association’s board of directors.”
The following table presents certain information relating to the Velocity Industrial Portfolio Properties:
| Property Name – Location | Allocated Whole Loan Cut-off Date Balance | % of Portfolio Cut-off Date Balance | Occupancy | Year Built/ Renovated | Net Rentable Area (SF) | As-Is Appraised Value | Allocated Cut-off Date LTV | % of UW NOI | Parking Ratio (per 1,000 SF) |
2750 Morris Road Lansdale, PA |
$42,369,021 | 56.5% | 89.5% | 1989/2021 | 681,126 | $74,400,000 | 56.9% | 60.2% | 2.1 |
1180 Church Road Lansdale, PA |
$32,630,979 | 43.5% | 88.9% | 1966/2021 | 449,656 | $55,400,000 | 58.9% | 39.8% | 3.1 |
| Total/Weighted Average | $75,000,000 | 100.0% | 89.3% | 1,130,782 | $129,800,000 | 57.8% | 100.0% | 2.5 |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
Major Tenants.
Organon & Co. (125,127 square feet; 11.1% of net rentable area; 20.2% of underwritten base rent; December 31, 2022 lease expiration) – Organon & Co. is a global healthcare company formed through a spinoff from Merck, to focus on improving the health of women throughout their lives. The company has more than 60 medicines and other products across a range of areas including reproductive health, heart disease, dermatology, allergies and asthma. Headquartered in Jersey City, New Jersey, Organon & Co. employs approximately 9,000 people and serves over 140 markets internationally.
Organon & Co. has been a tenant at the 1180 Church Road Property since 2005 and 100% of its space is classified as office. The tenant recently spent $18 million, approximately $144 per square foot, of their own money to upgrade their space. Organon & Co. has two, one-year renewal options at 2% above the base rent payable during the last month of the prior term, with six months’ notice. The tenant also pays approximately $240,000 for parking per year.
Keystone Technologies (248,104 square feet; 21.9% of net rentable area; 18.9% of underwritten base rent; March 31, 2031 lease expiration) – Keystone Technologies was founded in 1945 and manufacturing and delivers a variety of lighting products including LED, HID, and fluorescent products, transformers, sign solutions, sensors, and emergency back-up systems. The company operates out of 17 warehouse locations and guarantees next day delivery.
Keystone Technologies has been a tenant at the 2750 Morris Road Property since 2019, originally occupying 160,326 square feet. The tenant subsequently expanded into an additional 87,778 square feet in April and September 2021, and extended the original lease through March 31, 2031. The tenant has one, five-year renewal option at 95% of the fair market rent, with six months’ notice.
Jillamy (152,827 square feet; 13.5% of net rentable area; 13.3% of underwritten base rent; August 31, 2026 lease expiration) – Jillamy’s lease at the 2750 Morris Road Property commenced on December 18, 2020, with rent payments beginning on September 1, 2021. Jillamy was founded in 2001 and is a full service third party logistics provider with a full complement of freight forwarding solutions including a customs brokerage as well as packaging and warehouse services.
The following table presents certain information relating to the tenancy at the Velocity Industrial Portfolio Properties:
Major Tenants
| Tenant Name (Property) | Credit Rating (Fitch/ Moody’s/ |
Tenant NRSF | %
of NRSF |
Annual U/W Base Rent PSF(1) | Annual U/W Base Rent(1) |
% of Total Annual U/W Base Rent | Lease
Expiration Date |
Extension Options | Termination Option (Y/N) |
| Major Tenants | |||||||||
| Organon & Co. | NR/NR/NR | 125,127 | 11.1% | $10.42 | $1,303,580(2) | 20.2% | 12/31/2022 | 2, 1- year | N |
| Keystone Technologies | NR/NR/NR | 248,104 | 21.9% | $4.90 | $1,216,932 | 18.9% | 3/31/2031 | 1, 5-year | N |
| Jillamy | NR/NR/NR | 152,827 | 13.5% | $5.61 | $857,359 | 13.3% | 8/31/2026 | None | N |
| Hughes Relocation Services | NR/NR/NR | 127,661 | 11.3% | $5.50 | $702,136 | 10.9% | 1/31/2034 | 3, 3-year | N |
| Total Major Tenants | 653,719 | 57.8% | $6.24 | $4,080,006 | 63.2% | ||||
| Non-Major Tenant | 355,862 | 31.5% | $6.67 | $2,373,457 | 36.8% | ||||
| Occupied Collateral Total | 1,009,581 | 89.3% | $6.39 | $6,453,463 | 100.0% | ||||
| Vacant Space | 121,201 | 10.7% | |||||||
| Collateral Total | 1,130,782 | 100.0% | |||||||
| (1) | Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through June 2022 totaling $150,763. |
| (2) | The Organon & Co. space is classified as 100% office. Additionally, the Annual U/W Base Rent includes $240,000 for parking (the free release of excess parking area at the 1180 Church Road Property does not impact related lease obligations). |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
13
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
The following table presents certain information relating to the lease rollover schedule at the Velocity Industrial Portfolio Properties:
Lease Expiration Schedule(1)(2)
| Year
Ending December 31, |
No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 3 | 167,127 | 14.8% | 167,127 | 14.8% | $1,766,420 | 27.4% | $10.57 |
| 2023 | 2 | 99,432 | 8.8% | 266,559 | 23.6% | $648,392 | 10.0% | $6.52 |
| 2024 | 2 | 77,926 | 6.9% | 344,485 | 30.5% | $585,863 | 9.1% | $7.52 |
| 2025 | 1 | 68,000 | 6.0% | 412,485 | 36.5% | $302,600 | 4.7% | $4.45 |
| 2026 | 1 | 152,827 | 13.5% | 565,312 | 50.0% | $857,359 | 13.3% | $5.61 |
| 2027 | 0 | 0 | 0.0% | 565,312 | 50.0% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 565,312 | 50.0% | $0 | 0.0% | $0.00 |
| 2029 | 1 | 67,466 | 6.0% | 632,778 | 56.0% | $373,762 | 5.8% | $5.54 |
| 2030 | 0 | 0 | 0.0% | 632,778 | 56.0% | $0 | 0.0% | $0.00 |
| 2031 | 3 | 248,104 | 21.9% | 880,882 | 77.9% | $1,216,932 | 18.9% | $4.90 |
| Thereafter(3) | 2 | 128,699 | 11.4% | 1,009,581 | 89.3% | $702,136 | 10.9% | $5.46 |
| Vacant | 0 | 121,201 | 10.7% | 1,130,782 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average | 15 | 1,130,782 | 100.0% | $6,453,463 | 100.0% | $6.39 |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule. |
| (3) | Includes 1,038 square feet of space leased to Amazon with no associated rent or expiration date. |
The following table presents historical occupancy percentages at the Velocity Industrial Portfolio Properties:
Historical Occupancy
12/31/2018(1) |
12/31/2019(1) |
12/31/2020(1) |
6/23/2021(2) |
| 60.8% | 93.7% | 49.2% | 89.3% |
| (1) | Information obtained from a third-party market research provider and represents occupancy as of the fourth quarter of each year. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19 Update. As of June 29, 2021, the Velocity Industrial Portfolio Properties are open and operating. Approximately 100.0% of tenants by underwritten base rent and 100.0% of tenants by square footage paid full rent in May and June. The first payment date for the Velocity Industrial Portfolio Whole Loan will be August 11, 2021.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
14
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the Velocity Industrial Office Portfolio Properties:
Cash Flow Analysis(1)
| U/W | %(2) | U/W $ per SF | |
| Base Rent(3)(4) | $7,268,374 | 71.5% | $6.43 |
| Grossed Up Vacant Space | 0 |
0.0 |
0.00 |
| Gross Potential Rent | $7,268,374 | 71.5% | $6.43 |
| Other Income(5) | 250,000 | 2.5 | 0.22 |
| Parking/Garage/Other(6) | 733,200 | 7.2 | 0.65 |
| Total Recoveries | 1,910,116 |
18.8 |
1.69 |
| Net Rental Income | $10,161,690 | 100.0% | $8.99 |
| (Vacancy & Credit Loss) | (814,911) |
(11.2) |
(0.72) |
| Effective Gross Income | $9,346,779 | 92.0% | $8.27 |
| Real Estate Taxes | 985,305 | 10.5 | 0.87 |
| Insurance | 158,322 | 1.7 | 0.14 |
| Management Fee | 280,403 | 3.0 | 0.25 |
| Other Operating Expenses | 850,546 |
9.1 |
0.75 |
| Total Operating Expenses | $2,274,576 | 24.3% | $2.01 |
| Net Operating Income | $7,072,203 | 75.7% | $6.25 |
| Replacement Reserves | 113,078 | 1.2 | 0.10 |
| TI/LC | 282,696 |
3.0 |
0.25 |
| Net Cash Flow | $6,676,429 | 71.4% | $5.90 |
| NOI DSCR(7) | 2.88x | ||
| NCF DSCR(7) | 2.72x | ||
| NOI Debt Yield(7) | 9.4% | ||
| NCF Debt Yield(7) | 8.9% |
| (1) | The Velocity Industrial Portfolio Borrower purchased the 2750 Morris Road Property in September 2020 and the 1180 Church Street Property in December 2020. Historical operating performance is not available. |
| (2) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (3) | Base Rent includes contractual rent steps through June 2022 totaling $150,763. |
| (4) | Base Rent includes underwritten rent for Jillamy, representing 13.5% of net rentable area, with rent beginning in September 1, 2021. Free rent associated with the lease was reserved at loan origination. Additionally, Base Rent includes Keystone Technologies expansion space, representing 3.5% of net rentable area, with a lease beginning October 1, 2021, and Hughes Relocation Services, representing 11.3% of net rentable area, with a lease beginning August 1, 20121. Free rent and gap rent associated with these leases was reserved at loan origination. |
| (5) | Other Income includes income from a diesel-powered electricity generating facility at the 2750 Morris Road Property that is leased to PECO. |
| (6) | Parking/Garage/Other income relates to a parking lease with Amazon at the 2750 Morris Road Property for the use of 611 parking spaces, with a lease expiration of May 30, 2030. Amazon may terminate the lease after the 84th month of the term (August 1, 2027). |
| (7) | The NOI and NCF DSCR and the NOI and NCF Debt Yield are based on the Velocity Industrial Portfolio Whole Loan. |
Appraisal. As of April 26, 2021, the appraiser concluded to as-is market values of $74.4 million for the 2750 Morris Road Property, and $55.4 million for the 1180 Church Road Property (excluding the excess parking area that is subject to a free release). The aggregate appraised value for the Velocity Industrial Portfolio Properties is $129.8 million.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
15
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
Environmental Matters. The Phase I environmental site assessments dated December 8, 2020 (1180 Church Road Property) and August 12, 2020 (2750 Morris Road Property) identified a controlled recognized environmental condition (CREC) related to the 1180 Church Road Property’s inclusion within the U.S. EPA North Penn Area 7 Superfund site. No further action was recommended other than ongoing compliance with due care requirements, including limiting the 1180 Church Road Property to commercial and industrial uses and prohibiting the extraction or use of groundwater. See “Description of the Mortgage Pool – Environmental Considerations” in the Preliminary Prospectus.
Market Overview and Competition. The Velocity Industrial Portfolio Properties are located in Lansdale, Pennsylvania, within Montgomery County. The Velocity Industrial Portfolio Properties are located 3.3 miles from one another and are approximately 27.0 miles north of the Philadelphia central business district. The Velocity Industrial Portfolio Properties are located within 4.5 miles of I-476 and 14.4 miles of I-276. Additionally, the Velocity Industrial Portfolio Properties are within 6.4 miles of Pennsylvania Route 309, and the 1180 Church Road Property is located approximately 0.6 miles to the SEPTA Pennbrook train station.
According to a third party market research report, the Velocity Industrial Portfolio Properties are situated within the East Montgomery City Industrial submarket of the Philadelphia Industrial market. As of March 5, 2021 the submarket reported a total inventory of approximately 61.2 million square feet with a 6.3% vacancy rate. The appraisal identified six comparable industrial buildings, which reported an average occupancy rate of approximately 100% with an average rental rate of $5.80 per square foot. The appraiser identified six comparable office leases with an average rental rate of $12.73 per square foot.
The following table presents certain information relating to the appraiser’s market rent conclusions for the 2750 Morris Road Property:
Market Rent Summary(1)
| Valmet Off/Ind | Flex | Warehouse | Office | Office – Former Café Space | |
| Market Rent (PSF) | $9.25 | $6.50 | $5.50 | $10.00 | $9.50 |
| Lease Term (Years) | 5 | 5 | 5 | 5 | 5 |
| Lease Type (Reimbursements) | Net | Net | Net | Net | Net |
| Rent Increase Projection | 2.5% per annum | 2.5% per annum | 2.5% per annum | 2.5% per annum | 2.5% per annum |
| (1) | Information obtained from the appraisal. |
The following table presents certain information relating to the appraiser’s market rent conclusions for the 1180 Church Road Property:
Market Rent Summary(1)
| Flex | Warehouse | Office | |
| Market Rent (PSF) | $7.50 | $5.50 | $9.00 |
| Lease Term (Years) | 5 | 5 | 5 |
| Lease Type (Reimbursements) | Net | Net | Net |
| Rent Increase Projection | 2.5% per annum | 2.5% per annum | 2.5% per annum |
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales, which pertain to all of the Velocity Industrial Portfolio Properties identified by the appraiser:
Comparable Sales(1)
| Property Name | Location | Rentable Area (SF) | Sale Date | Sale Price | Sale Price (PSF) |
| Interstate Business Park | Bellmawr, NJ | 131,500 | Mar-21 | $11,975,000 | $91.06 |
| Ferguson Enterprises Building | Philadelphia, PA | 86,325 | May-20 | $8,750,000 | $101.36 |
| South Jersey Industrial Portfolio | Swedesboro, NJ | 556,707 | Apr-20 | $42,925,000 | $77.11 |
| AmeriSource Building | West Deptford Township, NJ | 191,500 | Mar-20 | $20,200,000 | $105.48 |
| Bishops Gate Corporate Center | Mount Laurel, NJ | 292,466 | Jan-20 | $32,200,000 | $110.10 |
| (1) | Information obtained from the appraisals. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
16
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
The following table presents certain information relating to comparable industrial leases related to the Velocity Industrial Portfolio Properties:
Comparable Industrial Leases(1)
| Property Name/Location | Year Built/ Renovated | Total GLA (SF) | Occupancy | Tenant | Tenant Size (SF) | Lease Start Date | Lease Term | Annual Base Rent PSF | Lease Type |
2750 Morris Road Lansdale, PA (subject) |
1989/2021 | 681,126(2) | 89.5%(2) | Jillamy(2) | 152,827(2) | Dec-20(2) | 5.0 Yrs. (2) | $5.61(2) | Net(2) |
1180 Church Road Lansdale, PA (subject) |
1966/2021 | 449,656(2) | 88.9%(2) | Hughes Relocation Services(2) | 127,661(2) | Aug-21(2) | 12.5 Yrs. (2) | $5.50(2) | Net(2) |
700 Pattison Avenue Philadelphia, PA |
1970/2001 | 288,766 | 100.0%(3) | NAV | 116,000 | Jan-21 | 10.0 Yrs. | $5.50 | Net |
1510 Gehman Road Harleysville, PA |
1990/2011 | 152,625 | 100.0% | Deacon Industrial Supply | 152,625 | Dec-20 | 10.0 Yrs. | $5.60 | Net |
9 Runway Road Levittown, PA |
2004/NAP | 60,000 | 100.0% | Recall Total Information Management, Inc. | 60,000 | Sep-20 | 5.0 Yrs. | $6.25 | Net |
Amazon Building 6300 Bristol Pike Levittown, PA |
1963/NAP | 149,180 | 100.0% | Amazon | 149,180 | Aug-20 | 13.0 Yrs. | $6.25 | Net |
3601 Island Avenue Philadelphia, PA |
1986/NAP | 84,400 | 100.0%(3) | Stadium Casino | 30,200 | Mar-20 | 3.0 Yrs. | $5.25 | Net |
Bristol Commerce Center 2401 Green Lane Bristol, PA |
2019/NAP | 308,959 | 100.0% | Urban Outfitters, Inc. | 308,959 | May-19 | 15.0 Yrs. | $5.95 | Net |
(1) Information obtained from the appraisal.
(2) Information obtained from the underwritten rent roll.
(3) Information obtained from a third party report.
The following table presents certain information relating to comparable office leases related to 2750 Morris Road Property:
Comparable Office Leases(1)
| Property Name/Location | Year Built/ Renovated | Total GLA (SF) | Occupancy | Tenant | Tenant Size (SF) | Lease Start Date | Lease Term | Annual Base Rent PSF | Lease Type |
2750 Morris Road Lansdale, PA (subject) |
1989/2021 | 681,126(2) | 89.5%(2) | ||||||
The Pinnacle 1684 S. Broad Street Lansdale, PA |
1999/NAP | 344,000 | 71.7%(3) | Current Offering | 96,280 | May-21 | 3.0 Yrs. | $8.50 | Net |
1010 West Germantown Pike Norristown, PA |
1979/NAP | 30,000 | NAV | Current Offering | 5,000
|
May-21 | 3.0 Yrs.
|
$10.00 | Net |
Wyncote Industrial Commons 827 Glenside Avenue Wyncote, PA |
1900/NAP | 99,626 | NAV | Current Offering | 13,600 | May-21 | 3.0 Yrs. | $10.00 | Net |
Pennsylvania Business Campus 300-309 Lakeside Drive Horsham, PA |
1982/NAP | 43,832 | 100.0% | Jefferson School of Nursing | 43,882 | Jul-20 | 15.0 Yrs. | $15.85 | Net |
2005 Cabot Boulevard West Langhome, PA |
1984/NAP | 61,969 | 83.3%(3) | Penndel Health | 18,333 | Jul-19 | 7.0 Yrs. | $12.00 | Net |
Great Valley Corporate Center One Great Valley Parkway Malvem, PA |
1982/NAP | 60,880 | Phase Bio Pharmaceuticals, Inc. | 15,881 | Aug-18 | 5.0 Yrs. | $15.80 | Net |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
| (3) | Information obtained from a third party report. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
17
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
Escrows.
Real Estate Taxes – The Velocity Industrial Portfolio Whole Loan documents require an upfront real estate tax reserve of $234,923 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next twelve months (initially $78,308).
Insurance – The Velocity Industrial Portfolio Whole Loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no event of default has occurred and is continuing, (ii) the Velocity Industrial Portfolio Borrower or borrower affiliate provides the lender with evidence that the Velocity Industrial Portfolio Properties’ insurance coverage is included in a blanket policy and such policy is in full force and effect and (iii) the Velocity Industrial Portfolio Borrower pays all applicable insurance premiums and provides the lender with evidence of payment of insurance premiums/renewals no later than ten business days prior to the expiration of the policies.
Replacement Reserve – The Velocity Industrial Portfolio Whole Loan documents require ongoing monthly replacement reserves of $9,423.
Leasing Reserve – The Velocity Industrial Portfolio Whole Loan documents require ongoing monthly general TI/LC reserves of $23,558.
Upfront Leasing Reserve – The Velocity Industrial Portfolio Whole Loan documents require an upfront tenant improvements and leasing commissions (“TI/LC”) reserve of $4,000,000 (the “Upfront Leasing Reserve”).
Provided that no event of default then exists, the Upfront Leasing Reserve will be disbursed to the Velocity Industrial Portfolio Borrower upon the satisfaction of the following conditions:
| (i) | no Cash Trap Event Period (as defined below) then exists; |
| (ii) | the Combined NCF DSCR (as defined below) is equal to or greater than 0.825 to 1.00; |
| (iii) | Organon & Co. has renewed its lease for a term of no less than five years at a rental rate no less than the rental rate in effect prior to such renewal; and |
| (iv) | all leasing expenses incurred in connection with such renewal have been paid in full and the tenant is in occupancy and paying full, unabated rent. |
“Combined NCF DSCR” means, assuming a mortgage loan constant of ten percent, the net cash flow divided by the combined debt service of the Velocity Industrial Portfolio Whole Loan and the debt service due under the mezzanine loan payable during the subsequent twelve month period.
Gap Rent Reserve – The Velocity Industrial Portfolio Whole Loan documents require an upfront reserve of $784,601 for gap rent related to certain existing leases which will be disbursed in accordance with the Velocity Industrial Portfolio Whole Loan documents.
Lockbox and Cash Management. The Velocity Industrial Portfolio Whole Loan requires a hard lockbox and in-place cash management. The Velocity Industrial Portfolio Borrower is required to cause all rents to be deposited directly into the lockbox account, and all rents received by the Velocity Industrial Portfolio Borrower or property manager be deposited into the lockbox account within two business days of receipt. Funds in the deposit account will be swept periodically into a cash management account and, prior to a Cash Trap Event Period, any funds remaining in the cash management account after the cash flow waterfall will be transferred to the Velocity Industrial Portfolio Borrower. During a Cash Trap Event Period, any excess cash flow remaining after satisfaction of the waterfall items outlined in the Velocity Industrial Portfolio Whole Loan documents is required to be swept to an excess cash flow subaccount to be held as additional collateral for the Velocity Industrial Portfolio Whole Loan, unless the Cash Trap Event Period is caused solely by the continuance of a mezzanine loan event of default, in which case excess cash flow will be disbursed to or at the direction of the mezzanine lender in accordance with the disbursement instructions provided by the mezzanine lender.
A “Cash Trap Event Period” will commence upon the earlier of the following:
| (i) | the occurrence and continuance of an event of default; |
| (ii) | the Combined NCF DSCR being less than 0.70 to 1.00; |
| (iii) | the occurrence of a Specified Tenant Cash Trap Event Period (as defined below); or |
| (iv) | the occurrence and continuance of a mezzanine loan event of default. |
A “Specified Tenant Cash Trap Event Period” means (a) a Specified Tenant (as defined below) vacates, abandons, or otherwise goes dark in its leased space, or gives notice of its intent to do so, or (b) a Specified Tenant has not renewed its lease twelve months prior to the scheduled expiration of its lease.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
18
| Industrial - Warehouse | Loan #1 | Cut-off Date Balance: | $65,000,000 | |
Property Addresses – Various Lansdale, PA 19446 |
Velocity Industrial Portfolio | Cut-off Date LTV: | 57.8% | |
| U/W NCF DSCR: | 2.72x | |||
| U/W NOI Debt Yield: | 9.4% |
A Specified Tenant Cash Trap Event Period will end upon the occurrence of the following:
| ● | With regard to clause (a) receipt of evidence that the applicable Specified Tenant has renewed or extended its lease or entered into a new lease, in each case for a term of at least five years at terms approved by the lender, with no outstanding landlord obligations, and has taken possession of, and resumed operations in all of the leased space and is paying full, unabated rent; |
| ● | With regard to a Specified Tenant terminating the applicable lease, receipt, in writing, of the Specified Tenant revoking its termination and reaffirming its lease; or |
| ● | With regard to clause (b) the entire space leased to the Specified Tenant has been leased to one or more replacement tenants acceptable to the lender, at terms approved by the lender, with no outstanding landlord obligations, and each replacement tenant is in occupancy, open for business and paying full, unabated rent. |
A “Specified Tenant” means together with any guarantor of its lease, sublease or other occupancy agreement, (i) Organon & Co. (ii) Keystone Technologies, LLC, and (iii) any replacement tenant occupying all or a portion of the space leased to a Specified Tenant as of the date of the Velocity Industrial Portfolio Whole Loan agreement, pursuant to a replacement lease entered into in accordance with the terms of the Velocity Industrial Portfolio Whole Loan agreement.
A Cash Trap Event Period will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), the Combined NCF DSCR being greater than or equal to 0.80 to 1.00 for two consecutive calendar quarters; |
| ● | With regard to clause (iii), the expiration of a Specified Tenant Cash Trap Event Period; or |
With regard to clause (iv), the receipt of notice from the mezzanine lender that all mezzanine loan events of default have been cured.
Property Management. The Velocity Industrial Portfolio Properties are managed by Last Mile Management LLC.
Partial Release. The Velocity Industrial Portfolio Borrower can obtain the free release of an excess parking area (approximately 5.0 acres) at the 1180 Church Street Property in connection with an arms-length, third party sale, subject to the certain conditions, including (i) the remaining properties’ having a loan-to-value no greater than that at the time of loan origination, and a debt yield no less than that at the time of loan origination, (ii) ongoing compliance with lease and zoning requirements, and (iii) an opinion of counsel that the partial release satisfies REMIC requirements.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Concurrently with the origination of the Velocity Industrial Portfolio Whole Loan, Wells Fargo Bank made a $10,000,000 mezzanine loan (the “Velocity Industrial Portfolio Mezzanine Loan”) to the sole member of the Velocity Industrial Portfolio Borrower, which is secured by the sole member’s ownership interest in the Velocity Industrial Portfolio Borrower. The Velocity Industrial Portfolio Mezzanine Loan is coterminous with the Velocity Industrial Portfolio Whole Loan and is subject to an intercreditor agreement. The Velocity Industrial Portfolio Mezzanine Loan accrues interest at a fixed per annum rate equal to 10.000% and is interest-only through the Velocity Industrial Portfolio Loan term. See “Description of the Mortgage Pool– Additional Indebtedness-Mezzanine Indebtedness” in the Preliminary Prospectus.
The following table presents certain information relating to the Velocity Industrial Portfolio Mezzanine Loan:
Mezzanine Loan Original Principal Balance |
Mezzanine Loan Interest Rate |
Original Term (mos.) | Original Amort. Term (mos.) |
Original IO Term (mos.) |
Total Debt UW NCF DSCR |
Total Debt UW NOI Debt Yield |
Total Debt Cutoff Date LTV | |
| Velocity Industrial Portfolio Mezzanine Loan | $10,000,000 | 10.000% | 120 | 0 | 120 | 1.92x | 8.3% | 65.5% |
Ground Lease. None.
Terrorism Insurance. The Velocity Industrial Portfolio Whole Loan documents require that the “all risk” insurance policy required to be maintained by the Velocity Industrial Portfolio Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Velocity Industrial Portfolio Properties, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
19
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
20
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
21
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
22
| No. 2 – The Grace Building | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Column Financial, Inc. | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (DBRSM/Fitch/Moody’s): |
A/A-/Baa2 | Property Type – Subtype: | Office – CBD | ||||
| Original Principal Balance(1): | $50,000,000 | Location: | New York, NY | ||||
| Cut-off Date Balance(1): | $50,000,000 | Size: | 1,556,972 SF | ||||
| % of Initial Pool Balance: | 6.7% | Cut-off Date Balance Per SF: | $567.13 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $567.13 | ||||
| Borrower Sponsor: | Brookfield Office Properties, Inc. | Year Built/Renovated: | 1974/2018 | ||||
| Guarantors: | BOP NYC OP LLC and Swig Investment Company, LLC | Title Vesting: | Fee | ||||
| Mortgage Rate: | 2.6921% | Property Manager: | TRZ Holdings IV LLC | ||||
| Note Date: | November 17, 2020 | Current Occupancy (As of): | 94.8% (10/19/2020) | ||||
| Seasoning: | 7 months | YE 2019 Occupancy: | 91.0% | ||||
| Maturity Date: | December 6, 2030 | YE 2018 Occupancy: | 97.6% | ||||
| IO Period: | 120 months | YE 2017 Occupancy: | 94.7% | ||||
| Loan Term (Original): | 120 months | As-Is Appraised Value: | $2,150,000,000 | ||||
| Amortization Term (Original): | NAP | As-Is Appraised Value Per SF: | $1,380.89 | ||||
| Loan Amortization Type: | Interest Only | As-Is Appraisal Valuation Date: | September 8, 2020 | ||||
| Call Protection(2): | L(31),DorYM1(82),O(7) | ||||||
| Lockbox Type: | Hard/Springing Cash Management | ||||||
| Additional Debt(1): | Yes | ||||||
| Additional Debt Type (Balance): | Pari Passu ($833,000,000); Subordinate ($367,000,000); Future Mezzanine |
Underwriting and Financial Information(3) | |||||
| TTM NOI (9/30/2020)(4): | $46,272,539 | ||||||
| YE 2019 NOI(4): | $52,538,193 | ||||||
| YE 2018 NOI(4): | $73,206,664 | ||||||
| YE 2017 NOI(4): | $67,159,674 | ||||||
| U/W Revenues: | $157,612,989 | ||||||
| U/W Expenses: | $53,319,272 | ||||||
| Escrows and Reserves | U/W NOI(4): | $104,293,717 | |||||
| Initial | Monthly | Cap | U/W NCF: | $102,347,502 | |||
| Taxes | $0 | Springing | NAP | U/W DSCR based on NOI/NCF: | 4.33x / 4.25x | ||
| Insurance | $0 | Springing | NAP | U/W Debt Yield based on NOI/NCF: | 11.8% / 11.6% | ||
| Replacement Reserve | $0 | Springing | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 11.8% / 11.6% | ||
| TI/LC Reserve | $56,172,399 | Springing | NAP | Cut-off Date LTV Ratio: | 41.1% | ||
| Free Rent | $25,964,570 | $0 | NAP | LTV Ratio at Maturity: | 41.1% | ||
| Parking Rent | $1,608,940 | $0 | NAP | ||||
| Lobby/Elevator Work | $5,970,240 | $0 | NAP | ||||
| Sources and Uses | ||||||||||||||
| Sources | Uses | |||||||||||||
| A Notes: | $883,000,000 | 70.6 | % | Loan Payoff(5) | $905,439,802 | 72.4 | % | |||||||
| B Notes: | 367,000,000 | 29.4 | Return of equity | 239,965,013 | 19.2 | |||||||||
| Upfront reserves | 89,716,149 | 7.2 | ||||||||||||
| Closing costs | 14,879,035 | 1.2 | ||||||||||||
| Total Sources | $1,250,000,000 | 100.0 | % | Total Uses | $1,250,000,000 | 100.0 | % | |||||||
| (1) | The Grace Building Mortgage Loan (as defined below) is part of a larger split whole loan evidenced by 21 senior pari passu notes with an aggregate Cut-off Date balance of $883.0 million (collectively, “The Grace Building A Notes”) and four pari passu promissory notes that are subordinate to The Grace Building A Notes with an aggregate Cut-off Date balance of $367.0 million (collectively, “The Grace Building B Notes”, and together with The Grace Building A Notes, “The Grace Building Whole Loan”). The financial information presented in the chart above and herein reflects the aggregate balance of The Grace Building A Notes. The Grace Building Whole Loan was co-originated by Bank of America, N.A. (“BANA”), JPMorgan Chase Bank, National Association (“JPM”), Column Financial, Inc. (“Column”), and DBR Investments Co. Limited (“DBRI”). Column will be contributing Notes A-3-3 and A-3-5, in the original principal amount of $50,000,000. |
| (2) | On and after the defeasance lockout expiration date, The Grace Building Whole Loan may be voluntarily prepaid with, if such a prepayment is made prior to June 6, 2030, a prepayment fee equal to the greater of the yield maintenance amount or 1% of the unpaid principal balance as of the prepayment date. |
| (3) | While The Grace Building Whole Loan was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact The Grace Building Whole Loan more severely than assumed in the underwriting of The Grace Building Whole Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
23
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
| (4) | The volatility in cash flow at The Grace Building Property (as defined below) is a result of the replacement of some larger legacy tenants (including 4 of the 5 largest tenants) between 2016 and 2018 and the signing of new and renewal leases with respect to 950,000 square feet of space. The cash flow declines reflected in 2019 and in 9/30/2020 TTM and the projected increase in UW cash flows are the result of this rollover and of the rent abatements associated with the new leases. All outstanding landlord obligations ($56,172,399) and rent abatements ($25,964,570) were reserved at origination. |
| (5) | Loan Payoff includes defeasance costs for previously securitized debt in the GRACE 2014-GRCE securitization trust. |
The Mortgage Loan. The Grace Building mortgage loan ( “The Grace Building Mortgage Loan”) is part of a whole loan (“The Grace Building Whole Loan”) that is evidenced by 21 pari passu senior promissory notes with an aggregate original principal balance and outstanding principal balance as of the Cut-off Date of $883,000,000 (collectively, “The Grace Building Senior Loan”) and four pari passu subordinate promissory notes in the aggregate original principal balance and outstanding principal balance as of the Cut-off Date of $367,000,000 (collectively, “The Grace Building Subordinate Companion Loan”). The Grace Building Whole Loan is secured by the borrower’s first priority fee simple mortgage encumbering a Class A office building located in New York, New York (“The Grace Building Property”). The Grace Building Mortgage Loan is comprised of the non-controlling notes A-3-3 and A-3-5, which have an aggregate original principal balance and aggregate outstanding principal balance as of the Cut-off Date of $50,000,000.
The Grace Building Whole Loan was co-originated by Bank of America, N.A., JPMorgan Chase Bank, National Association, Column Financial, Inc. and DBR Investments Co. Limited on November 17, 2020.
Note Summary
| Notes | Original Principal Balance | Cut-off Date Balance | Note Holder | Controlling Interest | ||||
| Notes A-1-1, A-2-1, A-3-1, A-4-1 | $383,000,000 | $383,000,000 | GRACE 2020-GRCE | Y(1) | ||||
| Notes A-3-2, A-3-4, A-4-5 | 60,000,000 | 60,000,000 | CSAIL 2021-C20 | N | ||||
| Note A-1-2 | 75,000,000 | 75,000,000 | BANK 2020-BNK29 | N | ||||
| Notes A-1-3-1 | 60,000,000 | 60,000,000 | BANK 2020-BNK30 | N | ||||
| Notes A-1-3-2 | 15,000,000 | 15,000,000 | BANK 2021-BNK33 | N | ||||
| Notes A-2-2, A-2-3, A-4-2 | 100,000,000 | 100,000,000 | BMARK 2020-B21 | N | ||||
| Note A-2-4, A-4-3 | 60,000,000 | 60,000,000 | BMARK 2021-B23 | N | ||||
| Notes A-2-5, A-2-6, A-2-7, A-4-4 | 80,000,000 | 80,000,000 | BMARK 2020-B22 | N | ||||
| Notes A-3-3, A-3-5 | 50,000,000 | 50,000,000 | WFCM 2021-C60 | N | ||||
| Notes B-1, B-2, B-3, B-4 | 367,000,000 | 367,000,000 | GRACE 2020-GRCE | Y(1) | ||||
| Total | $1,250,000,000 | $1,250,000,000 |
| (1) | Pursuant to the related co-lender agreement, the controlling holder is the GRACE 2020-GRCE securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced AB Whole Loans—The Grace Building Whole Loan” in the Preliminary Prospectus. |
The Borrower and Borrower Sponsor. The borrowing entity for the loan is 1114 6th Avenue Owner LLC (“The Grace Building Borrower”), a Delaware limited liability company that is structured to be bankruptcy-remote with at least one independent director. The Grace Building Borrower is owned by a joint venture partnership between an affiliate of Swig Investment Company, LLC and 1114 6th Avenue Holdings LLC (controlled and majority indirectly owned by an affiliate of the borrower sponsor, Brookfield Office Properties Inc.).
The borrower sponsor is Brookfield Office Properties Inc. and the non-recourse carve-out guarantors are BOP NYC OP LLC and Swig Investment Company, LLC. The full recourse obligations of the non-recourse carveout guarantors for bankruptcy related events are capped at 15% of the outstanding principal balance of The Grace Building Whole Loan. BOP NYC OP LLC is a subsidiary of Brookfield Property Partners L.P., the public real estate vehicle of Brookfield Asset Management Inc. Brookfield Property Partners L.P. is a large global real estate company, with approximately $86 billion in total assets. Brookfield Property Partners L.P. owns and operates properties in the world’s major markets, with a global portfolio that includes office, retail, multifamily, logistics, hospitality, self-storage, triple-net lease, manufactured housing and student housing assets.
Swig Investment Company, LLC is a San Francisco-based private real estate investment company with an 80-year history of development, ownership and management of commercial real estate properties in major markets throughout the United States. The company’s diversified portfolio includes over 9 million square feet of office space in markets such as New York, San Francisco, and Southern California.
The Property. The Grace Building Property is a 1.56 million square foot, LEED Gold office tower located at Sixth Avenue and 42nd Street in Midtown Manhattan across from Bryant Park. The Grace Building Property was developed in 1974 by Swig Investment Company, LLC and designed by Skidmore, Owings & Merrill-partner Gordon Bunshaft. The Grace Building Property offers wide-open floor plates with walls of glass offering views of Bryant Park, the Hudson River and the city skyline. The Grace Building Property also includes an 188-space underground parking garage.
as of October 19, 2020, The Grace Building Property was 94.8% occupied by 35 tenants. Major tenants at The Grace Building Property include Bank of America, N.A., The Trade Desk and Israel Discount Bank. In addition to the office space, there is 30,877 square feet
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
24
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
(2.0% of net rentable area) of retail space, which is 95.0% occupied by two fine dining restaurants, STK and Gabriel Kruether, and two quick service restaurants, Sweetgreen and Joe & The Juice.
The Grace Building Property has maintained high occupancy levels with a 20-year physical occupancy average of approximately 94%. The Grace Building Property experienced a major tenant turnover from 2016-2018, as four of the five largest tenants, including HBO (Time Warner Inc.) and Cooley LLP (a large law firm), were replaced by other tenants on long-term leases. As a result of such replacement leases, The Grace Building Property has been able to stabilize at approximately 95% occupancy, in-line with its historical average. Over 950,000 square feet of new and renewed leases have been signed at The Grace Building Property since 2016. As a result, less than 16.0% of tenants by net rentable area will have leases that expire in the next five years. Recent leasing activity includes 58,978 square feet of additional space leased to The Trade Desk, 127,425 square feet of expansion space leased to Bank of America, N.A., and 41,957 square feet of renewal and expansion space leased to iStar Financial.
COVID-19 Update. The Grace Building Whole Loan is current through the June 2021 payment date and is not subject to any forbearance, modification or debt service relief request. The Grace Building Property is open and operating, with 95.5% of tenants by occupied net rentable area and 94.0% of tenants by underwritten base rent having paid their June 2021 rent payments. The four retail tenants (1.8% of net rentable area, 2.5% of underwritten rent) have not made full rent payments for the last three months or more. The borrower sponsor is in the process of negotiating rent deferrals with such retail tenants, with full rental payments anticipated to commence in late 2021 or early 2022. The parking tenant has not paid the required monthly rental payments since March 2020 and an event of default is continuing under its lease. The borrower sponsor is in the process of replacing the current parking operator and intends to employ a new parking operator under a management agreement. The Grace Building Borrower deposited $1,608,940 with the lender at loan origination for anticipated parking rent shortfalls. We cannot assure you the borrower sponsor will employ a new parking operator as anticipated or at all.
Major Tenants.
The largest tenant at The Grace Building Property, Bank of America, N.A. (“BANA”), which is also one of the originating lenders, leases 155,270 square feet (10.0% of net rentable area, 9.0% of underwritten rent) of combined space on the 5th, 6th and 7th floors of The Grace Building Property, together with the building pavilion premises located on and beneath the plaza area of the 43rd Street side of the building through May 31, 2042. BANA is a multinational investment bank and financial services holding company headquartered in Charlotte, North Carolina, with central hubs in New York City, London, Hong Kong, Dallas and Toronto. BANA has expanded its footprint around Bryant Park with its New York headquarters at One Bryant Park and a recent expansion into 1100 Avenue of the Americas. BANA has the option to renew its lease for up to four renewal terms for a maximum of 20 years, provided that BANA must occupy 100,000 square feet in each of (i) the 5th, 6th and 7th floors and (ii) the portion of the total premises (i.e., such floors plus the pavilion space) leased by it as to which BANA is exercising the renewal option. BANA is only permitted to exercise a renewal with respect to the pavilion premises if at least six full floors of office space under its lease at 1100 Avenue of the Americas is also simultaneously renewed. BANA’s lease does not provide any termination options.
BANA’s annual base rent for the 5th, 6th and 7th floors is currently $79.00 per square foot and its annual base rent for the pavilion premises is currently $92.50 per square foot. BANA paid all charged rent for the May 2021 period. All free rent associated with the BANA lease, in the amount of $1,884,169, was fully reserved at loan origination. BANA is entitled to $8,840,109 for tenant improvements from the landlord, which amount was fully reserved at loan origination.
The second largest tenant at The Grace Building Property, The Trade Desk (“Trade Desk”), leases 154,558 square feet (9.9% of net rentable area, 14.4% of underwritten rent). Trade Desk is a global technology company that markets a software platform used by digital advertising buyers to purchase data-driven digital advertising campaigns across various advertising formats and devices. Trade Desk currently has over 1,300 employees and a reported market capitalization of approximately $26.48 billion. Trade Desk currently leases a total of 154,558 square feet on the 26th, 27th, 46th, 47th and 48th floors through August 31, 2030. The commencement date (the “Additional Premises Commencement Date”) with respect to the 26th and 27th floors (“Additional Premises”) will occur upon the earlier of (i) substantial completion of the work to be performed by the landlord and (ii) the date Trade Desk first takes possession of the space. Trade Desk has one, five-year renewal option so long as Trade Desk is not in default or in bankruptcy and Trade Desk and its affiliates physically occupy at least 79% of the space.
Trade Desk’s annual base rent for the 46th, 47th and 48th floors is $139.00 per square foot from August 10, 2020 through August 31, 2025, and then $148.00 per square foot from September 1, 2025 through August 31, 2030. Trade Desk’s annual base rent for the 26th and 27th floors is $118.00 per square foot initially and then $128.00 per square foot after the fifth anniversary of the Additional Premises Commencement Date through August 31, 2030. Trade Desk is currently in a free rent period through September 30, 2021. All free rent, in the amount of $5,799,503, was fully reserved at loan origination. Trade Desk is entitled to $7,770,283 for tenant improvements and leasing costs from the landlord, which amount was fully reserved at loan origination. We cannot assure you that Trade Desk will take possession of the Additional Premises or begin paying rent as expected or at all.
The third largest tenant at The Grace Building Property, Israel Discount Bank (“IDB”), leases 142,533 square feet (9.2% of net rentable area, 5.5% of underwritten base rent). IDB is an American multinational private bank, commercial bank and financial services company headquartered in New York City with locations in the United States, Latin America and Israel. Chartered by the State of New York and a member of the Federal Deposit Insurance Corporation, IDB reported $9.23 billion in total assets in 2018. IDB currently leases 142,533 square feet of combined space on the ground, 2nd, 8th, 9th and 10th floors through December 31, 2040. IDB has two, five-year renewal options, with 21 months’ prior written notice, provided that IDB has not subleased more than 20% of its leased premises, and IDB is leasing at least two full floors on the date it exercises the renewal option.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
IDB’s annual base rent for the ground floor is $317.08 per square foot, which steps to $352.08 per square foot, $392.08 per square foot and $442.08 per square foot every five years. IDB’s annual base rent for the 2nd, 8th, 9th and 10th floors is $51.08 per square foot, which steps to $58.08 per square foot, $65.08 per square foot and $72.08 per square foot every five years. The Grace Building Borrower has completed its work required under the lease and delivered the space to IDB and IDB took possession of the space and commenced paying rent in January 2021 and is expected to commence paying operating expenses and real estate taxes in January 2022. All free rent, in the amount of $5,546,495, was fully reserved at loan origination. IDB is entitled to $15,906,051 for tenant improvements and leasing commissions, which amount was fully reserved at loan origination. We cannot assure you that IDB will begin paying operating expenses or real estate taxes as expected or at all.
The fourth largest tenant at The Grace Building Property, Bain & Company, Inc. (“Bain”), leases 121,262 square foot (7.8% of net rentable area, 9.2% of underwritten base rent). Bain is an American global management consulting firm headquartered in Boston, Massachusetts. Bain provides advisory services to many large businesses, non-profit organizations and governments. Bain has 59 offices in 37 countries and more than 12,000 employees. Bain leases a portion of the 41st floor and the entire 42nd, 43rd and 44th floors through February 28, 2030. Bain has two, five-year renewal options, with 18 months’ prior written notice; provided that Bain is not in default and is physically occupying at least the lesser of (x) two full floors of the building and (y) 66.66% of its space. The lease does not contain any termination options.
Bain’s annual base rent for the 41st floor is currently $133.00 per square foot, increasing to $143.00 per square foot on January 1, 2026. The annual base rent for the 42nd through 44th floors is currently $99.50 per square foot, increasing to $106.00 per square foot on March 1, 2025. Bain is entitled to $2,439,030 for tenant improvements related to its 41st floor expansion, which amount was fully reserved at loan origination.
The following table presents certain information relating to the tenancy at The Grace Building Property:
Major Tenants(1)
| Tenant Name | Credit
Rating (Fitch/ Moody’s/ S&P) (3) | Tenant NRSF | %
of NRSF | Annual U/W
Base | Annual U/W Base Rent | %
of Total Annual U/W Base Rent | Lease
Expiration | Extension
Options | Term.
Option (Y/N) | ||||||||||||
| Bank of America, N.A. (2) | A+/A2/A- | 155,270 | 10.0 | % | $81.42 | $12,642,238 | 9.0 | % | 5/31/2042 | Y | N | ||||||||||
| The Trade Desk(2) | NR/NR/NR | 154,558 | 9.9 | 130.99 | 20,245,024 | 14.4 | 8/31/2030 | Y | Y(4) | ||||||||||||
| Israel Discount Bank | NR/NR / BBB+ | 142,533 | 9.2 | 54.21 | 7,727,200 | 5.5 | 12/31/2040 | Y | Y(5) | ||||||||||||
| Bain & Company, Inc. (2) | NR/NR/NR | 121,262 | 7.8 | 106.59 | 12,925,648 | 9.2 | 2/28/2030 | Y | N | ||||||||||||
| Insight Venture Management LLC(2) | NR/NR/NR | 93,998 | 6.0 | 102.69 | 9,652,225 | 6.9 | 2/28/2030 | N | N | ||||||||||||
| Subtotal / Wtd. Average | 667,621 | 42.9% | $94.65 | $63,192,334 | 45.0% | ||||||||||||||||
| Other Office and Storage | 780,613 | 50.1 | 94.55 | 73,804,124 | 52.5 | ||||||||||||||||
| Retail | 28,103 | 1.8 | 122.91 | 3,454,052 | 2.5 | ||||||||||||||||
| Occupied Collateral Total | 1,476,337 | 94.8% | $95.13 | $140,450,510 | 100.0% | ||||||||||||||||
| Vacant Space | 80,635 | 5.2 | |||||||||||||||||||
| Collateral Total | 1,556,972 | 100.0% | |||||||||||||||||||
| (1) | Information is based on the underwritten rent roll. |
| (2) | As of the loan origination date, Bank of America, N.A., The Trade Desk, Bain & Company, Inc. and Insight Venture Management LLC were entitled to a total of approximately $12,022,739 of free rent which was fully reserved by the lender. |
| (3) | Certain ratings are those of the parent entity whether or not the parent entity guarantees the lease. |
| (4) | Trade Desk has the right to terminate its lease solely as to the 26th and 27th floors if the related lease commencement date does not commence by May 31, 2021 as such date may be extended by force majeure (not to exceed 150 days in the aggregate). Provided Trade Desk is not in bankruptcy and no default is occurring under its lease, Trade Desk has a one-time right to terminate the lease with respect to one or both of the 26th and 27th floors, effective as of the last day of the month in which the seventh anniversary of the Additional Premises Commencement Date occurs. If Trade Desk has elected to terminate its lease with respect to both the 26th and 27th floors, Trade Desk will owe $6,700,000 as a termination payment. If Trade Desk has elected to terminate its lease with respect to either the 26th or 27th floor, Trade Desk will owe $3,350,000 as a termination payment. Notwithstanding the foregoing, no termination will be permitted if Trade Desk has exercised its right of first offer to lease certain additional space pursuant to its lease within the 24-month period immediately preceding the date on which Trade Desk sends a notice to effectuate such termination. We cannot assure you that the Trade Desk lease for the Trade Desk Additional Premises will commence as expected or at all. |
| (5) | Subject to certain conditions set forth in the lease, IDB has (i) a one-time right to terminate its entire leased space, effective as of December 31, 2035, with 21 months’ prior written notice, and (ii) the right to terminate the lease with respect to the ground floor only, effective (at IDB’s option) on either the fifth anniversary or the tenth anniversary of the rent commencement date, with 15 months’ prior written notice. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
26
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
The following table presents certain information relating to the lease rollover schedule at The Grace Building Property:
Lease Expiration Schedule(1)(2)
| Year Ending December 31, | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Annual U/W Base Rent PSF | ||||||||
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 | ||||||||
| 2021 | 1 | 5,497 | 0.4% | 5,497 | 0.4% | $412,275 | 0.3% | $75.00 | ||||||||
| 2022 | 1 | 600 | 0.0% | 6,097 | 0.4% | $0 | 0.0% | $0.00 | ||||||||
| 2023 | 5 | 55,694 | 3.6% | 61,791 | 4.0% | $3,991,172 | 2.8% | $71.66 | ||||||||
| 2024 | 10 | 143,459 | 9.2% | 205,250 | 13.2% | $14,251,502 | 10.1% | $99.34 | ||||||||
| 2025 | 3 | 31,907 | 2.0% | 237,157 | 15.2% | $3,765,480 | 2.7% | $118.01 | ||||||||
| 2026 | 9 | 121,137 | 7.8% | 358,294 | 23.0% | $12,381,404 | 8.8% | $102.21 | ||||||||
| 2027 | 3 | 47,753 | 3.1% | 406,047 | 26.1% | $4,090,693 | 2.9% | $85.66 | ||||||||
| 2028 | 4 | 97,651 | 6.3% | 503,698 | 32.4% | $7,914,676 | 5.6% | $81.05 | ||||||||
| 2029 | 3 | 21,740 | 1.4% | 525,438 | 33.7% | $2,201,776 | 1.6% | $101.28 | ||||||||
| 2030 | 24 | 459,310 | 29.5% | 984,748 | 63.2% | $51,997,764 | 37.0% | $113.21 | ||||||||
| 2031 | 4 | 10,727 | 0.7% | 995,475 | 63.9% | $1,032,656 | 0.7% | $96.27 | ||||||||
| Beyond | 21 | 480,862 | 30.9% | 1,476,337 | 94.8% | $38,411,114 | 27.3% | $79.88 | ||||||||
| Vacant | 0 | 80,635 | 5.2% | 1,556,972 | 100.0% | $0 | 0.0% | $0.00 | ||||||||
| Total/Weighted Average | 88 | 1,556,972 | 100.0% | $140,450,510 | 100.0% | $95.13(3) |
| (1) | Information based on the underwritten rent roll. |
| (2) | Certain tenants have more than one lease. In addition, certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date. |
| (3) | Weighted Average Annual U/W Rent Base PSF excludes Vacant Space. |
The following table presents historical occupancy percentages at The Grace Building:
Historical Occupancy
| 2015(1) | 2016(1) | 2017(1) | 2018(1) | 2019(1) | Current(2) | |||||
| 93.1% | 87.0% | 94.7% | 97.6% | 91.0% | 94.8% |
| (1) | Source: Historical Occupancy is provided by the borrower sponsor. Occupancies are as of December 31 of each respective year. |
| (2) | Based on the underwritten rent roll dated October 19, 2020. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
27
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at The Grace Building Property:
Cash Flow Analysis(1)
| 2017 | 2018 | 2019 | 9/30/2020 TTM(1) | U/W(2) | %(2) | U/W $ PSF |
|||||||||
| Base Rental Income(3) | $99,833,553 | $107,014,493 | $91,119,452 | $87,976,996 | $140,450,510 | 86.6% | $90.21 | ||||||||
| Expense Reimbursements | 10,212,232 | 12,529,407 | 8,566,979 | 6,267,900 | 12,766,325 | 7.9 | 8.20 | ||||||||
| Straight-Lined Rent(4) | 0 | 0 | 0 | 0 | 1,439,207 | 0.9 | 0.92 | ||||||||
| Vacant Income(5) | 0 | 0 | 0 | 0 | 7,464,675 | 4.6 | 4.79 | ||||||||
| Net Rental Income | $110,045,785 | $119,543,900 | $99,686,431 | $94,244,896 | $162,120,717 | 100.0% | $104.13 | ||||||||
| Other Income(6) | 3,209,878 | 3,195,652 | 3,230,812 | 2,759,133 | 2,956,947 | 1.8 | 1.90 | ||||||||
| (Vacancy & Credit Loss)(5) | 0 | 0 | 0 | 0 | (7,464,675) | (4.6) | (4.79) | ||||||||
| Effective Gross Income | $113,255,664 | $122,739,552 | $102,917,243 | $97,004,029 | $157,612,989 | 97.2% | $101.23 | ||||||||
| Taxes | 25,496,191 | 27,159,739 | 29,139,042 | 30,649,698 | 31,927,579 | 20.3 | 20.51 | ||||||||
| Insurance | 1,019,973 | 1,226,645 | 1,134,711 | 1,220,279 | 1,455,626 | 0.9 | 0.93 | ||||||||
| Other Operating Expenses | 19,579,826 | 21,146,504 | 20,105,297 | 18,861,512 | 19,936,067 | 12.6 | 12.80 | ||||||||
| Total Operating Expenses | $46,095,990 | $49,532,888 | $50,379,050 | $50,731,490 | $53,319,272 | 33.8% | $34.25 | ||||||||
| Net Operating Income | $67,159,674 | $73,206,665 | $52,538,193 | $46,272,539 | $104,293,717 | 66.2% | $66.98 | ||||||||
| TI/LC | 0 | 0 | 0 | 0 | 1,556,972 | 1.0 | 1.00 | ||||||||
| Capital Expenditures | 0 | 0 | 0 | 0 | 389,243 | 0.2 | 0.25 | ||||||||
| Net Cash Flow | $67,159,674 | $73,206,665 | $52,538,193 | $46,272,539 | $102,347,502 | 64.9% | $65.73 | ||||||||
| NOI DSCR | 2.79x | 3.04x | 2.18x | 1.92x | 4.33x | ||||||||||
| NCF DSCR | 2.79x | 3.04x | 2.18x | 1.92x | 4.25x | ||||||||||
| NOI Debt Yield | 7.6% | 8.3% | 5.9% | 5.2% | 11.8% | ||||||||||
| NCF Debt Yield | 7.6% | 8.3% | 5.9% | 5.2% | 11.6% |
| (1) | The volatility in cash flow at The Grace Building Property is a result of the replacement of some larger legacy tenants (including 4 of the 5 largest tenants) between 2016 and 2018 and the signing of new and renewal leases with respect to 950,000 square feet of space. The cash flow declines reflected in 2019 and in 9/30/2020 TTM and the projected increase in UW cash flows are the result of this rollover and the rent abatements associated with the new leases. All outstanding landlord obligations ($56,172,399) and rent abatements ($25,964,570) were reserved at loan origination. |
| (2) | % column represents percent of Net Rental Income for all revenue lines and represents percent of Effective Gross Income for the remainder of fields. |
| (3) | U/W Base Rental Income includes contractual rent steps of $4,566,719 underwritten for various tenants through March 1, 2022. |
| (4) | Represents the straight line credit for investment grade tenants and tenants identified by a legal industry publication as among the 100 largest law firms through the lesser of the lease or loan term. |
| (5) | U/W Vacancy represents an underwritten economic vacancy of 4.6%. The Grace Building Property is 94.8% occupied as of October 19, 2020. |
| (6) | U/W Other Income consists of directly billed utilities and $1,608,941 of parking income. 1114 Sixth Parking LLC is the current tenant under a parking garage lease. The tenant has not paid the required monthly rental payments since March 2020 and an event of default is continuing under its lease. The Grace Building Borrower is actively pursuing the termination of the lease and a replacement arrangement with a new parking manager. At origination, The Grace Building Borrower deposited $1,608,940 with the lender for anticipated parking rent shortfalls, through October 2021. |
Appraisal. The appraiser concluded to an “as-is” appraised value of $2,150,000,000 for The Grace Building Property as of September 8, 2020.
Environmental Matters. According to a Phase I environmental report dated September 22, 2020, there are no recognized environmental conditions or recommendations for further action at The Grace Building Property.
Market Overview and Competition. The Grace Building Property is located on the north side of Bryant Park at the corner of 42nd Street and 6th Avenue in the Sixth Avenue/Rockefeller Center submarket of the Midtown Manhattan office market. The Grace Building Property offers commuters access to multiple major mass transit stations in Manhattan, connecting to points across the tristate area. The 1-2-3, N-R-Q-W, 7 and B-D-F-M subway lines all stop within a block of The Grace Building Property, providing access to commuters coming from Penn Station, the Upper West Side, and Queens. The S subway line provides a quick cross-town connection to Grand Central Station and the 4, 5, 6 subway line. Additionally, The Grace Building Property is three blocks from the Port Authority Bus terminal at 8th Avenue and 42nd Street.
The Sixth Avenue/Rockefeller Center area has recently experienced the signing of sizable new leases. According to a third-party market research report, in the second quarter of 2020, a large technology company signed a 232,000 square foot lease at 151 West 42nd Street that was the largest new lease signed in the Sixth Avenue / Rockefeller Center area in the quarter. Other recent lease executions include Colliers relocating to The Grace Building Property for approximately 59,000 square feet and TripleMint leasing 31,000 square
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
28
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
feet at 1500 Broadway. Following a wave of move-outs earlier in the annual cycle, relocations into the Sixth Avenue/Rockefeller Center submarket have pushed vacancies downward in recent years to around 4.4% at the end of the second quarter of 2020.
According to the appraisal, as of the second quarter of 2020, the Sixth Avenue/Rockefeller Center Class A office submarket had a vacancy rate of 4.4% and market rents of $87.02 per square foot. The average in-place office rent at The Grace Building Property is currently approximately $95 per square foot.
The following table presents certain information relating to the appraiser’s market rent conclusions for The Grace Building Property:
Market Rent Summary – Office (1)
Office (Floors 2-12) |
Office (Floors 14-19) |
Office (Floors 20-25) |
Office (Floors 26-37) |
Office (Floors 38-41) |
Office (Floors 42-48) | |
| Market Rent (PSF) | $85.00 | $90.00 | $100.00 | $115.00 | $125.00 | $140.00 |
| Lease Term (Years) | 15 | 15 | 15 | 15 | 15 | 15 |
| Lease Type (Reimbursements) | Modified Gross | Modified Gross | Modified Gross | Modified Gross | Modified Gross | Modified Gross |
| Rent Increase Projection | $10.00 Per Square Foot Every 5 Years | |||||
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales pertaining to The Grace Building Property identified by the appraiser:
Comparable Sales(1)
| Property Name | Location | Rentable
Area (SF) |
Year
Built (Renovated) |
Sale Date | Actual
Sale Price |
Sale
Price (PSF) |
| One Madison Avenue | New York, NY | 1,392,565 | 1932 (2023) | Contract | $2,300,000,000 | $1,652 |
| 1633 Broadway | New York, NY | 2,561,512 | 1972 (2013) | May 2020 | $2,400,000,000 | $937 |
| 330 Madison Avenue | New York, NY | 854,664 | 1963 | Feb 2020 | $900,000,000 | $1,053 |
| 55 Hudson Yards | New York, NY | 1,431,155 | 2019 | Jan 2020 | $2,500,000,000 | $1,747 |
| 150 East 42nd Street | New York, NY | 1,698,603 | 1955 (2010) | Oct 2019 | $1,300,000,000 | $765 |
| 30 Hudson Yards | New York, NY | 1,463,234 | 2019 | April 2019 | $2,155,000,000 | $1,473 |
| 640 Fifth Avenue | New York, NY | 315,886 | 1948 (2014) | April 2019 | $975,000,000 | $3,087 |
| 3 Columbus Circle | New York, NY | 753,405 | 1927 (2011) | Nov 2018 | $1,035,000,000 | $1,374 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
29
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
The following tables present certain information relating to comparable office buildings for The Grace Building Property:
Comparable Office Properties(1)
| Property Name/Location | Year
Built/ Renovated |
NRA (SF) | No. of Stories | Office Rents Asking & Taking |
Occupancy |
One Bryant Park New York, NY |
2009 | 2,354,000 | 54 | -- | 100.0% |
Three Bryant Park New York, NY |
1972 / 2008 | 1,484,325 | 42 | $95 - $115 | 96.8% |
Seven Bryant Park New York, NY |
2015 | 473,672 | 28 | $120 - $150 | 97.9% |
1100 Avenue of the Americas New York, NY |
1906 / 2021 | 373,016 | 15 | -- | 90.4% |
660 Fifth Avenue New York, NY |
1958 / 2021 | 1,436,839 | 40 | $90 - $150 | 66.0% |
1 Vanderbilt New York, NY |
2020 | 1,732,955 | 67 | $125 - $200 | 65.0% |
1 Manhattan West New York, NY |
2019 | 2,100,000 | 67 | $115 - $135 | 86.0% |
2 Manhattan West New York, NY |
2022 | 1,900,000 | 56 | $90 - $150 | 25.3% |
50 Hudson Yards New York, NY |
2022 | 2,900,000 | 62 | $110 - $200 | 30.0% |
55 Hudson Yards New York, NY |
2019 | 1,434,038 | 51 | $105 - $135 | 98.0% |
4 Times Square New York, NY |
1999 / 2018 | 1,800,000 | 48 | $80 - $100 | 94.1% |
| (1) | Information obtained from the appraisal. |
Property Management. The Grace Building Property is currently managed by TRZ Holdings IV LLC (an affiliate of the borrower sponsors) (“TRZ”), pursuant to a management agreement and is sub-managed by Brookfield Properties (USA II) LLC (an affiliate of a borrower sponsor pursuant to a sub-management agreement). Under the Grace Building Whole Loan documents, the Grace Building Property is required to be managed by TRZ and submanaged by Brookfield Properties (USA II) LLC, respectively, or any qualified manager as defined in The Grace Building Whole Loan documents. The lender has the right to replace, or require The Grace Building Borrower to replace, each of the property manager and the property sub-manager with a property manager or property sub-manager, as applicable, selected by The Grace Building Borrower (or selected by the lender in the event of an event of default under The Grace Building Whole Loan documents) (i) during the continuance of an event of default under The Grace Building Whole Loan documents, (ii) during the continuance of a material default by the property manager under the management agreement or the property sub-manager under the sub-management agreement (after the expiration of any applicable notice and/or cure periods), or (iii) if the property manager or property sub-manager becomes bankrupt or insolvent.
Escrows and Reserves. At loan origination, The Grace Building Borrower deposited into escrow $56,172,399 for outstanding landlord tenant improvement and leasing commission obligations due to various tenants, $25,964,570 for free rent owed to various tenants through June 2022 to be applied on each monthly payment date to simulate the payment of tenant rent, $5,970,240 for certain construction and improvement work related to the lobby and elevator cabs and systems and $1,608,940 for anticipated parking rent shortfalls from the origination date through November 2021 (1/12th of which reserve will be deposited into the lockbox account on each monthly payment date for such period).
Real Estate Taxes – During a Trigger Period (as defined below), The Grace Building Borrower is required to deposit on a monthly basis 1/12th of the annual estimated real estate taxes.
Insurance – During a Trigger Period, The Grace Building Borrower is required to deposit on a monthly basis 1/12th of the annual estimated insurance premiums (unless The Grace Building Property is covered by a blanket policy).
Replacement Reserves – During a Trigger Period, The Grace Building Borrower is required to deposit on a monthly basis $0.20 per square feet per annum (which was $25,950 as of the origination date) for capital expenditures.
TI/LC Reserves –During a Trigger Period, The Grace Building Borrower is required to deposit on a monthly basis $1.50 per square feet per annum (which was $194,622 as of the origination date) for tenant improvements and leasing commissions.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
30
| Office - CBD | Loan #2 | Cut-off Date Balance: | $50,000,000 | |
| 1114 Avenue of the Americas | The Grace Building | Cut-off Date LTV: | 41.1% | |
| New York, NY 10036 | U/W NCF DSCR: | 4.25x | ||
| U/W NOI Debt Yield: | 11.8% |
Lockbox / Cash Management. The Grace Building Whole Loan is structured with a hard lockbox and springing cash management. Revenues from The Grace Building Property are required to be deposited into the lockbox account directly by the tenants and any funds received by The Grace Building Borrower and property manager must be deposited within five business days of receipt. If no Trigger Period exists, funds in the lockbox account will be disbursed to The Grace Building Borrower. During a Trigger Period, funds in the lockbox account are required to be swept on each business day to the lender-controlled cash management account and disbursed according to The Grace Building Whole Loan documents, with excess cash held by the lender for so long as such Trigger Period continues, other than for disbursements to The Grace Building Borrower for (unless already paid) debt service due under The Grace Building Whole Loan or any mezzanine loan, shortfalls in the required reserve accounts, deposit of cash in an amount to satisfy the debt yield test to cure a low cash flow period, emergency and, life safety expenses, approved operating expenses, disbursements to The Grace Building Borrower to be distributed to its equity holders in an amount sufficient to satisfy the distribution requirements applicable to REITs, and other permitted uses under The Grace Building Whole Loan documents.
A “Trigger Period” means the period (i) beginning upon the occurrence of an event of default under The Grace Building Whole Loan or, if a mezzanine loan is then outstanding under such mezzanine loan, and ending when the event of default has been cured or waived; or (ii) beginning when the debt yield (including any mezzanine loan) (tested each fiscal quarter) is less than 6.00% for any two consecutive fiscal quarters, and ending when (x) the debt yield (including any mezzanine loan) (tested each fiscal quarter) is at least 6.00% for any two consecutive fiscal quarters or (y) The Grace Building Borrower has delivered cash or a letter of credit in an amount which, when applied to the outstanding principal balance of The Grace Building Whole Loan (plus any mezzanine loan) would be sufficient to meet the debt yield requirement of 6.00%.
Current Mezzanine or Subordinate Indebtedness. The Grace Building Property also secures The Grace Building Subordinate Companion Loan, which has an aggregate Cut-off Date principal balance of $367,000,000. The Grace Building Subordinate Companion Loan accrues interest at an interest rate of 2.6921% per annum. The Grace Building Senior Loan is senior in right of payment to The Grace Building Subordinate Companion Loan. At or around loan origination, the holders of The Grace Building Senior Loan and The Grace Building Subordinate Companion Loan entered into a co-lender agreement that sets forth the allocation of collections on The Grace Building Whole Loan. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced AB Whole Loans—The Grace Building Whole Loan” in the Preliminary Prospectus.
Permitted Future Mezzanine or Secured Subordinate Indebtedness. An affiliate of the borrower is permitted to incur future mezzanine debt (secured by a pledge of direct equity interests in the borrower), provided that among other conditions: (i) no event of default is continuing; (ii) the principal amount of the mezzanine loan may not exceed an amount which, when combined with the Grace Building Whole Loan results in (a) a loan-to-value ratio greater than 58.14% or (b) a debt yield less than 8.35%; (iii) the mezzanine loan is co-terminous with the Grace Building Whole Loan or is freely prepayable after the maturity date of the Grace Building Whole Loan; (iv) the mezzanine loan is interest-only; (v) an intercreditor agreement is executed that is acceptable to the lender and the rating agencies; and (vi) a rating agency confirmation is delivered by each rating agency rating securities backed by the Grace Building Whole Loan.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Right of First Offer/Right of First Refusal. None.
Ground Lease. None.
Terrorism Insurance. The Grace Building Borrower is required to obtain and maintain “all risk” property insurance that covers perils of terrorism and acts of terrorism in an amount equal to the full replacement cost of The Grace Building Property and business interruption insurance for 36 months (24 months for terrorism) with a 12-month extended period of indemnity; provided that if the Terrorism Risk Insurance Program Reauthorization Act is no longer in effect, The Grace Building Borrower will not be obligated to pay annual insurance premiums for terrorism coverage in excess of two times the insurance premiums that would be payable under policies then obtained for all risk and business interruption insurance (excluding the terrorism and earthquake components of such property and business income insurance). See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
31
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
32
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
33
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
34
| No. 3 – Malibu Colony Plaza | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | LMF Commercial, LLC | Single Asset/Portfolio: | Single Asset | ||||
| Credit Assessment (DBRSM/Fitch/Moody’s): | NR/NR/NR | Property Type – Subtype: | Retail – Anchored | ||||
| Original Principal Balance: | $48,000,000 | Location: | Malibu, CA | ||||
| Cut-off Date Balance: | $48,000,000 | Size: | 114,370 SF | ||||
| % of Initial Pool Balance: | 6.4% | Cut-off Date Balance Per SF: | $419.69 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $419.69 | ||||
| Borrower Sponsors: | KW Partnership, L.P. and KW Two Partnership, L.P. | Year Built/Renovated: | 1989/NAP | ||||
| Guarantors: | KW Partnership, L.P. and KW Two Partnership, L.P. | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.7500% | Property Manager: | TKG Management, Inc. (borrower-related) | ||||
| Note Date: | May 6, 2021 | Current Occupancy (As of)(2): | 89.5% (4/8/2021) | ||||
| Seasoning: | 2 months | YE 2020 Occupancy: | 90.0% | ||||
| Maturity Date: | May 6, 2031 | YE 2019 Occupancy: | 91.0% | ||||
| IO Period: | 120 months | YE 2018 Occupancy: | 86.0% | ||||
| Loan Term (Original): | 120 months | YE 2017 Occupancy: | 85.0% | ||||
| Amortization Term (Original): | NAP | As-Is Appraised Value: | $95,000,000 | ||||
| Loan Amortization Type: | Interest Only | As-Is Appraised Value Per SF: | $830.64 | ||||
| Call Protection: | L(24),YM1(92),O(4) | As-Is Appraisal Valuation Date: | April 18, 2021 | ||||
| Lockbox Type: | Springing | Underwriting and Financial Information | |||||
| Additional Debt: | None | TTM NOI (3/31/2021)(3): | $2,841,060 | ||||
| Additional Debt Type (Balance): | NAP | YE 2020 NOI: | $3,263,415 | ||||
| YE 2019 NOI: | $4,297,116 | ||||||
| U/W Revenues: | $7,154,679 | ||||||
| U/W Expenses: | $3,246,859 | ||||||
| Escrows and Reserves(1) | U/W NOI: | $3,907,820 | |||||
| Initial | Monthly | Cap | U/W NCF: | $3,833,479 | |||
| Taxes | $0 | Springing | NAP | U/W DSCR based on NOI/NCF: | 2.14x / 2.10x | ||
| Insurance | $0 | Springing | NAP | U/W Debt Yield based on NOI/NCF: | 8.1% / 8.0% | ||
| Replacement Reserve | $0 | Springing | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 8.1% / 8.0% | ||
| TI/LC Reserve | $0 | Springing | $285,925 | Cut-off Date LTV Ratio: | 50.5% | ||
| LTV Ratio at Maturity: | 50.5% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $48,000,000 | 100.0% | Loan payoff | $41,221,217 | 85.9% | |||
| Closing costs | 426,299 | 0.9 | ||||||
| Return of equity | 6,352,483 | 13.2 | ||||||
| Total Sources | $48,000,000 | 100.0% | Total Uses | $48,000,000 | 100.0% | |||
| (1) | See “Escrows” section for a full description of Escrows and Reserves. |
| (2) | Current Occupancy includes Zinque (the 3rd largest tenant), which represents 6,387 square feet (5.6% of net rentable area and 7.6% of underwritten base rent). It is anticipated that Zinque will take occupancy and commence paying rent at the Malibu Colony Plaza Property (as defined below) in April 2022. The borrower sponsors have signed a 10-year Master Lease (as defined below) on the space until Zinque is in occupancy and paying rent. Zinque is working to obtain the proper zoning approval from the City of Malibu. U/W vacancy adjustment includes Zinque rent and recoveries. |
| (3) | The U/W NOI increased compared to TTM NOI is due to the fact that because of the COVID-19 pandemic several tenants (Coogie’s Beach Café, Becker Surfboards, Bui Sushi, Pinnacle Estate Properties, Vitamin Barn, The Nail Spa, and Malibu Oasis Salon (representing approximately 13.0% of the net rentable area and approximately 32.7% of the underwritten base rent)) received rent abatements and/or deferred rent payments, affecting actual rent collections. The borrower sponsors signed Master Leases on all of the above tenants’ spaces for a term of 10 years at rents equal to the rents payable under the applicable leases with a deduction for the amount of rent actually paid by the applicable underlying tenant. |
The Mortgage Loan. The mortgage loan (the “Malibu Colony Plaza Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 114,370 square feet anchored retail property located in Malibu, California (the “Malibu Colony Plaza Property”).
The Borrower and Borrower Sponsors. The borrower is KW Malibu Colony, L.L.C. (the “Malibu Colony Plaza Borrower”), a Missouri limited liability company and single purpose entity with two independent directors. Legal counsel to the Malibu Colony Plaza Borrower delivered a non-consolidation opinion in connection with the origination of the Malibu Colony Plaza Mortgage Loan. The nonrecourse
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
35
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
carve-out guarantors and borrower sponsors of the Malibu Colony Plaza Mortgage Loan are KW Partnership, L.P. and KW Two Partnership, L.P.
The borrower sponsors are owned by Ann W. Kroenke, Audrey J. Walton and Audrey J. Walton Revocable Trust. Ann W. Kroenke is an heir to the Walmart fortune; Audrey Walton is the ex-wife of James L. “Bud” Walton, Sam Walton’s younger brother and a co-founder of Walmart. Ann W. Kroenke is the wife of E. Stanley Kroenke, a repeat borrower sponsor. E. Stanley Kroenke is chairman, cofounder, and owner of THF Realty, a real estate development firm.
The Property. The Malibu Colony Plaza Property is a retail anchored shopping center, containing 114,370 square feet of net rentable area located in Malibu, California. Built in 1989, the Malibu Colony Plaza Property consists of two, one-story retail buildings located on a 13.9 acre parcel. The Malibu Colony Plaza Property is anchored by Ralphs Fresh Store and junior anchored by CVS. The Malibu Colony Plaza Property contains 601 surface parking spaces, resulting in a parking ratio of 5.25 spaces per 1,000 square feet of net rentable area. As of April 8, 2021, the Malibu Colony Plaza Property was 89.5% occupied by 22 national, regional and local tenants. Verizon Wireless is dark at the Malibu Colony Plaza Property and still paying rent; however, the tenant has been underwritten as vacant.
Major Tenants.
Largest Tenant: Ralphs Fresh Fare (36,200 square feet, 31.7% of net rentable area; 5.8% of underwritten base rent; 8/30/2023 lease expiration; Fitch/Moody’s/S&P: NR/Baa1/BBB) – Ralphs Fresh Fare is part of Ralphs Grocery Company, which was founded in 1873. Ralphs Grocery Company division headquarters are located in Los Angeles, California. Ralphs Grocery Company operates 465 Ralph’s stores in the southern and northern regions of California and the Midwest. Ralphs Grocery Company is a subsidiary of The Kroger Co. (“Kroger”). As of January 30, 2021, Kroger operated, either directly or through its subsidiaries, 2,742 supermarkets under a variety of local banner names, of which 2,255 had pharmacies and 1,596 had fuel centers. Kroger also manufactures and processes some of the food for sale in its supermarkets. For fiscal year ended January 2021, Kroger reported net sales of approximately $132.5 billion, an increase of 8.4% from the previous year. Ralphs Fresh Fare has been a tenant at the Malibu Colony Plaza Property since 1984 and has no renewal options remaining.
2nd Largest Tenant: CVS (22,880 square feet, 20.0% of net rentable area; 3.0% of underwritten base rent; 1/31/2025 lease expiration; Fitch/Moody’s/S&P: NR/Baa2/BBB) – Founded in 1963, CVS is the largest pharmacy healthcare provider in the United States and is headquartered in Woonsocket, Rhode Island. CVS operations include pharmaceutical and health and wellness services, including retail, specialty, mail service, care clinics, and wellness centers. As of December 31, 2020, CVS operated approximately 9,900 retail locations, 1,100 walk-in medical clinics, of which 80 clinics operated within Target stores. CVS retail/long-term care segment focuses on prescription and over-the-counter drugs and personal care products. For the fiscal year ended December 2020, the CVS retail/long-term care segment reported revenue of approximately $91.2 billion, up 5.3% over the prior year’s total sales of approximately $86.6 billion. CVS has been a tenant at the Malibu Colony Plaza Property since 1985 and has one, 5-year renewal options remaining.
3rd Largest Tenant: Zinque (6,387 square feet; 5.6% of net rentable area; 7.6% of underwritten base rent; 3/31/2032 lease expiration) – Zinque is a restaurant featuring French-inspired dishes, small plates and a curated wine and beer selection. Zinque currently has six restaurants in southern California and one located in Scottsdale, Arizona. Zinque signed its lease on October 1, 2019, and it is anticipated that Zinque will take occupancy and commence paying rent at the Malibu Colony Plaza Property in April 2022. The borrower sponsors have signed a 10-year master lease on the space until Zinque is in occupancy and paying rent. Zinque is working to obtain the proper zoning approval from the City of Malibu. On June 7, 2021, Zinque obtained a conditional use permit, and the tenant is working to obtain the other necessary licenses, permits and government approvals. Zinque has one, 5-year renewal option remaining. If Zinque cannot obtain a Type 47 liquor license, and all other necessary permits, licenses and other government approvals needed for the tenant’s work and to operate its business at the Malibu Colony Plaza Property by November 8, 2021, Zinque has the right to terminate its lease. The Zinque lease provides for one, 5-year renewal.
COVID-19 Update. As of June 24, 2021, the Malibu Colony Plaza Property is open and operating. Collection for June at the Malibu Colony Plaza Property was at 93.9% of total square feet and 97.5% of total UW base rent. As of the date hereof, the Malibu Colony Plaza Mortgage Loan is not subject to any modification or forbearance agreement, and the Malibu Colony Plaza Borrower has not requested any modification or forbearance to the Malibu Colony Plaza Mortgage Loan terms.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
36
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
The following table presents certain information relating to the tenancy at the Malibu Colony Plaza Property:
Major Tenants
| Tenant Name | Credit
Rating (Fitch/Moody’s/ S&P)(1) |
Tenant NRSF |
%
of NRSF |
Annual
U/W Base Rent PSF(2) |
Annual U/W Base Rent(2) |
%
of Total Annual U/W Base Rent |
Lease
Expiration Date |
Extension Options |
Termination Option (Y/N) |
| Anchor Tenants | |||||||||
| Ralphs Fresh Fare | NR/Baa1/BBB | 36,200 | 31.7% | $7.90 | $286,000 | 5.8% | 8/30/2023 | None | N |
| CVS | NR/Baa2/BBB | 22,880 | 20.0% | $6.56 | $150,000 | 3.0% | 1/31/2025 | 1, 5-year | N |
| Total Anchor Tenants | 59,080 | 51.7% | $7.38 | $436,000 | 8.9% | ||||
| Major Tenants | |||||||||
| Zinque(3) | NR/NR/NR | 6,387 | 5.6% | $58.24 | $372,000 | 7.6% | 3/31/2032 | 1, 5-year | Y |
| Bank of America | A+/A2/A- | 5,032 | 4.4% | $146.06 | $734,974 | 14.9% | 12/31/2026 | 2, 5-year | N |
| Coogie’s Beach Café | NR/NR/NR | 3,594 | 3.1% | $140.26 | $504,110 | 10.2% | 11/11/2025 | 1, 5-year | N |
| Becker Surfboards | NR/NR/NR | 3,229 | 2.8% | $75.73 | $244,532 | 5.0% | 10/31/2025 | 1, 5-year | N |
| Chase Bank | AA-/Aa1/A+ | 3,020 | 2.6% | $102.00 | $308,040 | 6.3% | 9/30/2028 | 2, 5-year | N |
| Total Major Tenants | 21,262 | 18.6% | $101.76 | $2,163,656 | 43.9% | ||||
| Non-Major Tenants | 21,997 | 19.2% | $105.75 | $2,326,100 | 47.2% | ||||
| Occupied Collateral Total | 102,339 | 89.5% | $48.13 | $4,925,756 | 100.0% | ||||
| Vacant Space | 12,031 | 10.5% | |||||||
| Collateral Total | 114,370 | 100.0% | |||||||
| (1) | Certain ratings are those of the parent company whether or not the parent company guarantees the lease. |
| (2) | Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through April 2022 totaling $49,800. |
| (3) | It is anticipated that Zinque will take occupancy and commence paying rent at the Malibu Colony Plaza Property in April 2022. The borrower sponsors have signed a 10-year Master Lease on the space until Zinque is in occupancy and paying rent. Zinque has the option to terminate its lease on November 8, 2021 if it cannot obtain a Type 47 liquor license and all other necessary permits, licenses and other government approvals needed for the tenant’s work and to operate its business at the Malibu Colony Plaza Property. |
The following table presents certain information relating to tenant sales at the Malibu Colony Plaza Property:
Tenant Sales (PSF)
| Major Tenant Name | %
of Total Annual U/W Base Rent |
2018 | 2019 | 2020 | Anchor Tenant Occupancy Cost(2) |
| Ralphs Fresh Fare | 5.8% | NAP | $616 | $720 | 5.1% |
| CVS | 3.0% | $481 | $451 | $490 | 6.8% |
| (1) | Occupancy Cost is based on 2020 sales, underwritten base rent and underwritten reimbursements. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
37
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
The following table presents certain information relating to the lease rollover schedule at the Malibu Colony Plaza Property:
Lease Expiration Schedule(1)(2)
| Year
Ending December 31, |
No.
of Leases Expiring |
Expiring NRSF |
%
of Total NRSF |
Cumulative Expiring NRSF |
Cumulative % of Total NRSF | Annual U/W Base Rent |
%
of Total Annual U/W Base Rent |
Annual U/W Base Rent PSF |
| MTM | 3 | 3,088 | 2.7% | 3,088 | 2.7% | $300,442 | 6.1% | $97.29 |
| 2021 | 0 | 0 | 0.0% | 3,088 | 2.7% | $0 | 0.0% | $0.00 |
| 2022 | 1 | 1,080 | 0.9% | 4,168 | 3.6% | $105,840 | 2.1% | $98.00 |
| 2023 | 4 | 42,366 | 37.0% | 46,534 | 40.7% | $937,147 | 19.0% | $22.12 |
| 2024 | 1 | 1,202 | 1.1% | 47,736 | 41.7% | $118,024 | 2.4% | $98.19 |
| 2025 | 7 | 36,678 | 32.1% | 84,414 | 73.8% | $1,668,130 | 33.9% | $45.48 |
| 2026 | 3 | 7,173 | 6.3% | 91,587 | 80.1% | $936,370 | 19.0% | $130.54 |
| 2027 | 0 | 0 | 0.0% | 91,587 | 80.1% | $0 | 0.0% | $0.00 |
| 2028 | 2 | 4,365 | 3.8% | 95,952 | 83.9% | $487,803 | 9.9% | $111.75 |
| 2029 | 0 | 0 | 0.0% | 95,952 | 83.9% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 95,952 | 83.9% | $0 | 0.0% | $0.00 |
| 2031 | 0 | 0 | 0.0% | 95,952 | 83.9% | $0 | 0.0% | $0.00 |
| Thereafter | 1 | 6,387 | 5.6% | 102,339 | 89.5% | $372,000 | 7.6% | $58.24 |
| Vacant | 0 | 12,031 | 10.5% | 114,370 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average(3) | 22 | 114,370 | 100.0% | $4,925,756 | 100.0% | $48.13 |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule. |
| (3) | Total Annual U/W Base Rent per square foot excludes vacant space. |
The following table presents historical occupancy percentages at the Malibu Colony Plaza Property:
Historical Occupancy
12/31/2018(1) |
12/31/2019(1) |
12/31/2020(1) |
4/8/2021(2) |
| 86.0% | 91.0% | 90.0% | 89.5% |
| (1) | Information obtained from the Malibu Colony Plaza Borrower. |
| (2) | Information obtained from the underwritten rent roll dated April 8, 2021. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
38
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the Malibu Colony Plaza Property:
Cash Flow Analysis
| 2019 | 2020 | TTM 3/31/2021 | U/W | %(1) | U/W
$ per SF | |
| Rents in Place | $4,606,043 | $3,764,696 | $3,573,023 | $4,875,956 | 55.5% | $42.63 |
| Contractual Rent Steps(2) | 0 | 0 | 0 | 49,800 | 0.6 | 0.44 |
| Percentage Rent | 44,589 | 97,129 | 100,786 | 100,786 | 1.1 | 0.88 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
1,051,360 |
12.0 |
9.19 |
| Gross Potential Rent | $4,650,633 | $3,861,825 | $3,673,809 | $6,077,903 | 69.1% | $53.14 |
| Other Income | 19,389 | 5,364 | 892 | 15,570 | 0.2 | 0.14 |
| Total Recoveries | 3,145,775 |
2,577,042 |
2,271,429 |
2,698,641 |
30.7 |
23.60 |
| Net Rental Income | $7,815,797 | $6,444,231 | $5,946,130 | $8,792,114 | 100.0% | $76.87 |
| (Vacancy & Credit Loss) | 0 |
0 |
0 |
(1,637,435)(3) |
(26.9) |
(14.32) |
| Effective Gross Income | $7,815,797 | $6,444,231 | $5,946,130 | $7,154,679 | 81.4% | $62.56 |
| Real Estate Taxes | 2,056,558 | 2,153,979 | 2,153,979 | 2,148,539 | 30.0 | 18.79 |
| Insurance | 98,454 | 136,432 | 139,818 | 139,818 | 2.0 | 1.22 |
| Management Fee | 495,479 | 161,727 | 138,957 | 286,187 | 4.0 | 2.50 |
| Other Operating Expenses | 868,190 |
728,678 |
672,315 |
672,315 |
9.4 |
5.88 |
| Total Operating Expenses | $3,518,681 | $3,180,817 | $3,105,070 | $3,246,859 | 45.4% | $28.39 |
| Net Operating Income(4) | $4,297,116 | $3,263,415 | $2,841,060 | $3,907,820 | 54.6% | $34.17 |
| Replacement Reserves | 0 | 0 | 0 | 17,156 | 0.2 | 0.15 |
| TI/LC | 0 |
0 |
0 |
57,185 |
0.8 |
0.50 |
| Net Cash Flow | $4,297,116 | $3,263,415 | $2,841,060 | $3,833,479 | 53.6% | $33.52 |
| NOI DSCR | 2.35x | 1.79x | 1.56x | 2.14x | ||
| NCF DSCR | 2.35x | 1.79x | 1.56x | 2.10x | ||
| NOI Debt Yield | 9.0% | 6.8% | 5.9% | 8.1% | ||
| NCF Debt Yield | 9.0% | 6.8% | 5.9% | 8.0% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Represents contractual rent steps through April 2022. |
| (3) | The underwritten economic vacancy is 18.7%. The Malibu Colony Plaza Property was 89.5% leased as of April 8, 2021. |
| (4) | The increase in U/W NOI from TTM 3/31/2021 is primarily attributed to the fact that because of the COVID-19 pandemic several tenants (Coogie’s Beach Café, Becker Surfboards, Bui Sushi, Pinnacle Estate Properties, Vitamin Barn, The Nail Spa, and Malibu Salon) received rent abatements and/or deferred rent payments, affecting actual rent collections. The borrower sponsors signed Master Leases on all of the above tenants’ spaces for a term of 10 years at rents equal to the rents payable under the applicable leases with a deduction for rent paid by the applicable underlying tenant. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
39
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
Appraisal. As of the appraisal valuation date of April 18, 2021, the Malibu Colony Plaza Property had an “as-is” appraised value of $95,000,000.
Environmental Matters. According to a Phase I environmental site assessment dated April 20, 2021, there was no evidence of any recognized environmental conditions at the Malibu Colony Plaza Property.
Market Overview and Competition. The Malibu Colony Plaza Property is located in Malibu, Los Angeles County, California. Malibu has a coastal location along the Pacific Ocean in the western section of Los Angeles County. Malibu is bounded by the Santa Monica mountains to the north, the city of Los Angeles community of Pacific Palisades to the east, the Pacific Ocean to the south, and unincorporated Los Angeles County land (Leo Carrillo State Beach) to the west. Malibu includes approximately 27 miles of coastline and extends inland approximately two miles. Land uses within the neighborhood primarily consist of residential and commercial uses. Residential development is the largest land use and is mainly located south of the Pacific Coast Highway. Commercial land uses are also located along Pacific Coast Highway. The Pacific Coast Highway is the primary arterial for the city of Malibu and is located parallel to the Pacific Ocean between Santa Monica and Oxnard. The Pacific Coast Highway provides access from the West Los Angeles/Santa Monica area.
The Pepperdine University is located approximately 1.25 miles west of the Malibu Colony Plaza Property. According to a third party market research report, the 2020 population within a one, three, and five-mile radius of the Malibu Colony Plaza Property was 972, 5,801 and 10,572, respectively. The average household income within the same radii was $208,424, $208,758 and $216,153, respectively.
Submarket Information – According to a third-party market research report, the Malibu Colony Plaza Property is situated within the Pacific Palisades/Malibu retail submarket, which contained approximately 1.2 million square feet of retail space as of first quarter 2021. The Pacific Palisades/Malibu retail submarket reported a vacancy rate of 7.4% and an average quoted rental rate of $71.64 per square feet. The Pacific Palisades/Malibu retail submarket reported 7,350 square feet under construction, with no new deliveries and no absorption.
Appraiser’s Comp Set – The appraiser identified seven competitive properties for the Malibu Colony Plaza Property totaling approximately 252,017 square feet, which reported an average occupancy rate of approximately 78.0%. The appraiser concluded to market rents of $66.00 per square foot for shop space $66 tenants, $84.00 per square foot for shop space $84 tenants, $102.00 per square foot for shop space $102 tenants, $120.00 per square foot for shop space $120 tenants, $144.00 per square foot for shop space $144 tenants, $18.00 per square foot for drug store tenants, $18.00 per square foot for grocery store tenants and $30.00 per square foot for newsstand tenants.
The following table presents certain information relating to the appraiser’s market rent conclusion for the Malibu Colony Plaza Property:
Market Rent Summary(1)
| Shop Space $66 |
Shop Space $84 |
Shop Space $102 |
Shop Space $120 |
Shop Space $144 |
Drug Store MLA |
Grocery Store MLA |
Newsstand MLA | |
| Market Rent (PSF) | $66.00 | $84.00 | $102.00 | $120.00 | $144.00 | $18.00 | $18.00 | $30.00 |
| Lease Term (Years) | 7 | 7 | 7 | 7 | 7 | 10 | 10 | 10 |
| Lease Type (Reimbursements) | NNN | NNN | NNN | NNN | NNN | NNN | NNN | NNN |
| Rent Increase Projection | 3.00% | 3.00% | 3.00% | 3.00% | 3.00% | None | None | 3.00% |
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales for the Malibu Colony Plaza Property identified by the appraiser:
Comparable Sales(1)
| Property Name | Location | Rentable Area (SF) |
Sale Date | Sale Price | Sale
Price (PSF) |
| Aliso Creek Shopping Center | Laguna Beach, CA | 49,149 | Oct-19 | $57,600,000 | $1,171.95 |
| 5th & PCH | Huntington Beach, CA | 96,639 | Oct-19 | $65,000,000 | $627.61 |
| Gelson’s Village At Calabasas | Calabasas, CA | 63,789 | Jul-19 | $39,500,000 | $619.23 |
| The Balcony at Beverwil | Los Angeles, CA | 71,184 | Nov-18 | $50,250,000 | $705.92 |
| Center at Carbon Beach | Malibu, CA | 20,102 | Aug-18 | $21,370,000 | $1,063.08 |
| Malibu Village | Malibu, CA | 50,498 | May-14 | $120,000,000 | $2,376.33 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
40
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
The table below presents certain information relating to four comparable retail properties to the Malibu Colony Plaza Property identified by the appraiser:
Competitive Set(1)
| Property Name / Location | Year
Built/ Renovated |
Total
GLA (SF) |
Occupancy | Distance
to Subject |
Major / Anchor Tenants |
Malibu Colony Plaza (Subject) Malibu, CA |
1989/NAP | 114,370 | 89.5% | - | Ralphs Fresh Fare, CVS |
Malibu Country Mart 1 3835 Cross Creek Road Malibu, CA |
1955/NAP | 52,914 | 77.0% | 0.4 miles | Brandi Melville, Vuori, Luckys Restaurant |
Malibu Country Mart III 3822-3844 Cross Creek Road Malibu, CA |
1972/NAP | 13,167 | 95.0% | 0.4 miles | John Varvatos, Oliver Peoples |
Malibu Village NEC PCH & Cross Creek Malibu, CA |
1966/2012 | 51,167 | 90.0% | 0.4 miles | Lululemon, European Shoe Repair |
Malibu Lumberyard 23641 Pacific Coast Highway Malibu, CA |
2008/NAP | 30,125 | 78.0% | 0.3 miles | All Saints, Vilebrequin, Alex Bittar |
Malibu Park at Cross Creek 23401 Civic Center Way Malibu, CA |
2019/NAP | 39,350 | 88.0% | 0.4 miles | Howdys Café, Real Coconut Restaurant, D’Amore Café, Malibu In Sight Optometrist |
Malibu Sands 22333 Pacific Coast Highway Malibu, CA |
1955/2016 | 16,294 | 40.0% | 1.8 miles | East Coast Defenders |
Trancas Country Mart 30745 Pacific Coast Highway Malibu, CA |
1950/2015 | 49,000 | 78.0% | 8.7 miles | NAV |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
41
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
The following table presents certain information relating to comparable leases to those at the Malibu Colony Plaza Property:
Comparable Leases(1)
| Property Name/Location | Year
Built/ Renovated |
Total GLA (SF) |
Distance from Subject |
Occupancy | Lease Term |
Tenant Size (SF) |
Annual Base Rent PSF |
Reimbursement Amount PSF |
Lease Type | |
Malibu Country Mart I 3835 Cross Creek Road, 23410 Civic Center Way Malibu, CA |
1955/NAP | 52,914 | 0.4 miles | 77.0% | 5.0 – 10.0 Yrs | 1,043 - 1,400 SF | $102.00 - $216.00 | NAV | NNN | |
Malibu Country Mart III 3822 – 3844 Cross Creek Road Malibu, CA |
1972/NAP | 13,167 | 0.4 miles | 95.0% | 5.0 Yrs | 2,067 – 2,090 SF | $215.28 -$264.00 | NAV | NNN | |
Malibu Village NEC PCH & Cross Creek Malibu, CA |
1966/2012 | 51,167 | 0.4 miles | 90.0% | 3.0 – 5.0 Yrs | 578 – 2,597 SF | $86.00 - $126.00 | NAV | NNN | |
Malibu Lumberyard 23641 Pacific Coast Highway, 3939 Cross Creek Road Malibu, CA |
2008/NAP | 30,125 | 0.3 miles | 78.0% | 5.0 – 10.0 Yrs | 600 – 1,737 SF | $115.00 - $170.00 | NAV | NNN | |
Malibu Park at Cross Creek 23401 Civic Center Way Malibu, CA |
2019/NAP | 39,350 | 0.4 miles | 88.0% | 10.0 Yrs | 945 – 1,692 SF | $159.00 - $206.00 | NAV | NNN | |
Malibu Sands 22333 Pacific Coast Highway Malibu, CA |
1955/2016 | 16,294 | 1.8 miles | 40.0% | 5.0 Yrs | 600 – 5,924 SF | $94.80 - $96.00 | NAV | NNN | |
Trancas Country Mart 30745 Pacific Coast Highway Malibu, CA |
1950/2015 | 49,000 | 8.7 miles | 78.0% | 10.0 Yrs | 474 -1,013 SF | $60.00 - $90.00 | NAV | NNN | |
| (1) | Information obtained from the appraisal. |
Escrows.
Real Estate Taxes – The Malibu Colony Plaza Mortgage Loan documents did not require an upfront real estate tax reserve. Ongoing monthly real estate tax reserves will not be required unless a Cash Management Trigger Event or Cash Sweep Event (see “Lockbox and Cash Management” section) has occurred and is continuing under the Malibu Colony Plaza Mortgage Loan. In the event a Cash Management Trigger Event or Cash Sweep Event (each as defined below) has occurred, the Malibu Colony Plaza Borrower is required to deposit monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be necessary to pay taxes over the then succeeding twelve months.
Insurance – The Malibu Colony Plaza Mortgage Loan documents did not require an upfront insurance reserve. Ongoing monthly insurance reserves will not be required unless a Cash Management Trigger Event or Cash Sweep Event has occurred and is continuing under the Malibu Colony Plaza Mortgage Loan. In the event a Cash Management Trigger Event or Cash Sweep Event has occurred, the Malibu Colony Plaza Borrower is required to deposit monthly insurance reserves in an amount equal to one-twelfth of the amount that the lender estimates will be necessary to pay insurance premiums over the then succeeding twelve months.
Replacement Reserves – The Malibu Colony Plaza Mortgage Loan documents did not require an upfront replacement reserve. Ongoing monthly replacement reserves will not be required unless a Cash Management Trigger Event or Cash Sweep Event has occurred and is continuing under the Malibu Colony Plaza Mortgage Loan. In the event a Cash Management Trigger Event or Cash Sweep Event has occurred, the Malibu Colony Plaza Borrower is required to deposit monthly replacement reserves of $1,430.
TI/LC Reserve – The loan documents did not require an upfront tenant improvement and leasing commission reserve. Ongoing monthly tenant improvement and leasing commission reserves will not be required unless a Cash Management Trigger Event or Cash Sweep Event has occurred and is continuing under the Malibu Colony Plaza Mortgage Loan. In the event a Cash Management Trigger Event or Cash Sweep Event has occurred, the Malibu Colony Plaza Borrower is required to deposit monthly tenant improvement and leasing commissions of $4,765, subject to a cap of $285,925. In addition, when a Cash Management Trigger Event and a Cash Sweep Event are in effect, the Malibu Colony Plaza Borrower is required to deposit in the TI/LC reserve any amounts paid to the Malibu Colony Plaza Borrower in connection with a termination, cancellation, sale or other disposition of a lease.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
42
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
Lockbox and Cash Management. The Malibu Colony Plaza Mortgage Loan documents require a springing lockbox and a springing cash management. Upon the occurrence and continuance of a Cash Management Trigger Event the Malibu Colony Plaza Borrower is required to establish a lender-controlled lockbox account and instruct tenants to deposit rents into such lockbox account. The Malibu Colony Plaza Mortgage Loan documents also require that all revenues received by the Malibu Colony Plaza Borrower or property manager be deposited into the lockbox account within one business day of receipt. Pursuant to the Malibu Colony Plaza Mortgage Loan documents, all excess funds on deposit are required to be applied as follows (a) if a Cash Sweep Event is not in effect, to the Malibu Colony Plaza Borrower; and (b) if a Cash Sweep Event is in effect due to the existence of a Critical Tenant Trigger Event (as defined below) to the Critical Tenant TI/LC account until the applicable Critical Tenant Trigger Event cure has occurred. If a Cash Sweep Event is in effect but a Critical Tenant Trigger Event is not in effect, then funds will be applied to the excess cash flow account.
A “Cash Management Trigger Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | the Malibu Colony Plaza Borrower’s second late debt service payment within a 12-month period; |
| (iii) | a bankruptcy action of the Malibu Colony Plaza Borrower, guarantor or property manager; |
| (iv) | a Cash Management DSCR Trigger Event (as defined below); or |
| (v) | a Critical Tenant Trigger Event (as defined below). |
A Cash Management Trigger Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default has been accepted or waived by the lender; |
| ● | with regard to clause (ii) above, when the debt service payments have been paid on time for 12 consecutive months; |
| ● | with regard to clause (iii) above, when such bankruptcy action petition has been discharged, stayed, or dismissed within 60 days of such filing among other conditions for the Malibu Colony Plaza Borrower or guarantor and within 120 days for the property manager, with respect to the property manager, the Malibu Colony Plaza Borrower replacing the property manager with a qualified property manager acceptable to the lender; |
| ● | with regard to clause (iv) above, the date the debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.15x for two consecutive quarters; and |
| ● | with regard to clause (v) above, a Critical Tenant Trigger Event Period Cure (as defined below). |
A “Cash Management DSCR Trigger Event” will occur on any day the debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.15x, unless within five days of such date, the Malibu Colony Plaza Borrower delivers one or more Master Leases (as defined below) that result in a minimum debt service coverage ratio of 1.25x for the Malibu Colony Plaza Mortgage Loan.
A “Cash Sweep Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | a bankruptcy action of the Malibu Colony Plaza Borrower, guarantor or property manager; |
| (iii) | a Cash Management DSCR Trigger Event; or |
| (iv) | a Critical Tenant Trigger Event (as defined below). |
A Cash Sweep Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default has been accepted or waived by the lender; |
| ● | with regard to clause (ii) above, when such bankruptcy action petition has been discharged, stayed, or dismissed within 60 days of such filing among other conditions for the Malibu Colony Plaza Borrower or guarantor and within 120 days for the property manager, with respect to the property manager, the Malibu Colony Plaza Borrower replacing the property manager with a qualified property manager acceptable to the lender; |
| ● | with regard to clause (iii) above, the date the debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.10x for two consecutive quarters; and |
| ● | with regard to clause (iv) above, a Critical Tenant Trigger Event Period Cure. |
A “Cash Sweep DSCR Trigger Event” will occur on any day the debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.10x, unless within five days of such date, the Malibu Colony Plaza Borrower delivers one or more Master Leases that result in a minimum debt service coverage ratio of 1.25x for the Malibu Colony Plaza Mortgage Loan.
A “Critical Tenant Trigger Event” will occur if KW Partnership, L.P. and KW Two Partnership, L.P. are not the guarantors of the Malibu Colony Plaza Mortgage Loan and one of the following occurs:
| (i) | If Ralphs Fresh Fare, CVS or any or any other tenant occupying the space currently occupied by such tenant or tenants (each, a “Critical Tenant” and each related lease, a “Critical Tenant Lease”) gives notice of its intention to not extend or renew its lease; |
| (ii) | on the date that is twelve months prior to the related lease expiration date if the Critical Tenant has failed to give notice of its election to renew its lease; |
| (iii) | on or prior to the date on which the Critical Tenant is required under its lease to notify the Malibu Colony Plaza Borrower of its election to renew its lease, and the Critical Tenant fails to give such notice; |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
43
| Retail - Anchored | Loan #3 | Cut-off Date Balance: | $48,000,000 | |
| 23705 Malibu Road | Malibu Colony Plaza | Cut-off Date LTV: | 50.5% | |
| Malibu, CA 90265 | U/W NCF DSCR: | 2.10x | ||
| U/W NOI Debt Yield: | 8.1% |
| (iv) | an event of default under the Critical Tenant Lease occurs or is continuing; |
| (v) | if a bankruptcy action with respect to the Critical Tenant or any guarantor of such Critical Tenant Lease occurs; |
| (vi) | if the Critical Tenant elects to pay reduced rent (including, without limitation, percentage rent in lieu of fixed rent); |
| (vii) | if the Critical Tenant discontinues its normal business operations; or |
| (viii) | the Critical Tenant is downgraded below “BBB-” or the equivalent by a credit reporting agency. |
A “Critical Tenant Trigger Event Cure” will occur upon:
| ● | with regard to clause (i), (ii) or (iii) above, (x) the date that (1) the Critical Tenant Lease extension is executed and delivered to the lender by the Malibu Colony Plaza Borrower and the related tenant improvement costs, leasing commissions and other material costs and expenses have been deposited into the Critical Tenant TI/LC account; or (2) a Critical Tenant Space Re-Tenanting Event (as defined below) has occurred; |
| ● | with regard to clause (iv) above, after a cure of the applicable default; |
| ● | with regard to clause (v) above, after an affirmation that the Critical Tenant is actually paying all rents and other amounts under the lease; |
| ● | with regard to clause (vi) above, the Critical Tenant re-commences the payment of full unabated rent; |
| ● | with regard to clause (vii) above, the Critical Tenant re-commences its normal business operations or a Critical Tenant Space Re-Tenanting Event (as defined below) has occurred; or |
| ● | with regard to clause (viii) above, the date the credit rating of the related Critical Tenant is no longer less than a “BBB-” or the equivalent by a credit reporting agency. |
A “Critical Tenant Space Re-tenanting Event” will occur on the date each of the following conditions has been satisfied: (i) the Critical Tenant space is at least 75% leased to one or more replacement tenants for a term of at least five years and on terms that are acceptable to the lender; (ii) all tenant improvement costs, leasing commissions and other material costs and expenses relating to the re-letting of the space have been paid in full; and (iii) the replacement tenant(s) are conducting normal business operations at the related Critical Tenant space.
A “Master Lease” is a lease agreement between the Malibu Colony Plaza Borrower, as landlord, and the guarantor, as tenant, that (i) is for a term of 10 or more years; (ii) is subordinate to the loan documents, and (iii) contains terms and conditions reasonably acceptable to the lender. The Master Lease may not be amended without the prior consent of the lender and can be terminated only (x) if no event of default exists and (y) if, as of the Master Lease termination date, (a) the debt service coverage ratio is not lease than 1.25x for two consecutive quarters without including rent from the Master Lease, or (b) the Malibu Colony Plaza Borrower has deposited with the lender an amount equal to cash flow that would have been swept into the excess cash flow account, among other conditions.
Property Management. The Malibu Colony Plaza Property is managed by TKG Management, Inc., an affiliate of the Malibu Colony Plaza Borrower.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Terrorism Insurance. The Malibu Colony Plaza Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Malibu Colony Plaza Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Malibu Colony Plaza Property, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
44
| Loan #4 | Cut-off Date Balance: | $37,000,000 | ||
| Multifamily – Garden | Mason Multifamily Portfolio | Cut-off Date LTV: | 71.6% | |
| Property Addresses – DeKalb, IL 60115 | U/W NCF DSCR: | 1.51x | ||
| U/W NOI Debt Yield: | 9.2% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
45
| Loan #4 | Cut-off Date Balance: | $37,000,000 | ||
| Multifamily – Garden | Mason Multifamily Portfolio | Cut-off Date LTV: | 71.6% | |
| Property Addresses – DeKalb, IL 60115 | U/W NCF DSCR: | 1.51x | ||
| U/W NOI Debt Yield: | 9.2% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 4 – Mason Multifamily Portfolio | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | UBS AG | Single Asset/Portfolio: | Portfolio | ||||
| Credit Assessment (DBRSM/Fitch/Moody’s): | NR/NR/NR | Property Type – Subtype: | Multifamily – Garden | ||||
| Original Principal Balance: | $37,000,000 | Location: | DeKalb, IL | ||||
| Cut-off Date Balance: | $37,000,000 | Size: | 626 Units | ||||
| % of Initial Pool Balance: | 4.9% | Cut-off Date Balance Per Unit: | $59,105 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Unit: | $53,737 | ||||
| Borrower Sponsors: | James C. Mason and Linda R. Mason | Year Built/Renovated: | Various/NAP | ||||
| Guarantors: | James C. Mason and Linda R. Mason | Title Vesting: | Fee | ||||
| Interest Rate: | 3.9910% | Property Manager: | Self-managed | ||||
| Note Date: | June 30, 2021 | Current Occupancy (As of): | 91.9% (6/15/2021) | ||||
| Seasoning: | 0 months | YE 2020 Occupancy: | 93.8% | ||||
| Maturity Date: | July 6, 2031 | YE 2019 Occupancy: | 93.6% | ||||
| Interest-Only Period: | 60 months | YE 2018 Occupancy: | 96.7% | ||||
| Loan Term (Original): | 120 months | YE 2017 Occupancy: | 98.7% | ||||
| Amortization Term (Original): | 360 months | As-is Appraised Value: | $51,710,000 | ||||
| Loan Amortization Type: | Interest Only, Amortizing Balloon | As-is Appraised Value Per Unit: | $82,604 | ||||
| Call Protection: | L(24),D(92),O(4) | As-is Appraisal Valuation Date: | May 3, 2021 | ||||
| Lockbox Type: | Springing | Underwriting and Financial Information(2) | |||||
| Additional Debt: | None | TTM NOI (6/30/2021): | $3,251,609 | ||||
| Additional Debt Type (Balance): | NAP | YE 2020 NOI: | $3,168,466 | ||||
| YE 2019 NOI: | $3,604,418 | ||||||
| YE 2018 NOI: | $3,561,337 | ||||||
| U/W Revenues: | $5,767,919 | ||||||
| U/W Expenses: | $2,361,327 | ||||||
| U/W NOI: | $3,406,592 | ||||||
| Escrows and Reserves(1) | U/W NCF: | $3,200,846 | |||||
| Initial | Monthly | Cap | U/W DSCR based on NOI/NCF: | 1.61x / 1.51x | |||
| Taxes | $377,927 | $67,487 | NAP | U/W Debt Yield based on NOI/NCF: | 9.2% / 8.7% | ||
| Insurance | $0 | Springing | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 10.1% / 9.5% | ||
| Replacement Reserve | $0 | $19,303 | $694,908 | Cut-off Date LTV Ratio: | 71.6% | ||
| Immediate Repairs | $44,500 | $0 | NAP | LTV Ratio at Maturity: | 65.1% | ||
| Radon Reserve | $5,000 | $0 | NAP | ||||
| Sources and Uses | ||||||
| Sources | Uses | |||||
| Original loan amount | $37,000,000 | 90.2% | Loan Payoff(3) | $36,834,301 | 89.8% | |
| Escrows (released by prior lender) | 4,033,002 | 9.8 | Closing costs | 677,120 | 1.7 | |
| Upfront Reserves | 427,427 | 1.0 | ||||
| Return of equity | 3,094,154 | 7.5 | ||||
| Total Sources | $41,033,002 | 100.0% | Total Uses | $41,033,002 | 100.0% | |
| (1) | See “Escrows” section below. |
| (2) | While the Mason Multifamily Portfolio Mortgage Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Mason Multifamily Portfolio Mortgage Loan more severely than assumed in the underwriting of the Mason Multifamily Portfolio Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (3) | Loan Payoff includes $4,425,161 in defeasance premiums. |
The Mortgage Loan. The mortgage loan (the “Mason Multifamily Portfolio Mortgage Loan”) is evidenced by four promissory notes secured by a first mortgage encumbering the fee interest in eight garden style multifamily properties located in DeKalb, Illinois (each, a “Mason Multifamily Portfolio Property”, and collectively, the “Mason Multifamily Portfolio Properties”).
The Borrower and Borrower Sponsors. The borrower is Mason Properties 2021, LLC (the “Mason Multifamily Portfolio Borrower”), a Delaware limited liability company and single purpose entity with one independent director. Legal counsel to the Mason Multifamily Portfolio Borrower delivered a non-consolidation opinion in connection with the origination of the Mason Multifamily Portfolio Mortgage Loan. The non-recourse carveout guarantors and borrower sponsors of the Mason Multifamily Portfolio Mortgage Loan are James C. Mason and Linda R. Mason, who are principals of Mason Properties.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
47
| Loan #4 | Cut-off Date Balance: | $37,000,000 | ||
| Multifamily – Garden | Mason Multifamily Portfolio | Cut-off Date LTV: | 71.6% | |
| Property Addresses – DeKalb, IL 60115 | U/W NCF DSCR: | 1.51x | ||
| U/W NOI Debt Yield: | 9.2% |
Mason Properties provides commercial property management and rentals in DeKalb, Illinois and surrounding communities. Its portfolio of properties includes a range of office, retail, and warehouse space. In addition to commercial property management, Mason Properties owns and operates 12 residential properties throughout DeKalb, Sycamore and Rockford, Illinois. Many of its properties are in proximity to the Northern Illinois University campus, Kishwaukee College, downtown Sycamore and DeKalb.
The Properties. The Mason Multifamily Portfolio Properties are comprised of eight garden style multifamily properties located in DeKalb, Illinois. The Mason Multifamily Portfolio Properties were constructed between 1967 and 1984. The Mason Multifamily Portfolio Properties comprise 92 studio units (14.7% of unit count), 219 one-bedroom units (35.0% of unit count), 154 two-bedroom units (24.6% of unit count), 125 three-bedroom units (20.0% of unit count), 2 four-bedroom units (0.3% of unit count) and 34 five-bedroom units (5.4% of unit count). As of June 15, 2021, the Mason Multifamily Portfolio Properties were 91.9% occupied. Since 2014, occupancy at the Mason Multifamily Portfolio Properties ranged from 91.9% to 98.7%, with an average occupancy of 95.8%. Two residents at the Ashbury Court property and one tenant at the Ashbury East property utilize Section 8 vouchers to pay their rent.
The following table presents certain information relating to the Mason Multifamily Portfolio Properties:
Portfolio Summary(1)
| Property | Year Built/ Renovated |
Occ. %(2) | Units(2) | % of Total Units(2) | Appraised Value | Allocated
Cut-off Date Balance (“ALA”) |
% of ALA | U/W NCF | % Student(3) |
| University Heights | 1972/NAP | 87.7% | 171 | 27.3% | $12,100,000 | $8,699,947 | 23.5% | $680,812 | 50% |
| Ashbury Court | 1978/NAP | 91.7% | 144 | 23.0% | $10,900,000 | $7,837,143 | 21.2% | $668,529 | 15% |
| James Court | 1967/NAP | 92.7% | 96 | 15.3% | $8,430,000 | $6,061,204 | 16.4% | $567,473 | 15% |
| Old Orchard | 1984/NAP | 94.4% | 36 | 5.8% | $4,680,000 | $3,364,939 | 9.1% | $289,890 | 60% |
| Ashbury East | 1978/NAP | 95.0% | 60 | 9.6% | $4,550,000 | $3,271,468 | 8.8% | $290,945 | 15% |
| Colonial West | 1984/NAP | 97.5% | 40 | 6.4% | $3,910,000 | $2,811,306 | 7.6% | $253,528 | 65% |
| Colonial East | 1984/NAP | 92.1% | 38 | 6.1% | $3,720,000 | $2,674,695 | 7.2% | $225,277 | 65% |
| Cardinal Apartments | 1976/NAP | 95.1% | 41 | 6.5% | $3,420,000 | $2,279,298 | 6.2% | $224,392 | 85% |
| Total/Wtd. Avg. | 91.9% | 626 | 100.0% | $51,710,000 | $37,000,000 | 100.0% | $3,200,846 | 38% |
| (1) | Information obtained from the appraisals. |
| (2) | Information obtained from the underwritten rent rolls. |
| (3) | Information obtained from the borrower sponsors. |
The following table presents certain information relating to the unit mix of the Mason Multifamily Portfolio Properties:
Portfolio Unit Mix Summary(1)
| Property | NRA | Units | Studio,
One Bath |
One
Bed, One Bath |
Two
Bed, One Bath |
Two
Bed, Two Bath |
Three
Bed, One Bath |
Three
Bed, 1.5 Bath |
Three
Bed, Two Bath |
Four
Bed, 2.5 Bath |
Five
Bed, 2.5 Bath |
| University Heights | 107,468 | 171 | 58 | 70 | 21 | 0 | 17 | 0 | 5 | 0 | 0 |
| Ashbury Court | 103,122 | 144 | 24 | 42 | 60 | 0 | 0 | 18 | 0 | 0 | 0 |
| James Court | 67,705 | 96 | 9 | 39 | 0 | 40 | 0 | 0 | 8 | 0 | 0 |
| Old Orchard | 64,500 | 36 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2 | 34 |
| Ashbury East | 41,700 | 60 | 0 | 40 | 20 | 0 | 0 | 0 | 0 | 0 | 0 |
| Colonial West | 44,000 | 40 | 0 | 0 | 0 | 0 | 0 | 40 | 0 | 0 | 0 |
| Colonial East | 40,700 | 38 | 1 | 0 | 1 | 0 | 0 | 36 | 0 | 0 | 0 |
| Cardinal Apartments | 24,816 | 41 | 0 | 28 | 12 | 0 | 1 | 0 | 0 | 0 | 0 |
| Total/Wtd. Avg. | 494,011 | 626 | 92 | 219 | 114 | 40 | 18 | 94 | 13 | 2 | 34 |
| (1) | Information obtained from the underwritten rent rolls. |
The following table presents historical occupancy percentages at the Mason Multifamily Portfolio Properties:
Historical Occupancy
12/31/2014(1) |
12/31/2015(1) |
12/31/2016(1) |
12/31/2017(1) |
12/31/2018(1) |
12/31/2019(1) |
12/31/2020(1) |
6/15/2021(2) |
| 97.9% | 97.1% | 96.5% | 98.7% | 96.7% | 93.6% | 93.8% | 91.9% |
| (1) | Information obtained from the borrower sponsors. |
| (2) | Information obtained from the underwritten rent rolls. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Loan #4 | Cut-off Date Balance: | $37,000,000 | ||
| Multifamily – Garden | Mason Multifamily Portfolio | Cut-off Date LTV: | 71.6% | |
| Property Addresses – DeKalb, IL 60115 | U/W NCF DSCR: | 1.51x | ||
| U/W NOI Debt Yield: | 9.2% |
COVID-19 Update. As of June 15, 2021, the Mason Multifamily Portfolio Properties are open and operating. Approximately 98.2%, 88.1%, 100.0%, 94.9%, 92.2% and 94.7% of rent had been collected for the months of January 2021, February 2021, March 2021, April 2021, May 2021 and June 2021, respectively. The average rent collection from January 2021 through June 2021 was 94.7%. The Mason Multifamily Portfolio Mortgage Loan is not subject to any modification or forbearance request. The first debt service payment of the Mason Multifamily Portfolio Mortgage Loan is due in August 2021.
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Mason Multifamily Portfolio Properties:
Cash Flow Analysis
| 2018 | 2019 | 2020 | TTM
6/30/2021 | U/W | %(1) | U/W $ per Unit | |||||||||
| Base Rent | $5,245,421 | $5,402,716 | $5,138,546 | $5,229,094 | $5,319,341 | 85.4% | $8,497 | ||||||||
| Grossed Up Vacant Space | 0 | 0 | 0 | 0 | 451,080 | 7.2 | 721 | ||||||||
| Gross Potential Rent | $5,245,421 | $5,402,716 | $5,138,546 | $5,229,094 | $5,770,421 | 92.7% | $9,218 | ||||||||
| Other Income(2) | 490,277 | 457,576 | 403,129 | 407,698 | 456,558 | 7.3 | 729 | ||||||||
| Net Rental Income | $5,735,698 | $5,860,292 | $5,541,675 | $5,636,792 | $6,226,979 | 100.0% | $9,947 | ||||||||
| (Vacancy & Credit Loss) | (12,732) | (16,185) | (25,205) | (16,888) | (459,060)(3) | (8.0)(3) | (733) | ||||||||
| Effective Gross Income | $5,722,966 | $5,844,107 | $5,516,470 | $5,619,904 | $5,767,919 | 92.6% | $9,214 | ||||||||
| Real Estate Taxes | 771,731 | 764,480 | 793,973 | 768,205 | 809,844 | 14.0 | 1,294 | ||||||||
| Insurance | 160,762 | 209,117 | 262,608 | 202,449 | 280,082 | 4.9 | 447 | ||||||||
| Management Fee | 169,994 | 177,373 | 186,567 | 220,368 | 173,038 | 3.0 | 276 | ||||||||
| Other Operating Expenses | 1,059,143 | 1,088,719 | 1,104,857 | 1,177,272 | 1,098,364 | 19.0 | 1,755 | ||||||||
| Total Operating Expenses | $2,161,629 | $2,239,689 | $2,348,005 | $2,368,295 | $2,361,327 | 40.9% | $3,772 | ||||||||
| Net Operating Income | $3,561,337 | $3,604,418 | $3,168,466 | $3,251,609 | $3,406,592 | 59.1% | $5,442 | ||||||||
| Capital Expenditures | 0 | 0 | 0 | 47,007 | 205,746 | 3.6 | 329 | ||||||||
| Net Cash Flow | $3,561,337 | $3,604,418 | $3,168,466 | $3,204,602 | $3,200,846 | 55.5% | $5,113 | ||||||||
| NOI DSCR | 1.68x | 1.70x | 1.50x | 1.54x | 1.61x | ||||||||||
| NCF DSCR | 1.68x | 1.70x | 1.50x | 1.51x | 1.51x | ||||||||||
| NOI Debt Yield | 9.6% | 9.7% | 8.6% | 8.8% | 9.2% | ||||||||||
| NCF Debt Yield | 9.6% | 9.7% | 8.6% | 8.7% | 8.7% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Other Income is comprised of laundry income, parking income, storage income, pet fees, late fees, forfeited security deposits and various other fees. |
| (3) | The underwritten economic vacancy is 8.0%. The Mason Multifamily Portfolio Properties were 91.9% physically occupied as of June 15, 2021. |
Appraisals. As of the appraisal valuation date of May 3, 2021, the Mason Multifamily Portfolio Properties had an aggregate “as-is” appraised value of $51,710,000.
Environmental Matters. According to the Phase I environmental site assessments dated May 10, 2021, there was no evidence of any recognized environmental conditions at the Mason Multifamily Portfolio Properties. The Phase I environmental site assessments identified elevated radon levels at the Ashbury East property. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus.
Market Overview and Competition. The Mason Multifamily Portfolio Properties are located in DeKalb, Illinois, approximately 64.4 miles west of Chicago, approximately 58.3 miles west of Chicago O’Hare Airport and approximately 40.5 miles southeast of Rockford, Illinois. Primary access to the Mason Multifamily Portfolio Properties is provided by Interstate-88 with two nearby interchanges at Peace Road and Annie Glidden Road. Development to the southeast of the Mason Multifamily Portfolio Properties along Interstate-88 features several distribution centers: Nestle, Goodyear, 3M, Monsanto, Alloyd and Panduit occupy almost 4,000,000 square feet of industrial space. The Park 88 Business Park at I-88 and Peace Road is a master planned, 565-acre business park. When built out, the development can accommodate 7,000,000 square feet of distribution and bulk warehouse space. The City of DeKalb announced in January 2020 the development of a 1.6 million square foot industrial complex pre-leased to Ferrara Candy Company in the ChicagoWest Business Park. In June 2020, Facebook announced the development of a 907,000 square foot, estimated $800 million data center project along the I-88 corridor in DeKalb. According to the appraisals, the project is estimated to provide 100 permanent jobs and hundreds of construction jobs to the DeKalb area.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
49
| Loan #4 | Cut-off Date Balance: | $37,000,000 | ||
| Multifamily – Garden | Mason Multifamily Portfolio | Cut-off Date LTV: | 71.6% | |
| Property Addresses – DeKalb, IL 60115 | U/W NCF DSCR: | 1.51x | ||
| U/W NOI Debt Yield: | 9.2% |
DeKalb is best known as the home of Northern Illinois University (“NIU”), the primary economic driver of the county. NIU employs roughly 8,000 people including nearly 3,344 faculty members. According to the appraisals, it is estimated that the university’s impact on the area contributes $385 million to the local economy and accounts for over 17% of all the wages in DeKalb County. NIU is a teaching and research institution with an enrollment of approximately 18,000 students. The university is composed of seven degree-granting colleges, which offer 52 undergraduate majors and 74 graduate programs, including 10 PhD programs, doctoral degrees in Education and the Juris Doctorate (law degree).
The DeKalb Market Square is one of the primary retail centers surrounding the Mason Multifamily Portfolio Properties. The 360,000 square foot center is home to a Wal-Mart Supercenter and Lowes Home Improvement store. Northland Plaza, another major retail center in the market, is comprised of 300,000 square feet and is anchored by national retailers such as Bed Bath & Beyond, Hobby Lobby, Ross Dress for Less, Planet Fitness, PetSmart, and Aldi.
According to the appraisals, as of the first quarter of 2021, the Far Northwest Chicago Suburbs submarket had an inventory of approximately 29,761 units, a vacancy rate of approximately 3.8% and effective rents of $1,228 per unit per month. According to a third party market research report, the Mason Multifamily Portfolio Properties are classified as 2 star with a DeKalb multifamily submarket vacancy of 7.4% and no new supply. The sales comparables for the last 12 months reported an average vacancy of 6.7%. Since 2014, occupancy at the Mason Multifamily Portfolio Properties ranged from 91.7% to 98.7%, with an average occupancy of 95.8%.
The following table presents certain information relating to the appraisals’ market rent conclusion for the Mason Multifamily Portfolio Properties:
Multifamily Market Rent Summary(1)
| Property | Units | Avg. Size (SF) | Avg. Monthly In-Place Rent per Unit(2) |
Avg. Monthly In-Place Rent PSF(2) |
Avg. Monthly Market Rent per Unit(3) |
Avg. Monthly Market Rent PSF(3) |
| University Heights | 171 | 628 | $671 | $1.13 | $689 | $1.10 |
| Ashbury Court | 144 | 716 | $724 | $1.05 | $735 | $1.03 |
| James Court | 96 | 705 | $775 | $1.10 | $778 | $1.10 |
| Old Orchard | 36 | 1,792 | $1,174 | $0.66 | $1,151 | $0.64 |
| Ashbury East | 60 | 695 | $787 | $1.15 | $783 | $1.13 |
| Colonial West | 40 | 1,100 | $878 | $0.80 | $900 | $0.82 |
| Colonial East | 38 | 1,071 | $883 | $0.84 | $892 | $0.83 |
| Cardinal Apartments | 41 | 605 | $724 | $1.23 | $726 | $1.20 |
| Total/Wtd. Avg. | 626 | 789 | $771 | $1.05 | $779 | $1.03 |
| (1) | Information obtained from the underwritten rent rolls. |
| (2) | Excludes vacant space. |
| (3) | Information obtained from the appraisals. |
Escrows.
Real Estate Taxes – The Mason Multifamily Portfolio Mortgage Loan documents require an upfront real estate tax reserve of $377,927 and ongoing monthly tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next 12 months (initially $67,487).
Insurance – The Mason Multifamily Portfolio Borrower is not required to make monthly escrow deposits for insurance premiums as long as the Mason Multifamily Portfolio Borrower maintains a blanket policy acceptable to the lender. If such condition is not satisfied, the Mason Multifamily Portfolio Borrower is required to make monthly deposits into an insurance reserve equal to 1/12 of the estimated annual insurance premiums.
Replacement Reserves – The Mason Multifamily Portfolio Mortgage Loan documents require ongoing monthly replacement reserves of $19,303, subject to a cap of $694,908. However, in lieu of the Mason Multifamily Portfolio Borrower depositing the monthly amount, the Mason Multifamily Portfolio Borrower has an option to deposit a letter of credit in an amount equal to the cap of $694,908.
Immediate Repairs – The Mason Multifamily Portfolio Mortgage Loan documents require an upfront immediate repairs reserve of $44,500.
Radon Reserve –The Mason Multifamily Portfolio Mortgage Loan documents require an upfront reserve of $5,000 with respect to radon testing and any necessary radon work at the Ashbury East property.
Lockbox and Cash Management. Upon the occurrence and continuance of a Cash Management Trigger Event (as defined below), the Mason Multifamily Portfolio Borrower is required to establish a lender-controlled lockbox account and the Mason Multifamily Portfolio Borrower and property manager are required to deposit all rents into the lockbox account within one business day of receipt. During the continuance of a Cash Management Trigger Event, all funds in the lockbox account are required to be swept each business day to a lender-controlled cash management account and disbursed in accordance with the Mason Multifamily Portfolio Mortgage Loan
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
50
| Loan #4 | Cut-off Date Balance: | $37,000,000 | ||
| Multifamily – Garden | Mason Multifamily Portfolio | Cut-off Date LTV: | 71.6% | |
| Property Addresses – DeKalb, IL 60115 | U/W NCF DSCR: | 1.51x | ||
| U/W NOI Debt Yield: | 9.2% |
documents, and all excess funds on deposit in the cash management account (after payment of required monthly reserve deposits, the debt service payment on the Mason Multifamily Portfolio Mortgage Loan, operating expenses and cash management bank fees) is required to be applied as follows: (a) if a Cash Sweep Trigger Event (as defined below) has occurred and is continuing, to the lender-controlled excess cash flow account or (b) if no Cash Sweep Trigger Event has occurred and is continuing, to the Mason Multifamily Portfolio Borrower.
A “Cash Management Trigger Event” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | any bankruptcy action involving the Mason Multifamily Portfolio Borrower, the guarantors, the key principal or the property manager; |
| (iii) | the trailing 12-month period debt service coverage ratio falling below 1.25x; or |
| (iv) | the indictment for fraud or misappropriation of funds of the Mason Multifamily Portfolio Borrower, the guarantors, the key principal or an affiliated or third party property manager (provided that, in the case of the third party property manager, such fraud or misappropriation is related to any of the Mason Multifamily Portfolio Properties), or any director or officer of the aforementioned. |
A Cash Management Trigger Event will end upon the occurrence of the following:
| ● | with regard to clause (i) above, the cure of such event of default; |
| ● | with regard to clause (ii) above, the filing being discharged, stayed or dismissed within 45 days for the Mason Multifamily Portfolio Borrower, the guarantors or the key principal, or within 120 days for the property manager, and the lender’s determination that such filing does not materially affect the Mason Multifamily Portfolio Borrower’s, the guarantors’, the key principal’s or the property manager’s monetary obligations; |
| ● | with regard to clause (iii) above, the trailing 12-month debt service coverage ratio being at least 1.30x for two consecutive calendar quarters; or |
| ● | with regard to clause (iv) above, the dismissal of the applicable indictment with prejudice or acquittal of the applicable person, or the replacement of the property manager with a third party property manager that constitutes a qualified property manager under the Mason Multifamily Portfolio Mortgage Loan documents. |
A “Cash Sweep Trigger Event” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | any bankruptcy action involving the Mason Multifamily Portfolio Borrower, the guarantors, the key principal or the property manager; or |
| (iii) | the trailing 12-month period debt service coverage ratio falling below 1.20x. |
A Cash Sweep Trigger Event will end upon the occurrence of the following:
| ● | with regard to clause (i) above, the cure of such event of default; |
| ● | with regard to clause (ii) above, the filing being discharged, stayed or dismissed within 45 days for the Mason Multifamily Portfolio Borrower, the guarantors or the key principal, or within 120 days for the property manager, and the lender’s determination that such filing does not materially affect the Mason Multifamily Portfolio Borrower’s, the guarantors’, the key principal’s or the property manager’s monetary obligations; or |
| ● | with regard to clause (iii) above, the trailing 12-month debt service coverage ratio being at least 1.25x for two consecutive calendar quarters. |
Property Management. The Mason Multifamily Portfolio Properties are self-managed by an affiliate of the borrower sponsors.
Partial Release. The Mason Multifamily Portfolio Borrower may obtain a release of an individual property from the lien of the mortgage, subject to satisfaction of certain conditions including, but not limited to (i) defeasance (or during the open period, prepayment) in an amount equal to 125% of the allocated loan amount, (ii) after giving effect to such release, the aggregate allocated loan amount with respect to all of the Mason Multifamily Portfolio Properties released will not exceed 25% of the original amount of the Mason Multifamily Portfolio Mortgage Loan, (iii) the debt service coverage ratio after the release is no less than the greater of (a) the debt service coverage ratio prior to the release and (b) the debt service coverage ratio at origination, (iv) the loan-to-value ratio after the release is no more than the lesser of (a) the loan-to-value ratio prior to the release and (b) the loan-to-value ratio at origination, (v) the debt yield after release is no less than the greater of (a) the debt yield prior to the release and (b) the debt yield at origination, (vi) after giving effect to such release, the percentage of units, in the aggregate, leased to students at the remaining Mason Multifamily Portfolio Properties will not be greater than the percentage of units, in the aggregate, leased to students at all of the individual Mason Multifamily Portfolio Properties as of the origination date and (vii) the lender receives a REMIC opinion.
In addition, a partial release is permitted following a casualty or condemnation affecting an individual Mason Multifamily Portfolio Property. See “Description of the Mortgage Pool—Certain Terms of the Mortgage Loans—Releases; Partial Releases” in the Preliminary Prospectus.
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. None.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
51
| Loan #4 | Cut-off Date Balance: | $37,000,000 | ||
| Multifamily – Garden | Mason Multifamily Portfolio | Cut-off Date LTV: | 71.6% | |
| Property Addresses – DeKalb, IL 60115 | U/W NCF DSCR: | 1.51x | ||
| U/W NOI Debt Yield: | 9.2% |
Terrorism Insurance. The Mason Multifamily Portfolio Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Mason Multifamily Portfolio Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Mason Multifamily Portfolio Properties, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
52
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
53
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
54
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
55
| No. 5 – Gramercy Plaza | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Wells Fargo Bank, National Association | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (DBRSM/Fitch/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Office – Suburban | ||||
| Original Principal Balance: | $27,200,000 | Location: | Torrance, CA | ||||
| Cut-off Date Balance: | $27,200,000 | Size: | 157,008 SF | ||||
| % of Initial Pool Balance: | 3.6% | Cut-off Date Balance Per SF: | $173.24 | ||||
| Loan Purpose: | Acquisition | Maturity Date Balance Per SF: | $173.24 | ||||
| Borrower Sponsor: | Jeffrey Pori | Year Built/Renovated: | 1991/2019 | ||||
| Guarantor: | Jeffrey Pori | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.2810% | Property Manager: | KB Property Advisors, LLC | ||||
| Note Date: | June 11, 2021 | Current Occupancy (As of): | 91.3% (6/4/2021) | ||||
| Seasoning: | 1 month | 2020 Occupancy(2): | 87.3% | ||||
| Maturity Date: | June 11, 2031 | 2019 Occupancy(2): | 70.9% | ||||
| IO Period: | 120 months | 2018 Occupancy(2): | 23.7% | ||||
| Loan Term (Original): | 120 months | 2017 Occupancy(2): | 94.8% | ||||
| Amortization Term (Original): | NAP | As-Is Appraised Value: | $45,000,000 | ||||
| Loan Amortization Type: | Interest Only | As-Is Appraised Value Per SF: | $286.61 | ||||
| Call Protection: | L(25),D(91),O(4) | As-Is Appraisal Valuation Date: | April 26, 2021 | ||||
| Lockbox Type: | Soft/Springing Cash Management | Underwriting and Financial Information(3) | |||||
| Additional Debt: | None | TTM 3/31/2021 NOI(4): | $1,964,759 | ||||
| Additional Debt Type (Balance): | NAP | YE 2020 NOI(4): | $1,402,476 | ||||
| YE 2019 NOI(4): | $42,780 | ||||||
| YE 2018 NOI: | NAV | ||||||
| U/W Revenues: | $4,906,130 | ||||||
| U/W Expenses: | $1,781,775 | ||||||
| Escrows and Reserves(1) | U/W NOI(4): | $3,124,355 | |||||
| Initial | Monthly | Cap | U/W NCF: | $3,067,832 | |||
| Real Estate Taxes | $119,760 | $29,940 | NAP | U/W DSCR based on NOI/NCF: | 3.45x / 3.39x | ||
| Insurance | $0 | Springing | NAP | U/W Debt Yield based on NOI/NCF: | 11.5% / 11.3% | ||
| Replacement Reserve | $0 | $4,710 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 11.5% / 11.3% | ||
| TI/LC Reserve | $4,000,000 | Springing | NAP | Cut-off Date LTV Ratio: | 60.4% | ||
| Rent Concession Reserve | $740,024 | NAP | NAP | LTV Ratio at Maturity: | 60.4% | ||
| Existing TI/LC Reserve | $105,255 | NAP | NAP | ||||
| Sources and Uses | ||||||
| Sources | Uses | |||||
| Original loan amount | $27,200,000 | 52.8% | Purchase Price | $45,000,000 | 87.4% | |
| Borrower Equity | 24,304,144 | 47.2 | Closing costs | 1,539,105 | 3.0 | |
| Reserves | 4,965,039 | 9.6 | ||||
| Total Sources | $51,504,144 | 100.0% | Total Uses | $51,504,144 | 100.0% | |
| (1) | See “Escrows” section below. |
| (2) | Represents annual occupancy for each year. |
| (3) | While the Gramercy Plaza Mortgage Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Gramercy Mortgage Loan more severely than assumed in the underwriting of the Gramercy Plaza Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors— Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (4) | The increase in net operating income from 2019 to 2020 is primarily driven by three new leases representing 49.2% of in-place underwritten base rent that began during the second half of 2019. The increase in net operating income from 2020 to TTM 3/31/2021 is primarily driven by two leases signed in 2021 representing 5.1% of in-place underwritten base rent. The increase from TTM 3/31/2021 net operating income to U/W net operating income is driven by one new lease representing 3.5% of in-place underwritten base rent, as well as the burn off of free rent for leases signed in 2020 and 2021, primarily U.S. Auto Parts Network, Inc. which represents 19.5% of the in-place underwritten base rent and began paying full rent in February 2021. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
56
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
The Mortgage Loan. The mortgage loan (the “Gramercy Plaza Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 157,008 square foot office building located in Torrance, California (the “Gramercy Plaza Property”).
The Borrower and Borrower Sponsor. The borrower is KB Gramercy Plaza, DST (the “Gramercy Plaza Borrower”), a Delaware statutory trust. The Gramercy Plaza Borrower has entered into a master lease with an affiliated master tenant with respect to the Gramercy Plaza Property. The master tenant is structured as a single purpose entity. The master tenant’s interest in the master lease and all rents are assigned to the lender and the borrower sponsor has a 100% ownership interest in the master tenant. The master lease is subordinate to the Gramercy Plaza Mortgage Loan. There is no income underwritten from the master lease as the Gramercy Plaza Property was underwritten to the underlying property income. The Gramercy Plaza Borrower is managed by an affiliated signatory trustee that is controlled by the guarantor. The signatory trustee and the master tenant have one independent director, which is the same for each. Legal counsel to the Gramercy Plaza Borrower delivered a non-consolidation opinion in connection with the origination of the Gramercy Plaza Mortgage Loan. See “Description of the Mortgage Pool—Delaware Statutory Trusts” in the Preliminary Prospectus.
The borrower sponsor and non-recourse carveout guarantor is Jeffrey Pori (the “Gramercy Plaza Guarantor”), the CEO of Kingsbarn Realty Capital, LLC. Kingsbarn Realty Capital, LLC is a real estate private equity firm focused on providing structured real estate investments to high-net-worth individuals, family trusts, foundations and institutional investors. The company has a current portfolio of approximately 88 assets throughout the United States. Jeffrey Pori reported a deed-in-lieu of foreclosure in 2007 and a personal bankruptcy in 2008. See “Description of the Mortgage Pool–Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.
The lender has the right to require the Gramercy Plaza Borrower to convert from a Delaware statutory trust to a limited liability company upon (i) any event that causes the Gramercy Plaza Mortgage Loan signatory trustee to cease to be the signatory trustee of the Gramercy Park Borrower, (ii) any event resulting in the dissolution of the Gramercy Park Borrower, (iii) an event of default, (iv) the lender’s commercially reasonable determination that the Gramercy Plaza Borrower will be unable to make a material decision or take a material action required in connection with the operation and maintenance of the Gramercy Plaza Property, (v) termination of the master lease, (vi) 90 days prior to the maturity date of the Gramercy Plaza Mortgage Loan, if an executed commitment from an institutional lender to refinance the Gramercy Plaza Mortgage Loan is not delivered to the lender, and (vii) Gramercy Plaza Borrower is prohibited by statutory trust law from satisfying or is otherwise unable to satisfy its obligations under the Gramercy Plaza Mortgage Loan documents.
The Property. The Gramercy Plaza Property comprises a 157,008 square foot, Class A, 4-story office property located in Torrance, California. Constructed in 1991 and renovated in 2019, the Gramercy Plaza Property is situated on a 5.5 acre site. There are 378 parking spaces in a parking structure and 147 surface parking spaces for a total of 525 spaces, representing a parking ratio of 3.34 per 1,000 square feet. The seller of the Gramercy Plaza Property bought the asset in 2018 for $26.2 million, when it was approximately 23.7% occupied and has completed approximately $5.9 million in upgrades to the mechanical systems, common areas, tenant spaces and fund tenant improvements. As of June 4, 2021, the Gramercy Plaza Property was 91.3% leased to 11 tenants, with the largest tenant making up 25.3% of the net rentable area and 27.5% of underwritten base rent.
Major Tenants.
CCH Incorporated (NR/Baa1/BBB+; F/M/S&P; 39,793 square feet; 25.3% of net rentable area; 27.5% of underwritten base rent; April 30, 2028 lease expiration) – CCH Incorporated was founded in 1913 and is a provider of software and information services for tax, accounting and audit work. Since 1995, it has been a subsidiary of Wolters Kluwer, which is the rated entity parent company. Wolters Kluwer is headquartered in the Netherlands and is a global provider of professional information software solutions and services for clinicians, nurses, accountants, lawyers, and the tax, finance, audit, and regulatory sectors. The company has customers in over 180 countries and employs approximately 19,000 people worldwide.
CCH Incorporated has been a tenant at the Gramercy Plaza Property since 2019. The tenant has 2, 5-year renewal options at fair market rent, with 10 months’ notice. In addition, the tenant may terminate Suite 112, representing 701 square feet, as of the end of the fourth lease year (8/31/2023), with no less than 6 months’ notice
U.S. Auto Parts Network, Inc. (25,265 square feet; 16.1% of net rentable area; 19.5% of underwritten base rent; February 12, 2026 lease expiration) – U.S. Auto Parts Network, Inc. is an online provider of aftermarket auto parts and accessories. Through their website CarParts.com, the company offers a wide selection of new auto parts for car repair, maintenance and collision, with a catalog of over 1 million products. The company recorded $144.8 million in sales in the first quarter of 2021, which represented a 65% increase over first quarter of 2020. Adjusted EBITDA decreased from $4.3 million in the first quarter of 2020 to $3.6 million in the first quarter of 2021, reportedly due to the ramp up of a new distribution center in Texas, adverse weather, and investments in brand awareness that didn’t exist in the first quarter of 2020.
U.S. Auto Parts Network, Inc. has been a tenant at the Gramercy Plaza Property since 2020, and has one, 5-year renewal option at fair market rent with eight months’ notice. The tenant can terminate its lease, in whole or part, at any time after the 24th month of the renewal term, with 180 days’ written notice.
Pioneer Electronics (USA) Inc. (24,652 square feet; 15.7% of net rentable area; 15.3% of underwritten base rent; December 31, 2022 lease expiration) – Pioneer Electronics (USA) Inc. (“Pioneer”) is under the larger Pioneer umbrella, which was founded in 1938. The company develops and manufactures electronics products for the car, home, and business markets.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
57
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
Pioneer has been a tenant at the Gramercy Plaza Property since 2018 and has two, 5-year extension options with 9 months’ notice. The rent for the first extension option will be 95% of the then-current fair market rent and rent for the second option will be then current fair market rent.
The following table presents certain information relating to the tenancy at the Gramercy Plaza Property:
Major Tenant
| Tenant Name | Credit
Rating (Fitch/Moody’s/ S&P)(1) |
Tenant NRSF | %
of NRSF |
Annual U/W Base Rent PSF(1) |
Annual U/W Base Rent(2) |
% of Total Annual U/W Base Rent | Lease
Expiration Date |
Extension Options | Termination Option (Y/N) | |
| Major Tenants | ||||||||||
| CCH Incorporated | NR/Baa1/BBB+ | 39,793 | 25.3% | $33.12 | $1,317,944 | 27.5% | 4/30/2028 | 2-5yr | Y(3) | |
| U.S. Auto Parts Network, Inc. | NR/NR/NR | 25,265 | 16.1% | $36.96 | $933,794 | 19.5% | 2/12/2026 | 1-5yr | Y(4) | |
| Pioneer Electronics (USA) Inc. | NR/NR/NR | 24,652 | 15.7% | $29.76 | $733,644 | 15.3% | 12/31/2022 | 2-5yr | N | |
| Sanrio, Inc | NR/NR/NR | 21,268 | 13.5% | $33.74 | $717,510 | 15.0% | 4/30/2026 | 1-5yr | N | |
| Total Major Tenants | 110,978 | 70.7% | $33.37 | $3,702,893 | 77.4% | |||||
Non-Major Tenant
|
32,325
|
20.6%
|
$33.46
|
$1,081,701
|
22.6%
|
|||||
| Occupied Collateral | 143,303 | 91.3% | $33.39 | $4,784,593 | 100.0% | |||||
| Vacant | 13,705 | 8.7% | ||||||||
| Collateral Total | 157,008 | 100.0% | ||||||||
| (1) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
| (2) | The Annual U/W Base Rent PSF and Annual U/W Base Rent shown above include rent steps through June 2022 totalling $169,495. |
| (3) | Tenant has the right to terminate Suite 112, representing 701 square feet, as of the end of the fourth lease year (8/31/2023), with no less than 6 months’ notice. |
| (4) | The tenant can terminate its lease, in whole or part, at any time after the 24th month of the renewal term, with 180 days’ written notice. |
The following table presents certain information relating to the lease rollover schedule at the Gramercy Plaza Property:
Lease Expiration Schedule(1)(2)
| Year
Ending December 31, |
No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 1 | 1,175 | 0.7% | 1,175 | 0.7% | $35,250 | 0.7% | $30.00 |
| 2022 | 2 | 26,406 | 16.8% | 27,581 | 17.6% | $796,947 | 16.7% | $30.18 |
| 2023 | 1 | 1,297 | 0.8% | 28,878 | 18.4% | $12,360 | 0.3% | $9.53 |
| 2024 | 0 | 0 | 0.0% | 28,878 | 18.4% | $0 | 0.0% | $0.00 |
| 2025 | 0 | 0 | 0.0% | 28,878 | 18.4% | $0 | 0.0% | $0.00 |
| 2026 | 4 | 59,914 | 38.2% | 88,792 | 56.6% | $2,136,076 | 44.6% | $35.65 |
| 2027 | 2 | 14,718 | 9.4% | 103,510 | 65.9% | $486,016 | 10.2% | $33.02 |
| 2028 | 2 | 39,793 | 25.3% | 143,303 | 91.3% | $1,317,944 | 27.5% | $33.12 |
| 2029 | 0 | 0 | 0.0% | 143,303 | 91.3% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 143,303 | 91.3% | $0 | 0.0% | $0.00 |
| 2031 | 0 | 0 | 0.0% | 143,303 | 91.3% | $0 | 0.0% | $0.00 |
| Thereafter | 0 | 0 | 0.0% | 143,303 | 91.3% | $0 | 0.0% | $0.00 |
| Vacant | 13,705 | 8.7% | 157,008 | 100.0% | $0 | 0.0% | $0.00 | |
| Total/Weighted Average | 12 | 157,008 | 100.0% | $4,784,593 | 100.0% | $33.39(3) |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease that are not considered in the Lease Expiration Schedule. |
| (3) | Total/Weighted Average Annual U/W Base Rent PSF excludes vacant space. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
58
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
The following table presents historical occupancy percentages at the Gramercy Plaza Property:
Historical Occupancy(1)
2017 |
2018 |
2019 |
2020 |
6/4/2021(2) |
| 94.8% | 23.7% | 70.9% | 87.3% | 91.3% |
| (1) | Historical Occupancy obtained from a third party research provider. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19 Update. As of June 21, 2021, the Gramercy Plaza Property is open and operating. Approximately 100.0% of tenants by underwritten base rent and 100.0% of tenants by net rentable area paid full rent in May and June. The first payment date for the Gramercy Plaza Mortgage Loan will be July 11, 2021.
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Gramercy Plaza Property:
Cash Flow Analysis
| 2019 | 2020 | TTM 3/31/2021 | U/W | %(1) | U/W
$ per SF | |
| Base Rent | $1,441,141 | $2,871,288 | $3,427,104 | $5,286,196(2) | 97.3% | $33.67(2) |
| Grossed Up Vacant Space | 0 |
0 |
0 |
0 |
0 |
0.00 |
| Gross Potential Rent | $1,441,141 | $2,871,288 | $3,427,104 | $5,286,196 | 97.3% | $33.67 |
| Total Recoveries | 4,485 | 22,332 | 44,382 | 116,216 | 2.1 | 0.74 |
| Other Income | 0 | 21,516 | 24,564 | 24,564 | 0.5 | 0.16 |
| Parking/Garage/Other | 10,468 |
9,287 |
7,774 |
7,774 |
0.1 |
0.05 |
| Net Rental Income | $1,456,094 | $2,924,423 | $3,503,824 | $5,434,750 | 100.0% | $34.61 |
| (Vacancy & Credit Loss) | 0 |
0 |
0 |
(528,620) |
(10.0) |
(3.37) |
| Effective Gross Income | $1,456,094 | $2,924,423 | $3,503,824 | $4,906,130 | 90.3% | $31.25 |
| Real Estate Taxes | 418,427 | 311,156 | 318,887 | 524,676 | 10.7 | 3.34 |
| Insurance | 55,445 | 72,222 | 70,683 | 27,184 | 0.6 | 0.17 |
| Management Fee | 52,867 | 86,860 | 107,652 | 147,184 | 3.0 | 0.94 |
| Other Operating Expenses | 886,576 |
1,051,709 |
1,041,843 |
1,082,732 |
22.1 |
6.90 |
| Total Operating Expenses | $1,413,314 | $1,521,947 | $1,539,065 | $1,781,775 | 36.3% | $11.35 |
| Net Operating Income(3) | $42,780 | $1,402,476 | $1,964,759 | $3,124,355 | 63.7% | $19.90 |
| Replacement Reserves | 0 | 0 | 0 | 56,523 | 1.2 | 0.36 |
| TI/LC | 0 |
0 |
0 |
0 |
0.0 |
0.00 |
| Net Cash Flow | $42,780 | $1,402,476 | $1,964,759 | $3,067,832 | 62.5% | $19.54 |
| NOI DSCR | 0.05x | 1.55x | 2.17x | 3.45x | ||
| NCF DSCR | 0.05x | 1.55x | 2.17x | 3.39x | ||
| NOI Debt Yield | 0.2% | 5.2% | 7.2% | 11.5% | ||
| NCF Debt Yield | 0.2% | 5.2% | 7.2% | 11.3% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Base Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | The Annual U/W Base Rent per SF and Annual U/W Base Rent includes rent steps through June 2022 totaling $169,495. |
| (3) | The increase in net operating income from 2019 to 2020 is primarily driven by three new leases representing 49.2% of in-place underwritten base rent that began during the second half of 2019. The increase in net operating income from 2020 to TTM 3/31/2021 is primarily driven by two leases signed in 2021 representing 5.1% of in-place underwritten base rent. The increase from TTM 3/31/2021 net operating income to U/W net operating income is driven by one new lease representing 3.5% of in-place underwritten base rent, as well as the burn off of free rent for leases signed in 2020 and 2021, primarily U.S. Auto Parts Network, Inc. which represents 19.5% of the in-place underwritten base rent and began paying full rent in February 2021. |
Appraisal. The appraiser concluded to an “As-Is and Stabilized” market value of $45,000,000 as of April 26, 2021.
Environmental Matters. According to the Phase I environmental site assessment dated May 3, 2021, there are no Recognized, Controlled Recognized, or Historical Recognized Environmental Conditions at the Gramercy Plaza Property.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
Market Overview and Competition. The Gramercy Plaza Property is located in Torrance, California, approximately 16.4 miles south of downtown Los Angeles. Torrance is the second largest city in the South Bay area and located approximately 14.3 miles to the Port of Long Beach and 13.4 miles to the Port of Los Angeles. Additionally, it is located 9.6 miles to Los Angeles International Airport. The Gramercy Plaza Property has access throughout the region via I-405 and I-110, located approximately 0.4 miles and 2.0 miles to the Gramercy Plaza Property, respectively.
The Gramercy Plaza Property is located in the northeast section of Torrance in an area that is primarily industrial and office uses. The largest employers within the city include American Honda Motor Company, Robinson Helicopter Company, Honeywell Aerospace, and Lisi Aerospace. The Gramercy Plaza Property is located less than two miles south of the future Torrance Transit Park Ride Regional Terminal, which will eventually be the terminus of the Green Line, a light rail that connects Redondo Beach and Norwalk. The Transit Park is expected to include a 15,000 square foot building for retail, ticket sales, arrival information and security, as well as a 250-car parking lot, a drop off zone and bike storage. According to a third party research report, the estimated 2021 population within a two-and five-mile radius was approximately 70,168 and 643,573, respectively; and the estimated 2021 average household income within the same radii was approximately $104,496 and $109,713, respectively.
According to a third party market research report, the Gramercy Plaza Property is situated within the 190th Street Corridor office submarket of the greater Los Angeles Office Market. As June 17, 2021, the submarket reported a total inventory of approximately 5.2 million square feet with a 13.6% vacancy rate and averaging asking rent of $32.73 per square foot.
The appraiser identified nineteen competitive office buildings in the marketplace with direct rents ranging from $27.00 to $45.60 per square foot, full service gross, with an average of $34.69 per square foot. The appraiser concluded to a market rent of $36.60 per square foot, full service gross.
The following table presents certain information relating to the appraiser’s market rent conclusions for the Gramercy Plaza Property:
Market Rent Summary(1)
| Office | Café Amenity | |
| Market Rent (PSF) | $36.60 | $12.00 |
| Lease Term (Years) | 7 | 7 |
| Lease Type (Reimbursements) | FSG | MG |
| Rent Increase Projection | 3.0% per annum | 3.0% per annum |
| Tenant Improvements (New/Renew (PSF) | $35/$15 | $10/$5 |
| Free Rent (Months) | 7 | 0 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
The table below presents certain information relating to comparable sales pertaining to the Gramercy Plaza Property identified by the appraiser:
Comparable Sales(1)
| Property Name | Location | Year Built/Renovated | Occupancy | Rentable Area (SF) | Sale Date | Sale Price | Sale Price (PSF) |
Gramercy Plaza (Subject) 2050 West 190th Street |
Torrance, CA | 1991/2019 | 91.3%(2) | 157,008(2) | Jun-21 | $45,000,000 | $286.61 |
Pacific Gateway 19191 South Vermont Avenue |
Torrance, CA | 1982/2019(2) | 89.5%(3) | 237,145 | Oct-20 | $55,500,000 | $234.03 |
Park Del Amo 2355-2377 Crenshaw Boulevard |
Torrance, CA | 1985/NAP | 93.0% | 204,468 | May-20 | $39,000,000 | $190.74 |
2160 East Grand Avenue 2160 East Grand Avenue |
El Segundo, CA | 1999/NAP | 0.0% | 157,049 | Nov-19 | $63,500,000 | $404.33 |
101 PCH 101 Pacific Coast Highway |
El Segundo, CA | 1984/2019 | 91.0% | 206,024 | Nov-19 | $97,150,000 | $471.55 |
The Hubb 100 West Broadway |
Long Beach, CA | 1986/2018 | 88.0% | 210,428 | Nov-18 | $60,500,000 | $287.51 |
Gateway Towers 970 & 990 West 190th Street |
Torrance, CA | 1984/NAP | 89.0% | 443,517 | Oct-18 | $106,500,000 | $240.13 |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from underwritten rent roll. |
| (3) | Information obtained from a third party report. |
The following table presents certain information relating to comparable office leases related to Gramercy Plaza Property:
Comparable Office Leases(1)
| Property Name/Location | Year Built/ Renovated | Total GLA (SF) | Occupancy | Tenant | Tenant Size (SF) | Lease Start Date | Lease Term | Annual Base Rent PSF | Lease Type |
Gramercy Plaza (subject) Torrance, CA |
1991/2019 | 157,008(2) | 91.3%(2) | ||||||
Pacific Pointe 879 West 190th Street Gardena, CA |
1988/2009 | 257,156 | 77.8% | NAV
NAV
|
3,891
990
|
1Q2021
1Q2021
|
5.4 Yrs.
3.0 Yrs.
|
$31.80
$31.80
|
FSG
FSG
|
The Enclave 970 West 190th Street 990 West 190th Street Torrance, CA |
1984/NAP 1987/NAP
|
228,500 225,627
|
79.2% 98.1%
|
NAV
NAV
NAV
|
1,830
1,425
6,627
|
2Q2021
2Q2021
2Q2021 |
5.4 Yrs.
3.3 Yrs.
3.3 Yrs.
|
$38.40
$38.40
$37.20
|
FSG
FSG
FSG
|
South Bay Centre 1515 West 190th Street Gardena, CA |
1984/NAP | 210,919 | 89.8% | NAV | 2,349 | 1Q2021 | 2.0 Yrs. | $37.80 | FSG |
Pacific Gateway 19191 South Vermont Avenue Torrance, CA |
1982/2019(3) | 237,145 | 89.5%(3) | NAV | 5,681
|
2Q2021
|
1.0 Yrs.
|
$33.00 | FSG |
Waypoint 21041,
21061, 21081 South Torrance, CA |
NAV | NAV | NAV | NAV | 1,495 | 1Q2021 | 5.3 Yrs. | $30.60 | FSG |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
| (3) | Information obtained from a third party report. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
Escrows.
Real Estate Taxes - The Gramercy Plaza Mortgage Loan documents require an upfront real estate tax reserve of $119,760 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next 12 months (initially $29,940).
Insurance - The Gramercy Plaza Mortgage Loan documents require ongoing monthly insurance reserves in an amount equal to one-twelfth of the insurance premiums that the lender estimates will be payable for the renewal of the coverage afforded by the policies upon the expiration thereof.
Notwithstanding the foregoing, the Gramercy Plaza Borrower’s obligation to make insurance reserve payments will be waived so long as (i) no event of default is continuing, (ii) the insurance policies maintained by the Gramercy Plaza Borrower are part of a blanket or umbrella policy approved by the lender in its reasonable discretion and (iii) the Gramercy Plaza Borrower provides the lender with paid receipts for the payment of the insurance premiums by no later than ten business days prior to the expiration dates of such policies.
Replacement Reserve - The Gramercy Plaza Mortgage Loan documents require ongoing monthly replacement reserves of $4,710. The lender may reassess its estimate no more than once per year and may require the Gramercy Plaza Borrower to increase the monthly deposits if the lender, in its reasonable discretion, determines it is necessary to maintain proper operation of the Gramercy Plaza Property.
TI/LC Reserve - The Gramercy Plaza Mortgage Loan documents require an upfront general TI/LC reserve of $4,000,000 and, commencing on the monthly payment date occurring in July 2025, an ongoing monthly TI/LC reserve of $19,626 ($1.50 per square foot annually).
Rent Concession Reserve - The Gramercy Plaza Mortgage Loan documents require an upfront reserve of $740,024 representing the amount of future rent credits or abatements under existing leases.
Existing TI/LC Reserve - The Gramercy Plaza Mortgage Loan documents require an upfront reserve of $105,255 representing the amount of tenant improvement obligations payable under the lease for AlphaTheta.
Lockbox and Cash Management. The Gramercy Plaza Mortgage Loan is structured with an in-place soft lockbox and the Gramercy Plaza Borrower is required to deposit all rents into the established deposit account. Upon the occurrence of a Cash Trap Event Period (as defined below), a cash management account will be established, into which all funds in the deposit account will be deposited. During the continuance of a Cash Trap Event Period, the lender will withdraw all funds from the cash management account and disburse in accordance with the cash management waterfall, with any excess funds held in an excess cash flow subaccount controlled by the lender and held as additional security for so long as the Cash Trap Event Period continues. Provided, however, that if the Cash Trap Event Period is caused solely by a Major Tenant Event Period (as defined below), then the excess cash flow sweep is capped at $40 per square foot of the applicable Major Tenant (as defined below) space.
A “Cash Trap Event Period” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default under the Gramercy Plaza Mortgage Loan documents; |
| (ii) | the amortizing net cash flow debt service coverage ratio (“NCF DSCR”) being less than 1.25x, tested quarterly; or |
| (iii) | the occurrence of a Major Tenant Event Period (as defined below). |
A Cash Trap Event Period will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), the amortizing NCF DSCR being greater than or equal to 1.30x for two consecutive calendar quarters; |
| ● | with regard to clause (iii), a Major Tenant Re-Tenanting Event (as defined below) has occurred |
| ○ | or with respect solely to clause (a) of the Major Tenant Event, the Major Tenant has resumed its normal business operations in its entire space and is paying full, unabated rent; |
| ○ | or with respect solely to clause (b) of the Major Tenant Event, the Major Tenant bankruptcy or insolvency proceeding has terminated and the Major Tenant lease has been affirmed, both on terms satisfactory to the lender; or |
| ○ | or with respect solely to clause (c) of the Major Tenant Event, the Major Tenant renews or extends the term of its lease pursuant to the terms in its lease or otherwise on terms acceptable to the lender. |
A “Major Tenant Event” means (a) the Major Tenant (as defined below) goes dark, vacates or otherwise fails to continuously occupy its entire space, (b) the Major Tenant files bankruptcy or otherwise becomes involved as a debtor in a bankruptcy proceeding, or (c) the Major Tenant fails to renew or extend its lease, pursuant to the terms in its lease, or otherwise on terms acceptable to the lender, on or prior to the earlier of (i) nine months prior to the lease expiration and (ii) the deadline under the Major Tenant lease.
A “Major Tenant” means the tenant known as CCH Incorporated, and any replacement tenant that enters into a lease (a) including leases with affiliates, for 15% or more of the gross leasable area of the Gramercy Plaza Property, (b) which contains any option, offer, right of first refusal, or entitlement to acquire all or any portion of the Gramercy Plaza Property, and (c) any instrument guaranteeing or providing credit support for any lease meeting the requirements of (a) and/or (b).
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #5 | Cut-off Date Balance: | $27,200,000 | |
| 2050 West 190th Street | Gramercy Plaza | Cut-off Date LTV: | 60.4% | |
| Torrance, CA 90504 | U/W NCF DSCR: | 3.39x | ||
| U/W NOI Debt Yield: | 11.5% |
A “Major Tenant Re-Tenanting Event” means the lender has received satisfactory evidence that the entire Major Tenant space has been leased to one or more satisfactory replacement tenants, on terms satisfactory to the lender, and the tenant(s) has taken occupancy, is operating, all tenant improvement costs and leasing commissions have been paid, or reserved for, and the tenant has commenced paying full, unabated rent.
Property Management. The Gramercy Plaza Property is managed by KB Property Advisors, LLC.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. In connection with the acquisition of the Gramercy Plaza Property, additional funding was contributed to the Gramercy Plaza Borrower by the direct owner of the Delaware statutory trust depositor, which pledged its interest in such depositor to Crayhill Capital Management as security for the $19.4 million funding. Such funding is expressly subordinated to the Gramercy Plaza Mortgage Loan, and the lender may not exercise any remedy that results in control of the Gramercy Plaza Borrower, master tenant, or signatory trustee. See “Description of the Mortgage Pool–Additional Indebtedness–Mezzanine Indebtedness” in the Preliminary Prospectus.
Ground Lease. None.
Terrorism Insurance. The Gramercy Plaza Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Gramercy Plaza Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Gramercy Plaza Property, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
Earthquake Insurance. Not required.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
63
| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
64
| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
65
| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
66
| No. 6 – Bell Towne Centre | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Column Financial, Inc. | Single Asset/Portfolio: | Single Asset | ||||
| Credit Assessment (DBRSM/Fitch/Moody’s): | NR/NR/NR | Property Type – Subtype: | Retail – Shadow Anchored | ||||
| Original Principal Balance: | $26,600,000 | Location: | Phoenix, AZ | ||||
| Cut-off Date Balance: | $26,600,000 | Size: | 130,713 SF | ||||
| % of Initial Pool Balance: | 3.6% | Cut-off Date Balance Per SF: | $203.50 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $164.46 | ||||
| Borrower Sponsor: | Nexus Development Corporation/Central Division | Year Built/Renovated: | 1988/NAP | ||||
| Guarantor: | Curtis R. Olson | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.5210% | Property Manager: | Nexus Development Corporation/Central Division | ||||
| Note Date: | November 24, 2020 | Current Occupancy (As of): | 88.7% (5/25/2021) | ||||
| Seasoning: | 7 months | YE 2020 Occupancy: | 90.3% | ||||
| Maturity Date: | December 6, 2030 | YE 2019 Occupancy: | 93.0% | ||||
| IO Period: | 12 months | YE 2018 Occupancy: | 96.1% | ||||
| Loan Term (Original): | 120 months | As-Is Appraised Value: | $42,500,000 | ||||
| Amortization Term (Original): | 360 months | As-Is Appraised Value Per SF: | $325.14 | ||||
| Loan Amortization Type: | Interest Only, Amortizing Balloon | As-Is Appraisal Valuation Date: | October 28, 2020 | ||||
| Call Protection: | L(31),D(85),O(4) | ||||||
| Lockbox Type: | Hard/Springing Cash Management | Underwriting and Financial Information(1) | |||||
| Additional Debt: | None | TTM NOI (2/28/2021): | $3,028,389 | ||||
| Additional Debt Type (Balance): | NAP | YE 2020 NOI: | $2,942,060 | ||||
| YE 2019 NOI: | $3,116,915 | ||||||
| YE 2018 NOI: | $3,117,461 | ||||||
| U/W Revenues: | $4,064,272 | ||||||
| U/W Expenses: | $1,082,055 | ||||||
| Escrows and Reserves | U/W NOI: | $2,982,217 | |||||
| Initial | Monthly | Cap | U/W NCF: | $2,719,483 | |||
| Taxes | $81,102 | $27,034 | NAP | U/W DSCR based on NOI/NCF: | 2.08x / 1.89x | ||
| Insurance | $42,391 | Springing | NAP | U/W Debt Yield based on NOI/NCF: | 11.2% / 10.2% | ||
| Replacement Reserve | $0 | $2,832 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 13.9% / 12.7% | ||
| Rollover Reserve | $750,000 | $19,062 | $1,500,000(2) | Cut-off Date LTV Ratio: | 62.6% | ||
| LTV Ratio at Maturity: | 50.6% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $26,600,000 | 100.0% | Loan Payoff | $21,514,966 | 80.9% | |||
| Reserves | 873,493 | 3.3 | ||||||
| Closing Costs | 386,139 | 1.5 | ||||||
| Return of Equity(3) | 3,825,402 | 14.4 | ||||||
| Total Sources | $26,600,000 | 100.0% | Total Uses | $26,600,000 | 100.0% | |||
| (1) | While the Bell Towne Centre Mortgage Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Bell Towne Centre Mortgage Loan more severely than assumed in the underwriting of the Bell Towne Centre Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors— Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (2) | From and after January 1, 2026, the amount on deposit in the Rollover Reserve Fund will be capped at $1,000,000 in the aggregate. |
| (3) | The Bell Towne Centre Borrower Sponsor (as defined below) has $15.9 million of implied equity remaining in the Bell Towne Centre Property based on the as-is appraised value of $42,500,000. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
67
| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
The Mortgage Loan. The mortgage loan (the “Bell Towne Centre Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 130,713 square foot SuperTarget shadow anchored retail center located in Phoenix, Arizona (the “Bell Towne Centre Property”).
The Borrower and Borrower Sponsor. The borrower is CRO BTC Phoenix Associates, LLC, (the “Bell Towne Centre Borrower”), organized as a Delaware limited liability company and structured to be bankruptcy remote with two independent directors. Legal counsel to the Bell Towne Centre Borrower delivered a non-consolidation opinion in connection with the origination of the Bell Towne Centre Mortgage Loan. The borrower sponsor of the Bell Towne Centre Mortgage Loan is Nexus Development Corporation/Central Division (the “Bell Towne Centre Borrower Sponsor”). The non-recourse carve-out guarantor of the Bell Towne Centre Mortgage Loan is Curtis R. Olson. Mr. Olson is the principal investor, Chairman, and CEO of the Bell Towne Centre Borrower Sponsor. As the non-recourse carve-out guarantor, Mr. Olson is required to maintain a net worth of $20,000,000 or greater and liquid assets of $5,000,000 or greater.
The Property. The Bell Towne Centre Property is a 130,713 square foot shadow anchored retail center, located at the southwest corner of Bell Road and N. 3rd Street in Phoenix, Arizona. The Bell Towne Centre Property is 88.7% leased as of May 2021 to a diverse mix of national and regional tenants including Bank of America (5,400 square feet, 8.7% underwritten base rent), Verizon Wireless (3,115 square feet, 3.7% underwritten base rent), Cox Enterprises, Inc. (4,161 square feet, 5.0% underwritten base rent), FedEx Kinko’s (6,845 square feet, 4.4% underwritten base rent), Chipotle Mexican Grill, Inc. (2,470 square feet, 3.3% underwritten base rent), and OneMain Financial (1,955 square feet, 2.1% underwritten base rent).
The tenancy at the Bell Towne Centre Property is granular with 39 distinct tenants with no single tenant comprising more than 8.7% of base rent and 6.7% of net rentable area. Year end 2019 comparable sales totaled $22.5 million ($321 per square foot) at an occupancy cost of 7.6%. Year end 2020 comparable sales totaled $19.1 million ($272 per square foot) at an occupancy cost of 9.1%.
The Bell Towne Centre Property is part of a 308,272 square foot regional shopping center shadow-anchored by a 177,562 square foot SuperTarget (which is not part of the Bell Towne Centre Mortgage Loan collateral), which is the only SuperTarget in the northern valley, with the next-closest location more than 11 miles south. The SuperTarget serves as a draw for the Bell Towne Centre Property, and also pays a portion of the NNN operating expenses for the Bell Towne Centre Property. Built in 1988, the Bell Towne Centre Property is situated on a 14.8-acre site. The Bell Towne Centre Property offers 1,352 surface parking spaces (4.4 cars / 1,000 square feet including the SuperTarget GLA).
The Bell Towne Centre Property is located between Bell Road and West Greenway Parkway, two major east-west arterials that serve the north Phoenix area. Bell Road and N. 3rd Street is a highly trafficked intersection featuring multiple direct access points and frontage to the Bell Towne Centre Property. Bell Road, the primary retail corridor in the submarket, serves as a major east-west arterial, providing transportation for approximately 35,000 vehicles per day. The Bell Towne Centre Property’s eastern boundary E. Greenway Parkway, is also a highly utilized arterial, serving approximately 34,000 vehicles per day. Additionally, the Bell Towne Centre Property is located less than 3.0 miles from Interstate 17 (Black Canyon Freeway) and less than 2.0 miles from Arizona State Route 101 (Agua Fria Freeway/Loop 101), two of Phoenix’s largest freeways. Direct access to both Interstate 17 and Loop 101 is provided via Bell Road and N. 7th Street (serving approximately 36,000 vehicles per day). The Bell Towne Centre Property’s central location in the market is a distinguishing feature compared to other retail centers in the area.
The Bell Towne Centre Property is also adjacent to the Bell Towne Plaza, a 225,906 square foot community shopping center anchored by Sprouts Farmers Market, LA Fitness, and OfficeMax. Both the Bell Towne Centre Property and the adjacent Bell Towne Plaza are owned and managed by the Bell Towne Centre Borrower Sponsor.
Major Tenants.
Largest Tenant by square feet: Royal Dance Works, Inc.(8,796 square feet; 6.7% of net rentable area; 4.2% underwritten base rent; December 2030 lease expiration) is a dance studio in Phoenix with dance classes for children, teens, and adults from beginner to professional levels.
2nd Largest Tenant by square feet: Brown Group Retail, LLC, dba Famous Footwear (7,678 square feet; 5.9% of net rentable area; 5.2% underwritten base rent; October 2022 lease expiration) is a family footwear destination in the United States and Canada, dealing in branded footwear, generally at prices discounted from manufacturer’s suggested prices. Famous Footwear is part of Caleres Inc., a diverse portfolio of global footwear brands. Brown Group has been at the Bell Towne Centre Property since June 2007, with its current lease expiring in 2022. Brown Group’s lease has one, 5-year renewal option remaining.
3rd Largest Tenant by square feet: FedEx Kinko’s (6,845 square feet; 5.2% of net rentable area; 4.4% underwritten base rent; January 2028 lease expiration) is an American multinational delivery services company specializing in air delivery, ground delivery, freight delivery, supply chain management, office services, and various other services across multiple subsidiaries.
COVID-19 Update. As of July 1, 2021, the Bell Towne Centre Property is open and operating. From October 2020 through June 2021 rental collections averaged 98%. The Bell Towne Centre Borrower amended or renewed 11 leases totaling 28,536 square feet. 14 tenants received some form of abated rent and most have either repaid a portion of that, executed a new lease incorporating any unpaid back rent and/or agreed to pay back unpaid rent over equal monthly installments. As of July 1, 2021, all tenants are current on rent with the exception of Sylvan Learning (1.6% of net rentable area), which has been making partial rent payments, however, has been underwritten as vacant.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
The following table presents certain information relating to the tenancy at the Bell Towne Centre Property:
Major Tenants
| Tenant Name | Credit Rating (Moody’s/S&P/Fitch)(1) | Tenant NRSF |
% of NRSF | Annual U/W Base Rent PSF |
Annual
U/W Base Rent |
%
of Total Annual U/W Base Rent |
Lease Expiration Date |
Extension Options |
Termination Option |
| Major Tenants | |||||||||
| Royal Dance Works, Inc. | NR/NR/NR | 8,796 | 6.7% | $14.60 | $128,422 | 4.2% | 12/31/2030 | N/A | N |
| Famous Footwear | B1/B+/BB+ | 7,678 | 5.9% | $21.00 | $161,238 | 5.2% | 10/31/2022 | 1 5-year | N |
| FedEx Kinko’s | Baa2/BBB/NR | 6,845 | 5.2% | $19.84 | $135,811 | 4.4% | 1/31/2028 | N/A | N |
| Chili’s Grill & Bar | B1/BB-/NR | 6,341 | 4.9% | $35.48 | $225,000 | 7.3% | 1/24/2023 | 1 5-year | N |
| Bank of America | A2/A-/AA- | 5,400 | 4.1% | $49.78 | $268,800 | 8.7% | 11/30/2022 | 1 5-year | N |
| Total Major Tenants | 35,060 | 26.8% | $26.22 | $919,271 | 29.9% | ||||
| Non-Major Tenants | 80,894 | 61.9% | $26.70 | $2,159,976 | 70.1% | ||||
| Occupied Collateral Total | 115,954 | 88.7% | $26.56 | $3,079,246 | 100.0% | ||||
| Vacant Space | 14,759 | 11.3% | |||||||
| Collateral Total | 130,713 | 100.0% | |||||||
| Non-collateral Anchor | |||||||||
| Target Corporation | A2/A/A | 177,562 |
| (1) | Certain ratings are those of the parent company whether or not the parent company guarantees the lease. |
The following table presents certain information relating to tenant sales at the Bell Towne Centre Property:
Tenant Sales (PSF)(1)(2)
| Tenant Name | %
of Total Annual U/W Base Rent |
2018 | 2019 | 2019 Occupancy Cost |
2020 | March 2021 TTM |
March
2021 TTM Occupancy Cost |
| Chili’s Grill & Bar | 7.3% | $485 | $513 | 6.90% | $225 | NAV | 7.6% |
| Panera | 7.0% | $504 | $519 | 7.50% | $456 | $460 | 9.2% |
| Famous Footwear | 5.2% | $215 | $227 | 9.30% | $198 | $217 | 10.4% |
| Royal Dance Works, Inc. | 4.2% | $89 | $90 | 15.30% | $72 | NAV | 21.3% |
| Five Guys Operations, LLC | 4.0% | $510 | $501 | 8.80% | $558 | $593 | 10.7% |
| Zaytuni, Llc D/B/A Us Egg | 2.9% | $313 | $361 | 4.60% | $296 | NAV | 6.3% |
| Maurices #2247 | 2.6% | $115 | $121 | 17.40% | $74 | $76 | 16.5% |
| Einstein Brothers Bagels | 2.1% | $444 | $427 | 6.30% | $381 | $385 | 8.2% |
| Autonomis, Llc Dba Hallmark | 1.7% | $164 | $166 | 7.80% | $158 | NAV | 10.8% |
| Rue21 | 1.5% | $147 | $142 | 7.10% | $125 | $138 | 10.5% |
| (1) | March TTM sales periods vary on a tenant by tenant basis. |
| (2) | March TTM sales are considered non-comp as they do not represent a full 12-months of sales history due to government mandated lockdowns. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
The following table presents certain information relating to the lease rollover schedule at the Bell Towne Centre Property:
Lease Expiration Schedule(1)(2)
| Year
Ending December 31, |
No.
of Leases Expiring |
Expiring NRSF |
%
of Total NRSF |
Cumulative Expiring NRSF |
Cumulative % of Total NRSF |
Annual U/W Base Rent |
%
of Total Annual U/W Base Rent |
Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 8 | 24,919 | 19.1% | 24,919 | 19.1% | $708,547 | 23.0% | $28.43 |
| 2023 | 8 | 28,024 | 21.4% | 52,943 | 40.5% | $655,838 | 21.3% | $23.40 |
| 2024 | 5 | 12,120 | 9.3% | 65,063 | 49.8% | $482,087 | 15.7% | $39.78 |
| 2025 | 6 | 15,155 | 11.6% | 80,218 | 61.4% | $437,395 | 14.2% | $28.86 |
| 2026 | 4 | 8,220 | 6.3% | 88,438 | 67.7% | $197,048 | 6.4% | $23.97 |
| 2027 | 3 | 5,320 | 4.1% | 93,758 | 71.7% | $164,874 | 5.4% | $30.99 |
| 2028 | 2 | 9,515 | 7.3% | 103,273 | 79.0% | $182,536 | 5.9% | $19.18 |
| 2029 | 0 | 0 | 0.0% | 103,273 | 79.0% | $0 | 0.0% | $0.00 |
| 2030 | 2 | 11,296 | 8.6% | 114,569 | 87.6% | $250,922 | 8.1% | $22.21 |
| 2031 | 0 | 0 | 0.0% | 114,569 | 87.6% | $0 | 0.0% | $0.00 |
| Thereafter | 1 | 1,385 | 1.1% | 115,954 | 88.7% | $0 | 0.0% | $0.00 |
| Vacant | 0 | 14,759 | 11.3% | 130,713 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average | 39 | 130,713 | 100.0% | $3,079,246 | 100.0% | $26.56(3) |
| (1) | Information obtained from the underwritten rent roll dated May 25, 2021. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule. |
| (3) | Weighted Average Annual U/W Base Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the Bell Towne Centre Property:
Historical Occupancy
|
12/31/2018(1) |
12/31/2019(1) |
12/31/2020(1) |
5/25/2021(2) |
| 96.1% | 93.0% | 90.3% | 88.7% |
| (1) | Information obtained from The Bell Towne Centre Borrower. |
| (2) | Information obtained from the underwritten rent roll dated May 25, 2021. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the Bell Towne Centre Property:
Cash Flow Analysis
| 2018 | 2019 | 2020 | 2/28/2021 TTM | U/W(1) | %(2) | U/W
$ PSF | |
| Base Rental Income | $3,205,077 | $3,270,456 | $3,067,382 | $3,120,903 | $3,083,183 | 67.7% | $23.59 |
| Rent Steps | 0 | 0 | 0 | 0 | 37,062 | 0.8 | 0.28 |
| Grossed Up Vacant Space | 0 | 0 | 0 | 0 | 493,156 | 10.8 | 3.77 |
| Gross Potential Rent | $3,205,077 | $3,270,456 | $3,067,382 | $3,120,903 | $3,613,401 | 79.3% | $27.64 |
| Other Income | 125,188 | 102,568 | 50,273 | 51,737 | 51,737 | 1.1 | 0.40 |
| Recoveries | 962,600 | 916,663 | 892,290 | 941,672 | 892,290 | 19.6 | 6.83 |
| Net Rental Income | $4,292,865 | $4,289,687 | $4,009,945 | $4,114,312 | $4,557,428 | 100.0% | $34.87 |
| (Vacancy & Credit Loss) | 0 | 0 | 0 | 0 | (493,156) | (13.6) | (3.77) |
| Effective Gross Income | $4,292,865 | $4,289,687 | $4,009,945 | $4,114,312 | $4,064,272 | 89.2% | 31.09 |
| Taxes | 349,985 | 354,489 | 318,869 | 313,681 | 319,954 | 7.9 | 2.45 |
| Insurance | 38,829 | 38,964 | 41,228 | 34,351 | 42,391 | 1.0 | 0.32 |
| Other Operating Expenses | 786,590 |
779,318 |
707,788 |
737,892 |
719,710 |
17.7 |
5.51 |
| Total Operating Expenses | $1,175,404 | $1,172,772 | $1,067,885 | $1,085,923 | $1,082,055 | 26.6% | $8.28 |
| Net Operating Income | $3,117,461 | $3,116,915 | $2,942,060 | $3,028,389 | $2,982,217 | 73.4% | $22.81 |
| TI/LC | 0 | 0 | 0 | 0 | 228,748 | 5.6 | 1.75 |
| Capital Expenditures | 0 | 0 | 0 | 0 | 33,985 | 0.8 | 0.26 |
| Net Cash Flow | $3,117,461 | $3,116,915 | $2,942,060 | $3,028,389 | $2,719,483 | 66.9% | $20.80 |
| NOI DSCR | 2.17x | 2.17x | 2.05x | 2.11x | 2.08x | ||
| NCF DSCR | 2.17x | 2.17x | 2.05x | 2.11x | 1.89x | ||
| NOI Debt Yield | 11.7% | 11.7% | 11.1% | 11.4% | 11.2% | ||
| NCF Debt Yield | 11.7% | 11.7% | 11.1% | 11.4% | 10.2% |
| (1) | Rent Steps taken through May 31, 2022. |
| (2) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of |
Effective Gross Income for all other fields.
| (3) | The underwritten economic vacancy is 10.9%. The Bell Towne Centre Property was 88.7% leased as of May 25, 2021. |
| (4) | Other Income includes Sign Rent, Rental Tax, Other Rental/Storage Income, Other Monthly Charges, Termination Fees, Late Fees, and other miscellaneous revenues. |
Appraisal. As of the appraisal valuation date of October 28, 2020, the Bell Towne Centre Property had an “as-is” appraised value of $42,500,000.
Environmental Matters. According to a Phase I environmental site assessment dated November 9, 2020, there was evidence of one recognized environmental condition at the Bell Towne Centre Property. An environmental liability insurance policy in the amount of $1,000,000 per incident and in the aggregate was obtained to address the recognized environmental condition. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus.
Market Overview and Competition. The Bell Towne Centre Property is located in the North Bell Road market of Phoenix, Arizona. Phoenix is the capital and most-populous city in Arizona, and the fifth most populous city in the United States. Phoenix is the anchor of the Phoenix metropolitan area, also known as the Valley of the Sun, which in turn is part of the Salt River Valley.
Phoenix is the 11th-largest metro and the second-fastest growing metropolitan statistical area in the nation, adding more than 96,000 residents in 2018. During the same period, metro Phoenix ranked second for net migration, attracting 72,900 new people, for an average of 200 people moving to Phoenix daily. Axiometrics forecasts an approximate 2.0% annual increase in new multi-family inventory through 2023, while occupancy rates are projected to maintain a stabilized rate near 95%, as net absorption is projected to be positive each year through 2023. Effective rental rates are projected to increase by 3.8% per annum through 2023. Moody’s Analytics’ most recent projections estimate a net total loss of 97,600 jobs this year within metropolitan Phoenix resulting from the COVID-19 pandemic.
Net migration and the presence of large educational institutions and colleges are growing the local labor pool. Metro Phoenix is home to the largest public and private universities in the country: Arizona State University (ASU) and Grand Canyon University (GCU). ASU enrollment surpassed 111,000 students in fall 2018, spread across five campuses and the ASU Skysong Innovation Center. Recent job announcements by Intel, Allstate, Deloitte, Mayo Clinic, Nikola Motor Company, Fox Corporation, Wells Fargo, Infosys, and USAA have contributed to thousands of jobs in the metro.
The market has become a hub for financial services. State Farm selected Tempe for its 2.1 million square foot campus in 2015, which is expected to house up to 8,000 employees. Following State Farm’s lead, insurance and financial services companies have increased their footprints across the Valley, including sizable expansions by Farmers, Voya, Allstate, Freedom Financial, Bank of the West, and Nationwide. Greater Phoenix is also one of the most rapidly expanding high-tech job markets in the nation. Phoenix ranked in the top
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
20 for high tech employment growth in CBRE’s 2019 Scoring Tech Talent report. With more than 85,060 high-tech employees, metro employment has grown 12.3% over a five-year period. Microsoft, Google, and Apple have all invested in building data centers in various parts of the metro.
The Bell Towne Centre Property is located in an established northeast Phoenix neighborhood. The subject neighborhood contains a variety of residential uses including single-family housing, multi-story apartment complexes and mobile home parks. Bell Road serves as a primary commercial corridor for the northeast valley. Day to day shopping needs are served by existing commercial development mainly consisting of neighborhood shopping centers, strip retail centers and gas station/convenience stores.
Submarket Information – According to the appraisal, the Bell Towne Centre Property is situated in the North Bell Road retail submarket, which contained approximately 16.0 million square feet of retail space as of the second quarter of 2020. The North Bell Road retail submarket reported a vacancy rate of 6.6% with an average asking rental rate of $16.60 per square foot.
According to a third-party market report, the Bell Towne Centre Property is situated in the East Phoenix retail submarket. As of May 2021, the East Phoenix retail submarket reported an inventory of 8.9 million square feet, or 3.8% of the metro’s total inventory of retail space. Construction has returned to East Phoenix after limited net new supply over the past few years.
During May 2021, the submarket’s asking rent increased to $17.04 per square foot, up 1.1% from year end 2020. Over the past twelve months, asking rents have increased a total of 1.6%.
Over the last 12 months, submarket absorption totaled 48,200 square feet, 15% lower than the average annual absorption rate of 56,802 square feet recorded since the beginning of 2009. The submarket’s average vacancy rate drifted upward by 10 basis points during May 2021 to 6.8%, which is 3.8% lower than the long-term average, and 0.9% lower than the current metro average. The submarket vacancy rate is expected to finish 2021 at 6.5% and is expected to remain the same by year end 2022.
Appraiser’s Comp Set – The appraiser identified four comparable anchored multi-tenant retail centers within the Bell Towne Centre Property’s immediate market area. The appraiser concluded a market rent of $28.00 per square foot for the shop spaces, $18.00 per square foot for the low visibility shop spaces, $18.00 per square foot for the large shop spaces, $43.00 per square foot for the high visibility/pad shop spaces, $35.00 per square foot for the restaurant ground leased spaces, and $50.00 per square foot for the bank branch ground leased space at the Bell Towne Centre Property.
The following table presents certain information relating to the appraiser’s market rent conclusion for the Bell Towne Centre Property:
Market Rent Summary(1)
| Shop | Low
Visibility Shop Space |
High Visibility Retail |
Large
Shop Space |
GL
Pad - Restaurant |
GL
Pad - Bank | |
| Market Rent (PSF) | $28.00 | $18.00 | $43.00 | $18.00 | $35.00 | $50.00 |
| Lease Term (Years) | 5 | 5 | 10 | 10 | 20 | 20 |
| Lease Type (Reimbursements) | NNN | NNN | NNN | NNN | NNN | NNN |
| Rent Increase Projection | 3.00% | 3.00% | 3.00% | 3.00% | 10.00%/5 Yrs | 10.00%/5 Yrs |
(1) Information obtained from the appraisal.
Comparable Property Sales(1)
| Property Name | Location | Rentable Area (SF) |
Sale Date | Sale Price | Sale
Price (PSF) |
| Shoppes at Legacy House | Mesa, AZ | 54,160 | Jul-20 | $9,000,000 | $166.17 |
| Paradise Point | Phoenix, AZ | 54,430 | Feb-20 | $13,400,000 | $246.19 |
| Cactus Village | Phoenix, AZ | 60,363 | Feb-20 | $9,600,000 | $159.04 |
| Crossroads at Tolleson | Tolleson, AZ | 98,598 | Jan-20 | $24,500,000 | $248.48 |
| Sun City Promenade | Sun City, AZ | 70,035 | Dec-19 | $12,300,000 | $175.63 |
| The Shops at Gainey Village | Scottsdale, AZ | 138,444 | Dec-19 | $69,665,350 | $503.20 |
| Mountain Vista Plaza | Surprise, AZ | 64,193 | Nov-19 | $14,125,000 | $220.04 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
The following table presents certain information relating to four comparable leases to those at the Bell Towne Centre Property:
Comparable Properties(1)
| Property Name/Location | Year Built | Total
GLA (SF) |
Distance from Subject |
Inline Occupancy |
Overall Occupancy |
| Bell
Towne Plaza 245 East Bell Road Phoenix, AZ 85022 |
1988 | 225,906 | 0.2 miles | 98% | 78% |
| Covington
Plaza 731 East Union Hills Drive Phoenix, AZ 85024 |
1988 | 105,574 | 1.0 miles | 62% | 82% |
| Fountain
Square 310-630 East Bell Road Phoenix, AZ 85022 |
1986 | 168,644 | 0.2 miles | 78% | 87% |
| Moon
Valley Town Center 707-875 East Bell Road Phoenix, AZ 85022 |
1988 | 106,571 | 0.3 miles | 95% | 99% |
| (1) | Information obtained from the appraisal. |
Escrows. Real Estate Taxes – The Bell Towne Centre Mortgage Loan documents require an upfront real estate tax reserve of $81,102 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next twelve months (initially $27,034).
Insurance – The Bell Towne Centre Mortgage Loan documents require an upfront insurance reserve of $42,391 and ongoing monthly insurance reserves in an amount equal to one-twelfth of the insurance premiums that the lender estimates will be payable for the renewal of the coverage during the next twelve months (initially $42,391). The Bell Towne Centre Borrower is not required to make the deposit for insurance premiums as set forth above provided that (i) no event of default has occurred and is continuing, (ii) the liability and casualty policies maintained by the Bell Towne Centre Borrower covering the Bell Towne Centre Property are part of a blanket or umbrella policy approved by the lender in its reasonable discretion, and (iii) the Bell Towne Centre Borrower provides the lender evidence of renewal of such policies.
Replacement Reserve – The Bell Towne Centre Mortgage Loan documents require ongoing monthly replacement reserves of $2,832 ($0.26 per square foot annually).
Rollover Reserve – The Bell Towne Centre Mortgage Loan documents require upfront rollover reserves of $750,000 and ongoing monthly rollover reserves of $19,062 ($1.75 per square foot annually). The aggregate amount on deposit in the Rollover Reserve Fund is capped at (i) $1,500,000 in the aggregate until, and including, December 31, 2025 and (ii) from and after January 1, 2026, the aggregate amount on deposit in the Rollover Reserve Fund is capped at $1,000,000 in the aggregate.
Lockbox and Cash Management. The Bell Towne Centre Mortgage Loan is structured with a hard lockbox with springing cash management upon the occurrence of a Cash Sweep Event. At loan origination, the Bell Towne Centre Borrower and property manager were required to send direction letters to tenants instructing them to deposit all rents and payments into the lockbox account controlled by the lender. Upon the occurrence and during the continuance of a Cash Sweep Event (as defined below), the lockbox bank is required to transfer to the cash management account in immediately available funds by federal wire transfer all amounts on deposit in the lockbox account once every business day throughout the continuance of a Cash Sweep Event in accordance with the terms of the lockbox agreement. Other than during the continuance of a Cash Sweep Event, the lockbox bank will transfer to the Bell Towne Centre Borrower operating account all amounts on deposit in the lockbox account once every business day in accordance with the terms of the lockbox agreement. Upon the occurrence of a Cash Sweep Event Cure (as defined below) and so long as no event of default or other Cash Sweep Event is then existing, the lender is required to notify the lockbox bank of such Cash Sweep Event Cure and direct the lockbox bank to transfer, in immediately available funds by federal wire, all amounts on deposit in the lockbox account to the Bell Towne Centre Borrower operating account as set forth in the lockbox agreement.
A “Cash Sweep Event” means the occurrence of: (a) an event of default, (b) any bankruptcy action of the Bell Towne Centre Borrower (c) any bankruptcy action of the manager, provided that the same will not be a Cash Sweep Event if the Bell Towne Centre Borrower replaces the manager with a qualified manager within 60 days of the bankruptcy action of the manager; or (c) a Debt Yield Trigger Event (as defined below).
A “Debt Yield Trigger Event” means a debt yield of less than 8.25% on any date of determination for the calendar quarter immediately preceding the date of such determination, based upon the trailing 12 month period immediately preceding such date of determination, as determined by the lender.
A “Cash Sweep Event Cure” means (a) if the Cash Sweep Event is caused solely by the occurrence of a Debt Yield Trigger Event, (1) the achievement of a debt yield of 8.25% or higher for one calendar quarter based upon the trailing 12 month period immediately
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Shadow Anchored | Loan #6 | Cut-off Date Balance: | $26,600,000 | |
| 16842 North 7th Street | Bell Towne Centre | Cut-off Date LTV: | 62.6% | |
| Phoenix, AZ 85022 | U/W NCF DSCR: | 1.89x | ||
| U/W NOI Debt Yield: | 11.2% |
preceding the date on which the debt yield is calculated or (2) the deposit by the Bell Towne Centre Borrower of a letter of credit in an amount equal to the portion of the outstanding principal balance required to be paid down such that the debt yield is equal to or greater than 8.25% or (b) if the Cash Sweep Event is caused by an event of default, the acceptance by the lender of a cure of such event of default (which cure the lender is not obligated to accept and may reject or accept in its sole and absolute discretion) or (c) if the Cash Sweep Event is caused by a bankruptcy action of the manager, if the Bell Towne Centre Borrower replaces the manager with a qualified manager under a replacement management agreement; provided, however, that, such Cash Sweep Event Cure set forth in this definition of “Cash Sweep Event Cure” will be subject to the following conditions, (i) no event of default will have occurred and be continuing under the Bell Towne Centre Mortgage Loan agreement or any of the other Bell Towne Centre Mortgage Loan documents, (ii) a Cash Sweep Event Cure may occur no more than a total of 5 times in the aggregate during the term of the Bell Towne Centre Mortgage Loan and (iii) the Bell Towne Centre Borrower has paid all of the lender’s reasonable expenses incurred in connection with such Cash Sweep Event Cure including, reasonable attorneys’ fees and expenses.
Property Management. The Bell Towne Centre Property is managed by Nexus Development Corporation/Central Division, an affiliate of the Bell Towne Centre Borrower Sponsor.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Terrorism Insurance. The Bell Towne Centre Mortgage Loan documents require that the commercial property and business income insurance required to be maintained by the Bell Towne Centre Borrower covers perils of terrorism and acts of terrorism and the Bell Towne Centre Borrower is required to maintain commercial property and business income insurance, and general liability and umbrella liability insurance, for loss resulting from perils and acts of terrorism at all times during the term of the Bell Towne Centre Mortgage Loan.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
75
| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 7 – Rollins Portfolio | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | UBS AG | Single Asset/Portfolio: | Portfolio | ||||
Credit Assessment (DBRSM/Fitch/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Industrial – Flex | ||||
| Original Principal Balance(1): | $24,400,000 | Location: | Various, CA | ||||
| Cut-off Date Balance(1): | $24,400,000 | Size: | 232,340 SF | ||||
| % of Initial Pool Balance: | 3.3% | Cut-off Date Balance Per SF(1): | $169.58 | ||||
| Loan Purpose(2): | Acquisition | Maturity Date Balance Per SF(1): | $169.58 | ||||
| Borrower Sponsors: | New Mountain Net Lease Corporation and New Mountain Net Lease Partners Corporation | Year Built/Renovated: | Various/Various | ||||
| Guarantors: | New Mountain Net Lease Corporation and New Mountain Net Lease Partners Corporation | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.2095% | Property Manager: | Self-managed | ||||
| Note Date: | May 13, 2021 | Current Occupancy (As of): | 100.0% (7/1/2021) | ||||
| Seasoning: | 1 month | YE 2020 Occupancy(2): | NAP | ||||
| Maturity Date: | June 6, 2031 | YE 2019 Occupancy(2): | NAP | ||||
| IO Period: | 120 months | YE 2018 Occupancy(2): | NAP | ||||
| Loan Term (Original): | 120 months | YE 2017 Occupancy(2): | NAP | ||||
| Amortization Term (Original): | NAP | Appraised Value: | $60,200,000 | ||||
| Loan Amortization Type: | Interest-only | Appraised Value Per SF: | $259.10 | ||||
| Call Protection: | L(24),YM1(1),DorYM1(90),O(5) | Appraisal Valuation Date: | Various | ||||
| Lockbox Type: | Hard/Springing Cash Management | Underwriting and Financial Information(4) | |||||
| Additional Debt(1): | Yes | YE 2020 NOI(2): | NAP | ||||
| Additional Debt Type (Balance)(1): | Pari Passu ($15,000,000) | YE 2019 NOI(2): | NAP | ||||
| YE 2018 NOI(2): | NAP | ||||||
| Escrows and Reserves(3) | YE 2017 NOI(2): | NAP | |||||
| Initial | Monthly | Cap | U/W Revenues: | $3,879,864 | |||
| Taxes | $0 | Springing | NAP | U/W Expenses: | $116,396 | ||
| Insurance | $0 | Springing | NAP | U/W NOI: | $3,763,468 | ||
| Replacement Reserve | $0 | Springing | (3) | U/W NCF: | $3,763,468 | ||
| TI/LC Reserve | $0 | Springing | (3) | U/W DSCR based on NOI/NCF(1): | 2.94x / 2.94x | ||
| U/W Debt Yield based on NOI/NCF(1): | 9.6% / 9.6% | ||||||
| U/W Debt Yield at Maturity based on NOI/NCF(1): | 9.6% / 9.6% | ||||||
| Cut-off Date LTV Ratio(1): | 65.4% | ||||||
| LTV Ratio at Maturity(1): | 65.4% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original whole loan amount | $39,400,000 | 64.6% | Purchase price(2) | $60,575,000 | 99.4% | |||
| Borrower sponsor equity | 21,546,233 | 35.4 | Closing costs | 371,233 | 0.6 | |||
| Total Sources | $60,946,233 | 100.0% | Total Uses | $60,946,233 | 100.0% | |||
| (1) | The Rollins Portfolio Mortgage Loan (as defined below) is part of the Rollins Portfolio Whole Loan (as defined below) with an original aggregate principal balance of $39,400,000. The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers presented above are based on the Rollins Portfolio Whole Loan. |
| (2) | The borrower sponsors recently acquired the Rollins Portfolio Properties (as defined below) in a sale-leaseback transaction using cash equity in February 2021. As such, historical occupancies and cash flows are not available. The Rollins Portfolio Whole Loan was entered into subsequently to the actual acquisition. |
| (3) | See “Escrows” section below. |
| (4) | While the Rollins Portfolio Whole Loan was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Rollins Portfolio Whole Loan more severely than assumed in the underwriting of the Rollins Portfolio Whole Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
77
| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
The Mortgage Loan. The mortgage loan (the “Rollins Portfolio Mortgage Loan”) is part of a whole loan (the “Rollins Portfolio Whole Loan”) evidenced by four pari passu promissory notes with an aggregate original principal balance of $39,400,000 secured by a first priority fee mortgage encumbering a 232,340 square foot portfolio of 14 industrial flex properties located in California (each, a “Rollins Portfolio Property”, and collectively, the “Rollins Portfolio Properties”). The Rollins Portfolio Mortgage Loan is evidenced by the controlling Note A-1 and the non-controlling Note A-3 with an aggregate original principal balance of $24,400,000. The non-controlling Note A-2 and Note A-4, with an aggregate original principal balance of $15,000,000, are expected to be contributed to one or more future securitization trusts. The Rollins Portfolio Whole Loan will be serviced pursuant to the pooling and servicing agreement for the WFCM 2021-C60 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Mortgage Loans” in the Preliminary Prospectus.
Note Summary
| Notes | Original Principal Balance | Cut-off Date Balance | Note Holder | Controlling Interest |
| A-1 | $19,400,000 | $19,400,000 | WFCM 2021-C60 | Yes |
| A-2 | $10,000,000 | $10,000,000 | UBS AG | No |
| A-3 | $5,000,000 | $5,000,000 | WFCM 2021-C60 | No |
| A-4 | $5,000,000 | $5,000,000 | UBS AG | No |
| Total | $39,400,000 | $39,400,000 |
The Borrower and Borrower Sponsors. The borrower is NM CPC, L.P. (the “Rollins Portfolio Borrower”), a Delaware limited partnership and single purpose entity with one independent director. Legal counsel to the Rollins Portfolio Borrower delivered a non-consolidation opinion in connection with the origination of the Rollins Portfolio Whole Loan. The non-recourse carveout guarantors and borrower sponsors of the Rollins Portfolio Whole Loan are New Mountain Net Lease Corporation and New Mountain Net Lease Partners Corporation. New Mountain Capital, LLC was founded in 1999 and, together with its affiliates, the firm manages private equity, public equity, credit and net lease capital.
The Properties. The Rollins Portfolio Whole Loan is secured by 14 industrial flex properties totaling 232,340 square feet located in California. The Rollins Portfolio Properties were constructed between 1985 and 2015. As of July 1, 2021, the Rollins Portfolio Properties were 100.0% occupied by Clark Pest Control (as defined below) under a 15-year master lease expiring in February 2036. The Lodi property is used as the Clark Pest Control corporate office.
The following table presents certain information relating to the Rollins Portfolio Properties:
Portfolio Summary(1)
| Property | City, State | Net Rentable Area (SF)(2) |
Year |
U/W NCF | Allocated Whole Loan Cut-off Date Balance (“ALA”) |
%
of ALA |
“As-Is” Appraised Value |
Cut-off Date LTV |
Clear Heights (ft.) |
Dock Doors |
Drive -In Doors |
| Lodi | Lodi, CA | 55,632 | 2007/NAP | $983,224 | $10,293,435 | 26.1% | $14,850,000 | 69.3% | 30 | 0 | 3 |
| Sacramento | Sacramento, CA | 19,128 | 1985/2017 | $314,976 | $3,297,500 | 8.4% | $5,300,000 | 62.2% | 20 | 2 | 2 |
| Geotech Supply | Sacramento, CA | 25,020 | 2001/NAP | $301,036 | $3,151,565 | 8.0% | $6,600,000 | 47.8% | 28 | 2 | 4 |
| Vacaville | Vacaville, CA | 13,840 | 1990/2015 | $278,583 | $2,916,500 | 7.4% | $4,090,000 | 71.3% | 24 | 0 | 1 |
| Rancho Cordova | Rancho Cordova, CA | 15,520 | 1994/NAP | $256,470 | $2,685,000 | 6.8% | $4,200,000 | 63.9% | 18 | 2 | 2 |
| Modesto | Modesto, CA | 16,016 | 2001/NAP | $233,450 | $2,444,000 | 6.2% | $4,400,000 | 55.5% | 16 | 0 | 2 |
| Auburn | Auburn, CA | 19,750 | 1999/NAP | $229,247 | $2,400,000 | 6.1% | $4,100,000 | 58.5% | 20 | 0 | 2 |
| Livermore | Livermore, CA | 9,920 | 2003 & 2015/NAP | $216,352 | $2,265,000 | 5.7% | $3,020,000 | 75.0% | 20 | 0 | 2 |
| Salinas | Salinas, CA | 8,005 | 2004/NAP | $202,119 | $2,116,000 | 5.4% | $2,910,000 | 72.7% | 14 | 0 | 1 |
| Yuba City | Yuba City, CA | 9,920 | 2012/NAP | $189,797 | $1,987,000 | 5.0% | $2,890,000 | 68.8% | 20 | 0 | 4 |
| Santa Rosa | Santa Rosa, CA | 8,525 | 2002/NAP | $163,482 | $1,711,500 | 4.3% | $2,330,000 | 73.5% | 16 | 0 | 2 |
| Redding | Redding, CA | 12,480 | 2007/2011 | $155,458 | $1,627,500 | 4.1% | $2,170,000 | 75.0% | 18 - 24 | 0 | 4 |
| Chico | Chico, CA | 9,634 | 2012/NAP | $131,817 | $1,380,000 | 3.5% | $1,840,000 | 75.0% | 18 - 26 | 0 | 4 |
| Sonora | Sonora, CA | 8,950 | 1998/NAP | $107,459 | $1,125,000 | 2.9% | $1,500,000 | 75.0% | 16 | 0 | 2 |
| Total/Wtd. Avg. | 232,340 | $3,763,468 | $39,400,000 | 100.0% | $60,200,000 | 65.4% | 6 | 35 | |||
| (1) | Information obtained from the appraisals. |
| (2) | Information obtained from the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
78
| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
Sole Tenant.
Clark Pest Control (232,340 square feet; 100.0% of net rentable area; 100.0% of underwritten base rent; 2/29/2036 lease expiration) - Clark Pest Control of Stockton, Inc. and King Distribution, Inc. (collectively, “Clark Pest Control”) are wholly owned subsidiaries of Rollins, Inc., which guarantees the master lease. Through its family of brands, Rollins, Inc. provides pest control services and protection against termite damage, rodents and insects to more than two million customers in North America, South America, Europe, Asia, Africa and Australia from more than 700 locations. Clark Pest Control operates in 28 locations and offers residential and commercial pest control throughout California and northwestern Nevada. Clark Pest Control’s lease commenced on February 26, 2021. The master lease expires on February 29, 2036 and includes three renewal options for 60 months each and one renewal option for 59 months.
The following table presents certain information relating to the tenancy at the Rollins Portfolio Properties:
Major Tenant(1)
| Tenant Name | Credit
Rating (Fitch/ Moody’s/ S&P) |
Tenant NRSF |
%
of NRSF |
Annual U/W Base Rent PSF |
Annual U/W Base Rent |
%
of Total Annual U/W Base Rent |
Lease Expiration |
Extension Options |
Term. Option (Y/N) |
| Clark Pest Control | NR / NR / NR | 232,340 | 100.0% | $15.15 | $3,519,153 | 100.0% | 2/29/2036 | (2) | N |
| Occupied Collateral Total | 232,340 | 100.0% | $15.15 | $3,519,153 | 100.0% | ||||
| Vacant Space | 0 | 0.0% | |||||||
| Collateral Total | 232,340 | 100.0% | |||||||
| (1) | Based on the underwritten rent roll, including the rent increase occurring in March 2022. |
| (2) | Clark Pest Control has three renewal options for 60 months each and one renewal option for 59 months. |
The following table presents certain information relating to the lease rollover schedule at the Rollins Portfolio Properties:
Lease Expiration Schedule(1)
| Year Ending December 31, | No. of Leases Expiring |
Expiring NRSF | %
of Total NRSF |
Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2024 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2025 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2026 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2029 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2031 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| Thereafter | 1 | 232,340 | 100.0% | 232,340 | 100.0% | $3,519,153 | 100.0% | $15.15 |
| Vacant | 0 | 0 | 0% | 232,340 | 100.0% | $0 | 0.0% | $0.00 |
| Total | 1 | 232,340 | 100.0% | $3,519,153 | 100.0% | $15.15 |
| (1) | Based on the underwritten rent roll. Rent includes base rent and rent increase occurring in March 2022. |
The following table presents historical occupancy percentages at the Rollins Portfolio Properties:
Historical Occupancy
12/31/2017(1) |
12/31/2018(1) |
12/31/2019(1) |
12/31/2020(1) |
7/1/2021(2) |
| NAP | NAP | NAP | NAP | 100.0% |
| (1) | The borrower sponsors recently acquired the Rollins Portfolio Properties in a sale-leaseback transaction using cash equity in February 2021. As such, historical occupancies are not available. |
| (2) | Information obtained from the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
COVID-19 Update. As of June 24, 2021, all of the Rollins Portfolio Properties are open and operating. As of June 24, 2021, 100.0% of rent had been collected for the month of June 2021, and Clark Pest Control has made no request for rent relief or lease modification. The Rollins Portfolio Whole Loan is not subject to any modification or forbearance request. The first debt service payment of the Rollins Portfolio Whole Loan is due in July 2021.
Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the Rollins Portfolio Properties:
Cash Flow Analysis(1)
| U/W | %(2) | U/W
$ per SF | |
| Base Rent | $3,450,150 | 87.1% | $14.85 |
| Straight-Line Rent(3) | 323,496 | 8.2 | 1.39 |
| Contractual Rent Steps(4) | 69,003 | 1.7 | 0.30 |
| Grossed Up Vacant Space | 0 |
0.0 |
0.00 |
| Gross Potential Rent | $3,842,649 | 97.1% | $16.54 |
| Other Income | 0 | 0.0 | 0.00 |
| Total Recoveries | 116,396 |
2.9 |
0.50 |
| Net Rental Income | $3,959,045 | 100.0% | $17.04 |
| (Vacancy & Credit Loss)(5) | (79,181) |
(2.1) |
(0.34) |
| Effective Gross Income | $3,879,864 | 98.0% | $16.70 |
| Real Estate Taxes | 0 | 0.0 | 0.00 |
| Insurance | 0 | 0.0 | 0.00 |
| Management Fee | 116,396 | 3.0 | 0.50 |
| Other Operating Expenses | 0 |
0.0 |
0.00 |
| Total Operating Expenses | $116,396 | 3.0% | $0.50 |
| Net Operating Income | $3,763,468 | 97.0% | $16.20 |
| Capital Expenditures | 0 | 0.0 | 0.00 |
| TI/LC | 0 |
0.0 |
0.00 |
| Net Cash Flow | $3,763,468 | 97.0% | $16.20 |
| NOI DSCR(6) | 2.94x | ||
| NCF DSCR(6) | 2.94x | ||
| NOI Debt Yield(6) | 9.6% | ||
| NCF Debt Yield(6) | 9.6% |
| (1) | The borrower sponsors recently acquired the Rollins Portfolio Properties in a sale-leaseback transaction using cash equity in February 2021. As such, historical cash flows are not available. |
| (2) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (3) | Represents the straight-line rent through the end of term of the Rollins Portfolio Whole Loan in April 2031. |
| (4) | Represents the rent step occurring in March 2022. |
| (5) | The U/W economic vacancy is 2.0%. As of July 1, 2021, the Rollins Portfolio Properties were 100.0% occupied. |
| (6) | All statistical information related to the NOI DSCR, NCF DSCR, NOI Debt Yield and NCF Debt Yield is based on the Rollins Portfolio Whole Loan. |
Appraisals. The sum of the individual “as-is” appraised values for each of the Rollins Portfolio Properties equates to $60,200,000. The valuation dates range from January 15, 2021 to January 22, 2021.
Environmental Matters. According to the Phase I environmental site assessments dated December 24, 2020, there was no evidence of any recognized environmental conditions at the Rollins Portfolio Properties. One of the Rollins Portfolio Properties has a controlled recognized environmental condition. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
Market Overview and Competition. The Rollins Portfolio Properties are located across 10 metropolitan statistical areas and 14 submarkets in California.
The table below presents certain market information with respect to the Rollins Portfolio Properties:
Market Overview(1)
| Property | Year Built/ Renovated |
Net Rentable Area (SF)(2) |
Submarket | Property Vacancy(2) | Submarket Vacancy |
Appraisal Concluded Vacancy | Submarket Inventory (SF) |
U/W
Base Rent PSF(2) |
Appraisal Market Rent PSF |
| Lodi | 2007/NAP | 55,632 | Lodi | 0.0% | 1.8% | 0.0% | 1,479,211 | $15.87 | $14.40 |
| Sacramento | 1985/2017 | 19,128 | McClellan | 0.0% | 5.2% | 0.0% | 17,463,054 | $16.32 | $15.00 |
| Geotech Supply | 2001/NAP | 25,020 | Mather | 0.0% | 4.3% | 0.0% | 5,694,717 | $15.30 | $15.00 |
| Vacaville | 1990/2015 | 13,840 | Vacaville | 0.0% | 7.4% | 0.0% | 12,940,150 | $17.34 | $16.80 |
| Rancho Cordova | 1994/NAP | 15,520 | Sunrise | 0.0% | 4.5% | 0.0% | 12,966,620 | $15.81 | $15.00 |
| Modesto | 2001/NAP | 16,016 | Ceres | 0.0% | 0.7% | 0.0% | 5,371,054 | $16.83 | $15.00 |
| Auburn | 1999/NAP | 19,750 | Auburn/Newcastle | 0.0% | 3.5% | 0.0% | 3,200,627 | $12.24 | $11.00 |
| Livermore | 2003 & 2015/NAP | 9,920 | Livermore | 0.0% | 7.2% | 0.0% | 20,028,190 | $16.32 | $16.20 |
| Salinas | 2004/NAP | 8,005 | North Monterey County | 0.0% | 1.8% | 0.0% | 14,118,905 | $20.40 | $19.80 |
| Yuba City | 2012/NAP | 9,920 | Marysville/Yuba City(3) | 0.0% | 2.7%(3) | 0.0% | 7,735,885(3) | $17.09 | $16.80 |
| Santa Rosa | 2002/NAP | 8,525 | Santa Rosa | 0.0% | 4.2% | 0.0% | 11,264,964 | $15.30 | $15.00 |
| Redding | 2007/2011 | 12,480 | Redding(3)(4) | 0.0% | 3.5%(3) | 0.0% | 5,087,831(3) | $10.20 | $9.60 |
| Chico | 2012/NAP | 9,634 | Chico(3)(4) | 0.0% | 5.3%(3) | 0.0% | 9,708,099(3) | $11.22 | $10.80 |
| Sonora | 1998/NAP | 8,950 | Sonora(3)(4) | 0.0% | 2.5%(3) | 0.0% | 572,337(3) | $9.43 | $12.50 |
| Total/Wtd. Avg. | 232,340 | 0.0% | 3.6% | 0.0% | 127,631,644 | $15.15 | $14.36 | ||
| (1) | Information obtained from the appraisals. |
| (2) | Information obtained from the underwritten rent rolls. |
| (3) | Information obtained from third party market research reports. |
| (4) | No submarket information is available. Market information is shown. |
The following table presents certain demographic information with respect to the Rollins Portfolio Properties:
Demographics Overview
| Property | City, State | Net
Rentable Area (SF)(1) |
ALA | % of ALA | U/W NCF | %
of U/W NCF |
Estimated |
Estimated
2021 Average Household Income (5-mile Radius)(2) |
| Lodi | Lodi, CA | 55,632 | $10,293,435 | 26.1% | $983,224 | 26.1% | 10,352 | $109,427 |
| Sacramento | Sacramento, CA | 19,128 | $3,297,500 | 8.4% | $314,976 | 8.4% | 346,597 | $85,609 |
| Geotech Supply | Sacramento, CA | 25,020 | $3,151,565 | 8.0% | $301,036 | 8.0% | 191,117 | $102,556 |
| Vacaville | Vacaville, CA | 13,840 | $2,916,500 | 7.4% | $278,583 | 7.4% | 89,144 | $125,694 |
| Rancho Cordova | Rancho Cordova, CA | 15,520 | $2,685,000 | 6.8% | $256,470 | 6.8% | 159,635 | $112,536 |
| Modesto | Modesto, CA | 16,016 | $2,444,000 | 6.2% | $233,450 | 6.2% | 41,850 | $75,281 |
| Auburn | Auburn, CA | 19,750 | $2,400,000 | 6.1% | $229,247 | 6.1% | 40,664 | $104,205 |
| Livermore | Livermore, CA | 9,920 | $2,265,000 | 5.7% | $216,352 | 5.7% | 93,139 | $194,266 |
| Salinas | Salinas, CA | 8,005 | $2,116,000 | 5.4% | $202,119 | 5.4% | 155,265 | $88,029 |
| Yuba City | Yuba City, CA | 9,920 | $1,987,000 | 5.0% | $189,797 | 5.0% | 126,288 | $74,198 |
| Santa Rosa | Santa Rosa, CA | 8,525 | $1,711,500 | 4.3% | $163,482 | 4.3% | 96,833 | $123,800 |
| Redding | Redding, CA | 12,480 | $1,627,500 | 4.1% | $155,458 | 4.1% | 66,809 | $83,756 |
| Chico | Chico, CA | 9,634 | $1,380,000 | 3.5% | $131,817 | 3.5% | 91,397 | $85,512 |
| Sonora | Sonora, CA | 8,950 | $1,125,000 | 2.9% | $107,459 | 2.9% | 24,139 | $86,460 |
| Total/Wtd. Avg. | 232,340 | $39,400,000 | 100.0% | $3,763,468 | 100.0% | 100,468 | $105,886 | |
| (1) | Information obtained from the underwritten rent rolls. |
| (2) | Information obtained from third party market research reports. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
Escrows.
Real Estate Taxes – The Rollins Portfolio Borrower is not required to make monthly escrow deposits for real estate taxes as long as (i) the Clark Pest Control lease is in full force and effect, (ii) a Clark Pest Control Cash Management Trigger Event (as defined below) is not continuing, (iii) Clark Pest Control is responsible, pursuant to the terms of its master lease, for the direct payment of all taxes, (iv) Clark Pest Control pays all such taxes prior to the date of delinquency and (v) upon request of the lender, the Rollins Portfolio Borrower provides to the lender paid receipts for the payment of taxes prior to the delinquency thereof. If the above conditions are not satisfied, the Rollins Portfolio Borrower is required to make monthly deposits into a real estate tax reserve equal to 1/12 of the estimated annual real estate taxes.
Insurance – The Rollins Portfolio Borrower is not required to make monthly escrow deposits for insurance premiums as long as (i) the Clark Pest Control lease is in full force and effect, (ii) a Clark Pest Control Cash Management Trigger Event is not continuing, (iii) Clark Pest Control is responsible, pursuant to the terms of its master lease, for the direct payment of all insurance premiums, (iv) Clark Pest Control pays all such insurance premiums prior to the expiration of such policies and (v) upon request of the lender, prior to the expiration of the policies, the Rollins Portfolio Borrower provides to the lender evidence that such insurance premiums have been paid. If the above conditions are not satisfied, the Rollins Portfolio Borrower is required to make monthly deposits into an insurance reserve equal to 1/12 of the estimated annual insurance premiums.
Replacement Reserve – The Rollins Portfolio Borrower is not required to make monthly escrow deposits for capital expenditures as long as (i) the Clark Pest Control lease is in full force and effect, (ii) a Clark Pest Control Cash Management Trigger Event is not continuing, (iii) Clark Pest Control is responsible, pursuant to the terms of its master lease, for the direct payment of all capital expenditures, (iv) Clark Pest Control pays all such capital expenditures within the time frame set forth in the master lease and (v) upon request of the lender, the Rollins Portfolio Borrower provides to the lender evidence that such capital expenditures have been performed and all costs associated with such capital expenditures have been paid. If the above conditions are not satisfied, the Rollins Portfolio Whole Loan documents require ongoing monthly deposits into a replacement reserve of approximately $3,872, subject to a cap of $69,702.
TI/LC Reserve – The Rollins Portfolio Borrower is not required to make monthly escrow deposits for tenant improvements and leasing commissions (“TI/LC”) as long as the Clark Pest Control lease or a single replacement lease remains in full force and effect. If during the term of the Rollins Portfolio Whole Loan, the Clark Pest Control lease or a single replacement lease for the entire Rollins Portfolio Properties is not in full force and effect, the Rollins Portfolio Whole Loan documents require ongoing monthly deposits into a TI/LC reserve of approximately $14,521, subject to a cap of approximately $261,383.
A “Clark Pest Control Cash Management Trigger Event” will commence upon the earlier of the following:
| (i) | Clark Pest Control or a replacement tenant giving notice of its intention to terminate or cancel or not to extend or renew its lease; |
| (ii) | on or prior to 12 months prior to the then applicable expiration date under the Clark Pest Control lease or a replacement lease, as applicable, Clark Pest Control or the replacement tenant fails to give irrevocable notice of its election to renew its lease upon terms and conditions reasonably acceptable to the lender; |
| (iii) | on or prior to the date on which Clark Pest Control or the replacement tenant is required under its lease to notify the Rollins Portfolio Borrower of its election to extend or renew its lease, Clark Pest Control or the replacement tenant failing to give such notice of renewal; |
| (iv) | a monetary event of default with respect to the payment of fixed rent, taxes or insurance premiums under the Clark Pest Control lease or replacement lease occurring and continuing beyond any applicable notice and cure period; |
| (v) | Clark Pest Control or replacement tenant, as applicable, or any guarantor of the applicable lease becoming insolvent or a debtor in any bankruptcy action; |
| (vi) | the Clark Pest Control lease or replacement lease, as applicable, being terminated; |
| (vii) | (A) Clark Pest Control “going dark”, vacating or ceasing to occupy or conduct business at its space or a portion thereof constituting (x) 25% or more of the total rentable square footage at the applicable property (other than the Lodi property) pursuant to the Clark Pest Control lease or (y) 50% or more of the total square footage at the Lodi property (other than temporary cessation of operations in connection with remodeling, renovation or restoration of the leased premises) or (B) if applicable, replacement tenant “going dark”, vacating or ceasing to occupy or conduct business at its space or a portion thereof constituting 25% or more of the total rentable square footage at the applicable property pursuant to the replacement lease (other than temporary cessation of operations in connection with remodelling, renovation or restoration of their leased premises); or |
| (viii) | the long term unsecured debt rating of Clark Pest Control or replacement tenant (or any applicable lease guarantor) fails to satisfy a long term unsecured debt rating of at least CCC by Fitch (or its equivalent by the other rating agencies), in each case, to the extent that the long term unsecured debt ratings of the applicable entity are rated by such rating agency, or is withdrawn by any rating agency that has rated the Certificates or any other certificates backed by the Rollins Portfolio Whole Loan (other than a withdrawal of the shadow rating in connection with or following the issuance of a credit rating). |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
A Clark Pest Control Cash Management Trigger Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the date that is the earlier of (1) Clark Pest Control or the replacement tenant revokes or rescinds all termination or cancellation notices, (2) the Clark Pest Control lease or replacement tenant lease, as applicable, is extended on terms satisfying the requirements of the related Rollins Portfolio Whole Loan documents or (3) a Clark Pest Control Space Re-Tenanting Event (as defined below) occurs; |
| ● | with regard to clause (ii) above, the date that is the earlier of (1) the Clark Pest Control lease or the replacement tenant lease, as applicable, being extended on terms satisfying the requirements of the related Rollins Portfolio Whole Loan documents or (2) a Clark Pest Control Space Re-Tenanting Event occurs; |
| ● | with regard to clause (iii) above, the date that is the earlier of (1) the Clark Pest Control lease or replacement lease is extended on terms satisfying the requirements of the related Rollins Portfolio Whole Loan documents or (2) a Clark Pest Control Space Re-Tenanting Event occurs; |
| ● | with regard to clause (iv) above, the date that is the earlier of (1) a cure of the applicable event of default or (2) a Clark Pest Control Space Re-Tenanting Event occurs; |
| ● | with regard to clause (v) above, (1) with respect to an involuntary proceeding, the bankruptcy action against Clark Pest Control, the replacement tenant or any lease guarantor (if applicable) is dismissed within 90 days after its commencement, (2) the Clark Pest Control lease, the related replacement lease and lease guaranty, as applicable, has been assumed, affirmed or assigned, pursuant to a final unappealable order of a court of competent jurisdiction and Clark Pest Control or the replacement tenant, as applicable, is no longer the subject of a bankruptcy action and is paying rent under such lease, or (3) a Clark Pest Control Space Re-Tenanting Event occurs; |
| ● | with regard to clause (vi) above, (1) the Clark Pest Control lease or the related replacement lease, as applicable, is reinstated after it is terminated or (2) a Clark Pest Control Re-Tenanting Event occurs; |
| ● | with regard to clause (vii) above, (1) Clark Pest Control or the tenant under the related replacement lease, as applicable, re-commencing its normal business operations at the applicable Rollins Portfolio Property or (2) a Clark Pest Control Space Re-Tenanting Event occurs; or |
| ● | with regard to clause (viii) above, the long term unsecured debt rating of Clark Pest Control or the replacement tenant (or any applicable lease guarantor) is equal to or greater than CCC+ by Fitch (or their equivalents by the other rating agencies). |
A “Clark Pest Control Space Re-Tenanting Event” means that all of the Rollins Portfolio Properties (in the case of the Clark Pest Control lease) or all of the space demised under a single replacement lease with respect to all of the Rollins Portfolio Properties (in the case of a single replacement lease) has been re-tenanted to one or more replacement tenants pursuant to one or more replacement leases, or in the event less than all of the Rollins Portfolio Properties has been demised with respect to one or more replacement leases, the result that, after accounting for such replacement leases (1) the debt yield for the Rollins Portfolio Properties is at least 7.5% for one calendar quarter and (2) at least 75% of the Rollins Portfolio Properties are occupied with tenants in occupancy and conducting business, and all tenant improvements and leasing commissions with respect to any such leases have been paid in full and all tenant improvement work has been completed.
Lockbox and Cash Management. The Rollins Portfolio Whole Loan is structured with a hard lockbox with springing cash management upon the occurrence and continuance of a Cash Management Trigger Event (as defined below). Revenues from the Rollins Portfolio Properties are required to be deposited directly into the lockbox account or, if received by the Rollins Portfolio Borrowers or the property manager, deposited within two business days of receipt. During the continuance of a Cash Management Trigger Event, all funds in the lockbox account are required to be swept each business day to a lender-controlled cash management account and disbursed in accordance with the Rollins Portfolio Whole Loan documents, and all excess funds on deposit in the cash management account (after payment of required monthly reserve deposits, debt service payment, operating expenses and cash management bank fees) will be applied as follows: (a) if a Cash Management Trigger Event exists on account of any Cash Management Trigger Event other than a Cash Management DSCR Trigger Event (as defined below) or a Clark Pest Control Cash Management Trigger Event, to a lender-controlled excess cash flow account or (b) if no Cash Management Trigger Event exists or if a Clark Pest Control Cash Management Trigger Event or Cash Management DSCR Trigger Event exist and the excess cash flow account cap equal to 18 months of base rent is satisfied, to the Rollins Portfolio Borrower. The Rollins Portfolio Borrower has the right to deposit cash or a letter of credit to be applied towards such cap amount.
A “Cash Management Trigger Event” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | any bankruptcy action involving the Rollins Portfolio Borrower or the guarantors; |
| (iii) | at any time (a) the Clark Pest Control lease or a single replacement lease with respect to the entire Rollins Portfolio Properties is no longer in effect and (b) the Rollins Portfolio Properties are being managed by a property manager, any bankruptcy action of the property manager; |
| (iv) | a Cash Management DSCR Trigger Event; or |
| (v) | a Clark Pest Control Cash Management Trigger Event. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Loan #7 | Cut-off Date Balance: | $24,400,000 | ||
| Industrial – Flex | Rollins Portfolio | Cut-off Date LTV: | 65.4% | |
| Property Addresses – Various | U/W NCF DSCR: | 2.94x | ||
| U/W NOI Debt Yield: | 9.6% |
A Cash Management Trigger Event will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), the filing being discharged, stayed or dismissed within 60 days for the Rollins Portfolio Borrower or the guarantors and lender’s determination that such filing does not materially affect the Rollins Portfolio Borrower’s or the guarantors’ monetary obligations; |
| ● | with regard to clause (iii), (a) the replacement of the property manager with a third party property manager that constitutes a qualified property manager under the Rollins Portfolio Whole Loan documents and (b) the filing being discharged, stayed or dismissed within 120 days, and lender’s determination that such filing does not materially affect the property manager’s monetary obligations; |
| ● | with regard to clause (iv), the Cash Management DSCR Trigger Event being cured as set forth in the definition of such term below; or |
| ● | with regard to clause (v), the Clark Pest Control Cash Management Trigger Event being cured as set forth in the definition of such term above. |
A “Cash Management DSCR Trigger Event” means the debt service coverage ratio for any two consecutive quarters, as determined by the lender, based on the trailing 12-month period immediately preceding the date of such determination is (a) on or prior to the eight-and-a-half-year anniversary of the origination date, less than 1.25x and (b) thereafter, less than 2.00x. A Cash Management DSCR Trigger Event will end upon the occurrence of (A) the debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is (x) on or prior to the eight-and-a-half-year anniversary of the origination date, at least 1.30x and (y) thereafter, at least 2.05x for two consecutive quarters or (B) the Rollins Portfolio Borrower deposits into the lockbox account, within 10 business days following commencement of the Cash Management DSCR Trigger Event, cash in an amount such that when added to the calculation of net operating income for the applicable fiscal quarter would result in the debt service coverage ratio for such quarter being at least equal to the applicable amount stipulated in clause (A).
Property Management. The Rollins Portfolio Properties are self-managed by Clark Pest Control.
Partial Release. A partial release is only permitted following (i) a casualty or condemnation affecting an individual property or (ii) an event of default occurring with respect to an individual property. See “Description of the Mortgage Pool—Certain Terms of the Mortgage Loans—Releases; Partial Releases” in the Preliminary Prospectus.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Terrorism Insurance. The Rollins Portfolio Whole Loan documents require that the “all risk” insurance policy required to be maintained by the Rollins Portfolio Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Rollins Portfolio Properties, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
Earthquake Insurance. The seismic reports for the Rollins Portfolio Properties indicated scenario expected losses ranging between 2.0% and 11.0%.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
85
| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 8 – 1010 Building and Heinen’s Rotunda Building | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | LMF Commercial, LLC | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (DBRSM/Fitch/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Mixed Use –Multifamily/Retail/ Office | ||||
| Original Principal Balance: | $24,250,000 | Location: | Cleveland, OH | ||||
| Cut-off Date Balance: | $24,250,000 | Size: | 138,515 SF | ||||
| % of Initial Pool Balance: | 3.2% | Cut-off Date Balance Per SF: | $175 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $143 | ||||
| Borrower Sponsor: | Gregory M. Geis | Year Built/Renovated: | 1907/ 2015 | ||||
| Guarantor: | Gregory M. Geis | Title Vesting: | Fee | ||||
| Mortgage Rate: | 4.6800% | Property Manager: | Geis Property Management, LLC (borrower-related) | ||||
| Note Date: | June 3, 2021 | Current Occupancy (As of): | 99.3% (5/11/2021) | ||||
| Seasoning: | 0 months | YE 2020 Occupancy: | 93.0% | ||||
| Maturity Date: | July 1, 2031 | YE 2019 Occupancy: | 96.0% | ||||
| IO Period: | 0 months | YE 2018 Occupancy: | 97.0% | ||||
| Loan Term (Original): | 120 months | YE 2017 Occupancy: | NAV | ||||
| Amortization Term (Original): | 360 months | As-Is Appraised Value: | $42,520,000 | ||||
| Loan Amortization Type: | Amortizing Balloon | As-Is Appraised Value Per SF: | $307 | ||||
| Call Protection: | L(24),D(92),O(4) | As-Is Appraisal Valuation Date: | March 25, 2021 | ||||
| Underwriting and Financial Information | |||||||
| Lockbox Type: | Springing | TTM NOI (3/31/2021): | $1,852,793 | ||||
| Additional Debt: | None | YE 2020 NOI: | $1,838,477 | ||||
| Additional Debt Type (Balance): | NAP | YE 2019 NOI: | $1,831,406 | ||||
| YE 2018 NOI: | NAV | ||||||
| U/W Revenues: | $3,280,989 | ||||||
| U/W Expenses: | $1,142,866 | ||||||
| Escrows and Reserves(1) | U/W NOI: | $2,138,122 | |||||
| Initial | Monthly | Cap | U/W NCF: | $2,073,997 | |||
| Taxes | $0 | $12,606 | NAP | U/W DSCR based on NOI/NCF: | 1.42x / 1.38x | ||
| Insurance | $51,667 | $4,473 | NAP | U/W Debt Yield based on NOI/NCF: | 8.8% / 8.6% | ||
| Replacement Reserve | $0 | $3,012 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 10.8% / 10.4% | ||
| TI/LC Reserve | $0 | $2,110 | NAP | Cut-off Date LTV Ratio: | 57.0% | ||
| Debt Service Reserve | $0 | Springing | NAP | LTV Ratio at Maturity: | 46.5% | ||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $24,250,000 | 93.6% | Loan payoff | $25,176,845 | 97.2% | |||
| Sponsors equity | 1,664,958 | 6.4 | Closing costs | 686,446 | 2.6 | |||
| Upfront reserves | 51,667 | 0.2 | ||||||
| Total Sources | $25,914,958 | 100.0% | Total Uses | $25,914,958 | 100.0% | |||
| (1) | See “Escrows” section for a full description of Escrows and Reserves. |
The Mortgage Loan. The mortgage loan (the “1010 Building and Heinen’s Rotunda Building Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 138,515 square foot mixed use multifamily, retail and office property located in Cleveland, Ohio (the “1010 Building and Heinen’s Rotunda Building Property”).
The Borrower and Borrower Sponsor. The borrower is 1010 Euclid, LLC (the “1010 Building and Heinen’s Rotunda Building Borrower”) a Delaware limited liability company and single purpose entity with one independent director. Legal counsel to the 1010 Building and Heinen’s Rotunda Building Borrower delivered a non-consolidation opinion in connection with the origination of the 1010 Building and Heinen’s Rotunda Mortgage Loan. The nonrecourse carve-out guarantor of the 1010 Building and Heinen’s Rotunda Building Mortgage Loan is Gregory M. Geis.
The borrower sponsor and nonrecourse carve-out guarantor, Gregory M. Geis, is the CEO of Geis Companies (“Geis”). Geis was formed in 1967 in Macedonia, Ohio and has become a multi-million dollar development and construction company, with more than 150 employees. Geis has grown to become a large industrial design firm in Ohio, designing and constructing approximately 2.0 million square feet annually, with projects underway in 14 states and two foreign countries. Mr. Geis is responsible for establishing the company’s mission, strategy and objectives. The borrower sponsor (or an affiliate) is the tenant at space representing approximately
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
23.8% of the net rentable area and approximately 11.2% of the underwritten base rent at the 1010 space at the 1010 Building and Heinen’s Rotunda Building Property.
The Property. The 1010 Building and Heinen’s Rotunda Building Property is a mixed use multifamily, retail and office property located in Cleveland, Ohio. The 1010 Building and Heinen’s Rotunda Building Property consists of two buildings totaling 138,515 square feet of net rentable area, which is comprised of 90 multifamily units (59,976 square feet) and 81,539 square feet of retail and office space situated on a 0.92-acre parcel. The 90 multifamily units are located at 1010 Euclid Avenue in a 13-story high-rise building (the “1010 Building”) which attached to the Metropolitan at the 9 hotel (the “Metropolitan Hotel”) (which hotel is owned by an affiliate of the borrower but is not collateral for the 1010 Building and Heinen’s Rotunda Building Mortgage Loan). The 1010 Building was originally constructed in 1910 and converted from an office building in 2015 by the borrower sponsor. The 1010 Building is part of a larger development, which includes a 29-story tower, a hotel and an apartment building (which are not part of the collateral). In addition to the 90 multifamily units, the 1010 Building also includes 36,759 square feet of retail and office space (45.1% of the commercial net rentable area and 45.4% of the commercial underwritten base rent) leased to Downtown Cleveland Alliance (DCA), the Metropolitan Hotel – Azure (rooftop bar) (“Azure”), Gdot Design, Jen Diasio, Geis Hospitality, LLC (owned by the borrower sponsor) and office space for the Metropolitan Hotel. The 1010 Building and Heinen’s Rotunda Building Property also includes the building adjacent to the 1010 Building located at the adjacent building at the corner of Euclid Avenue and E 9th Street (the “Heinen’s Rotunda Building”). The Heinen’s Rotunda Building was originally constructed in 1907 and renovated in 2015 by the borrower sponsor. The Heienen’s Rotunda Building is occupied by two retail tenants, Heinen’s and Metropolitan Hotel – Vault (54.9% of the commercial net rentable area and 54.6% of the commercial underwritten base rent).
The 1010 Building and Heinen’s Rotunda Building Property is subject to a 12-year 100% tax abatement from Cleveland for the redevelopment of the 1010 Building and Heinen’s Rotunda Building Property. The abatement started in January 1, 2015 and expires December 31, 2021 for the retail/office space and December 31, 2026 for the multifamily portion of the 1010 Building and Heinen’s Rotunda Building Property. The retail/office space is a separate tax parcel and each lease is 100.0% triple net to each of the tenants. The multifamily portion of the 1010 Building and Heinen’s Rotunda Building Property shares a tax parcel with the Azure tenant space. Azure is required to reimburse its pro-rata share of the real estate taxes in an amount equal to 13.0% of the multifamily parcel taxes due. Additionally, the 1010 Building and Heinen’s Rotunda Building Property benefits from a 30-year tax increment finance (“TIF”) agreement that commenced on November 12, 2013 and will end December 31, 2043. During the term of the TIF agreement, the 1010 Building and Heinen’s Rotunda Building Borrower is required to make payments in lieu of taxes (“Service Payments”) in an amount equal to the amount of taxes that the 1010 Building and Heinen’s Rotunda Borrower would have paid had the improvements not been exempt from taxation under the TIF agreement. Pursuant to the 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents, the lender collects funds on a rolling basis for the payment of the Service Payments. The Service Payments are secured by a TIF mortgage for the benefit of the City of Cleveland that is senior to the 1010 Building and Heinen’s Rotunda Building Mortgage Loan. The City of Cleveland is only entitled to exercise remedies with respect to the payments then due and payable through the most recent tax collection date and there is no right to accelerate the payments which become due and owing on subsequent tax collection dates. The Service Payments, other than a portion which are payable to the school board, are dedicated to the payment of annual debt service on the 1010 Building and Heinen’s Rotunda Building Mortgage Loan. Starting in 2022, Cuyahoga County will reimburse the school board taxes (35.0% of total taxes) to the 1010 Building and Heinen’s Rotunda Building Borrower on the retail/office spaces through the end of 2043, and once the abatement that covers the multifamily portion of the 1010 Building and Heinen’s Rotunda Building Property ends in 2027, Cuyahoga county will reimburse the school board taxes to the 1010 Building and Heinen’s Rotunda Building Borrower for the entire 1010 Building and Heinen’s Rotunda Building Property through the end of 2043.
Multifamily
The multifamily portion of the 1010 Building consists of 90 multifamily units, which are comprised of 81 one-bedroom/one-bath units and nine two-bedroom/two-bath units. Unit amenities include air conditioning, dishwasher, garbage disposal, microwave, premium countertops, in-unit washer and dryer and walk-in closets. Community amenities include a fitness center, concierge service, grocery delivery, dog area and a rooftop lounge. According to the rent roll dated May 11, 2021, the multifamily units are 98.9% occupied.
Unit Mix Summary(1)
| Unit Type | Total No. of Units | Occupied Units | % of Total Units | Occupancy | Average Unit Size (SF) | Average Underwritten Monthly Rent per Unit |
| 1 Bedroom / 1 Bathroom | 81 | 81 | 90.0% | 100.0% | 601 | $1,052 |
| 2 Bedrooms / 2 Bathrooms | 9 | 8 | 10.0% | 88.9% | 924 | $1,618 |
| Total/Weighted Average | 90 | 89 | 100.0% | 98.9% | 633 | $1,103 |
| (1) | Information obtained from the underwritten rent roll. |
Retail/Office
The retail/office portion of the 1010 Building and Heinen’s Rotunda Building Property consists of 3 retail tenants (65.4% of the commercial net rentable area and 63.4% of the commercial underwritten base rent) and 4 office tenants (34.6% of the commercial net rentable area and 36.6% of the commercial underwritten base rent).
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
Major Tenants.
Largest Tenant: Heinen’s (33,280 square feet, 40.8% of commercial net rentable area; 42.8% of commercial underwritten base rent; 1/31/2030 lease expiration) – Heinen’s is a family-owned grocery store chain that began as a butcher shop in Shaker Heights, Ohio in 1929. Heinen’s features 14 departments ranging from quality meats, to wellness, to beer and fine wine. In addition, the grocer features a coffee expresso bar, offers catering, and holds events such as wine/beer tasting, raw oyster bars, and healthy cooking demos. Heinen’s has 19 locations in Ohio and four in Illinois. Heinen’s has been a tenant at the 1010 Building and Heinen’s Rotunda Building Property since 2015 and has two, 5-year renewal options remaining. Heinen’s may terminate its lease effective January 31, 2025 with a nine months’ notice period and payment of a termination fee equal to $1,791,707.
2nd Largest Tenant: Metropolitan Hotel (23,882 square feet, 29.3% of commercial net rentable area; 20.6% of commercial underwritten base rent; 20,032 SF expiring on 4/30/2036 and 3,850 SF expiring on 9/1/2029) – Metropolitan Hotel includes Metropolitan Hotel – Vault (“The Vault”) (11,500 SF), Metropolitan Hotel – Azure (8,532 SF), and Metropolitan Hotel office space (3,850 SF). The Vault is located in the vault of the former Cleveland Trust building (Heinen’s Rotunda Building). The Vault is a cocktail lounge and bar offering more than 30 handcrafted cocktails and small plates. The Vault has been a tenant at the 1010 Building and Heinen’s Rotunda Building Property since 2014 and has no renewal options remaining. The owner of the Metropolitan Hotel is an affiliate of the 1010 Building and Heinen’s Rotunda Building Borrower.
3rd Largest Tenant: Downtown Cleveland Alliance (“DCA”) (8,701 square feet; 10.7% of commercial net rentable area; 8.9% of commercial underwritten base rent; 6/30/2024 lease expiration) –DCA is a not-for-profit organization committed to making downtown Cleveland a compelling place to live, work and play. DCA is a collaboration of neighborhood-based organizations, property owners and downtown businesses, created as an organization dedicated to the long-term economic health of downtown Cleveland. As a not-for-profit organization, the DCA can implement strategic initiatives and provide services that enhance the pedestrian experience and attract more investment into downtown Cleveland. DCA has been a tenant at the 1010 Building and Heinen’s Rotunda Building Property since 2014 and has one, 5-year renewal option remaining.
COVID-19 Update. As of June 30, 2021, the 1010 Building and Heinen’s Rotunda Building Property is open and operating. Collection for June at the 1010 Building and Heinen’s Rotunda Building Property was at 93.3% of total square feet and 96.9% of total UW base rent. As of the date hereof, the 1010 Building and Heinen’s Rotunda Building Mortgage Loan is not subject to any modification or forbearance agreement, and the 1010 Building and Heinen’s Rotunda Building Borrower has not requested any modification or forbearance to the 1010 Building and Heinen’s Rotunda Building Mortgage Loan terms.
The following table presents certain information relating to the tenancy at the 1010 Building and Heinen’s Rotunda Building Property:
Major Tenants
| Tenant Name | Credit
Rating (Fitch/Moody’s/ S&P) |
Tenant NRSF | %
of NRSF |
Annual U/W Base Rent PSF(1) | Annual U/W Commercial Base Rent(1) |
% of Total Annual U/W Base Rent | Lease
Expiration Date |
Extension Options | Termination Option (Y/N) |
| Major Tenants | |||||||||
| Heinen’s | NR/NR/NR | 33,280 | 40.8% | $14.41 | $479,686 | 42.8% | 1/31/2030 | 2, 5-year | Y(2) |
| Metropolitan Hotel – The Vault(3) | NR/NR/NR | 11,500 | 14.1% | $11.49 | $132,099 | 11.8% | 4/30/2036 | None | N |
| Downtown Cleveland Alliance (DCA) | NR/NR/NR | 8,701 | 10.7% | $11.44 | $99,547 | 8.9% | 6/30/2024 | 1, 5-year | N |
| Gdot Design, Jen Diasio | NR/NR/NR | 8,653 | 10.6% | $17.23 | $149,094 | 13.3% | 9/30/2024 | None | N |
| Metropolitan Hotel - Azure(3) | NR/NR/NR | 8,532 | 10.5% | $11.49 | $98,006 | 8.8% | 4/30/2036 | None | N |
| Total Major Tenants | 70,666 | 86.7% | $13.56 | $958,432 | 85.6% | ||||
| Non-Major Tenant | 10,873 | 13.3% | $14.84 | $161,344 | 14.4% | ||||
| Occupied Collateral Total | 81,539 | 100.0% | $13.73 | $1,119,776 | 100.0% | ||||
| Vacant Space | 0 | 0.0% | |||||||
| Collateral Total | 81,539 | 100.0% | |||||||
| (1) | Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through January 2022 totaling $12,551. |
| (2) | Heinen’s may terminate its lease effective January 31, 2025 with a nine months’ notice period and payment of a termination fee equal to $1,791,707. |
| (3) | The owner of the Metropolitan Hotel (the tenant under the Metropolitan Hotel – The Vault lease and the tenant under the Metropolitan Hotel - Azure lease) is an affiliate of the 1010 Building and Heinen’s Rotunda Building Borrower. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
The following table presents certain information relating to the lease rollover schedule at the 1010 Building and Heinen’s Rotunda Building Property:
Lease Expiration Schedule(1)(2)
| Year
Ending December 31, |
No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2024 | 2 | 17,354 | 21.3% | 17,354 | 21.3% | $248,641 | 22.2% | $14.33 |
| 2025 | 0 | 0 | 0.0% | 17,354 | 21.3% | $0 | 0.0% | $0.00 |
| 2026 | 0 | 0 | 0.0% | 17,354 | 21.3% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 17,354 | 21.3% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 17,354 | 21.3% | $0 | 0.0% | $0.00 |
| 2029 | 1 | 3,850 | 4.7% | 21,204 | 26.0% | $0 | 0.0% | $0.00 |
| 2030 | 1 | 33,280 | 40.8% | 54,484 | 66.8% | $479,686 | 42.8% | $14.41 |
| 2031 | 0 | 0 | 0.0% | 54,484 | 66.8% | $0 | 0.0% | $0.00 |
| Thereafter | 3 | 27,055 | 33.2% | 81,539 | 100.0% | $391,449 | 35.0% | $14.47 |
| Vacant | 0 | 0 | 0.0% | 81,539 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average(3) | 7 | 81,539 | 100.0% | $1,119,776 | 100.0% | $13.73 |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule. |
| (3) | Total Annual UW Base Rent per square foot excludes vacant space. |
The following table presents historical occupancy percentages at the 1010 Building and Heinen’s Rotunda Building Property:
Historical Occupancy
12/31/2018 |
12/31/2019(1) |
12/31/2020(1) |
5/11/2021(2) |
| 97.0% | 96.0% | 93.0% | 99.3% |
| (1) | Information obtained from the borrower’s rent roll. |
| (2) | Information obtained from the underwritten rent roll dated May 11, 2021. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
90
| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the 1010 Building and Heinen’s Rotunda Building Property:
Cash Flow Analysis
| 2019 | 2020 | TTM 03/31/2021 | U/W | %(1) | U/W $ per SF | |
| Residential Rents in Place | $1,177,802 | $1,230,969 | $1,224,845 | $1,178,326 | 34.8% | $8.51 |
| Retail Rents in Place | 1,081,315 | 1,072,074 | 1,080,862 | 1,107,226 | 32.7 | 7.99 |
| Contractual Rent Steps(2) | 0 | 0 | 0 | 12,551 | 0.4 | 0.09 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
21,960 |
0.6 |
0.16 |
| Gross Potential Rent | $2,259,117 | $2,303,043 | $2,305,707 | $2,320,063 | 68.6% | $16.75 |
| Other Income(3) | 114,219 | 99,884 | 88,263 | 319,543 | 9.4 | 2.31 |
| Total Recoveries | 849,687 |
756,841 |
750,227 |
741,872 |
21.9 |
5.36 |
| Net Rental Income | $3,223,023 | $3,159,768 | $3,144,197 | $3,381,478 | 100.0% | $24.41 |
| (Vacancy & Credit Loss) | (96,054) |
(115,240) |
(137,150) |
(100,489)(4) |
(4.3) |
(0.73) |
| Effective Gross Income | $3,126,969 | $3,044,529 | $3,007,047 | $3,280,989 | 97.0% | $23.69 |
| Real Estate Taxes | 142,393 | 151,271 | 151,271 | 151,271 | 4.6 | 1.09 |
| Insurance | 65,586 | 70,878 | 64,785 | 53,680 | 1.6 | 0.39 |
| Management Fee | 95,576 | 101,183 | 98,713 | 98,430 | 3.0 | 0.71 |
| Other Operating Expenses | 992,009 |
882,720 |
839,486 |
839,486 |
25.6 |
6.06 |
| Total Operating Expenses | $1,295,564 | $1,206,052 | $1,154,255 | $1,142,866 | 34.8% | $8.25 |
| Net Operating Income | $1,831,406 | $1,838,477 | $1,852,793 | $2,138,122 | 65.2% | $15.44 |
| Replacement Reserves | 0 | 0 | 0 | 38,808 | 1.2 | 0.28 |
| TI/LC | 0 |
0 |
0 |
25,317 |
0.8 |
0.18 |
| Net Cash Flow | $1,831,406 | $1,838,477 | $1,852,793 | $2,073,997 | 63.2% | $14.97 |
| NOI DSCR | 1.22x | 1.22x | 1.23x | 1.42x | ||
| NCF DSCR | 1.22x | 1.22x | 1.23x | 1.38x | ||
| NOI Debt Yield | 7.6% | 7.6% | 7.6% | 8.8% | ||
| NCF Debt Yield | 7.6% | 7.6% | 7.6% | 8.6% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Represents contractual rent steps through January 2022. |
| (3) | Other income consist of a 15-year straight line reimbursement of the TIF income from Cuyahoga County in the amount $231,000. |
| (4) | The underwritten economic vacancy is 4.3%. The 1010 Building and Heinen’s Rotunda Building Property was 99.3% leased as of May 11, 2021. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
91
| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
Appraisal. As of the appraisal valuation date of March 25, 2021, the 1010 Building and Heinen’s Rotunda Building Property had an “as-is” appraised value of $42,520,000.
Environmental Matters. According to a Phase I environmental site assessment dated April 6, 2021, there was no evidence of any recognized environmental conditions at the 1010 Building and Heinen’s Rotunda Building Property.
Market Overview and Competition. The 1010 Building and Heinen’s Rotunda Building Property is located in Cleveland, Cuyahoga County, Ohio, within the Cleveland-Elyria metropolitan statistical area (the “Cleveland MSA”). The Cleveland MSA consists of Cuyahoga, Geauga, Lake and Medina counties. The Cleveland MSA economy is driven by the manufacturing, engineering and science industries. There are approximately 168 engineering companies located in the Cleveland area that are engaged in civil engineering, construction, and information technology. Cleveland serves as headquarters to a group of companies on the Fortune 500 list, both industrial and non-industrial and includes firms such as National City Corp., Eaton Corp., Parker Hannifin Corp., Sherwin-Williams Co., and KeyCorp. Primary access to the 1010 Building and Heinen’s Rotunda Building Property’s neighborhood is provided by Interstate 90, 77 and 71. The neighborhood surrounding the 1010 Building and Heinen’s Rotunda Building Property consists of a mixture of office, retail and residential development. The Flats at East Bank is an approximately $500 million waterfront development project along the Cuyahoga River approximately 1.1 miles west of the 1010 Building and Heinen’s Rotunda Building Property. Phase One of the project opened in 2013 and features an 18-story, 500,000 square foot office tower, an Aloft hotel and a range of local restaurants. Phase 2 includes Flats at East Bank Apartments, a 241-unit residential building and 1,200 foot riverfront boardwalk. The 1010 Building and Heinen’s Rotunda Building Property is located within the Gateway District of downtown Cleveland. Gateway District is home to Progressive Field, Quicken Loans Arena, which is home to the Cleveland Indians and Cleveland Cavaliers, respectively. The area also includes the East 4th entertainment district offering restaurants, concerts, comedy shows and a bowling alley. According to the appraisal, the 2020 population within a one-, three-, and five-mile radius is 14,177, 76,575 and 238,476, respectively. The average household income within the same radii is $68,397, $51,528, and $46,786, respectively.
Submarket Information – According to the appraisal, the 1010 Building and Heinen’s Rotunda Building Property is situated within the Central Cleveland apartment submarket, which contained approximately 13,472 units as of year end 2020. The Central Cleveland apartment submarket reported a vacancy rate of 7.3% with an average quoted rental rate of $1,396 per unit. The Central Cleveland apartment submarket reported positive absorption of 1,196 units and 777 units under construction.
Submarket Information – According to the appraisal, the 1010 Building and Heinen’s Rotunda Building Property is located within the CBD retail submarket, which contained approximately 2.8 million square feet of retail space as of year end 2020. The CBD retail submarket reported a vacancy rate of 1.6% with an average quoted rental rate of $24.69 per square feet. The CBD retail submarket reported positive net absorption of 3,264 square feet and 18,702 square feet under construction. According to the appraisal, the 1010 Building and Heinen’s Rotunda Building Property is situated within the CBD office submarket, which contained approximately 30.5 million square feet of office space as of year end 2020. The CBD office submarket reported a vacancy rate of 9.2% with an average quoted rental rate of $21.55 per square feet. The CBD office submarket reported positive absorption of 21,339 square feet and no new construction.
Appraiser’s Multifamily Comp Set – The appraiser identified four primary competitive properties for the 1010 Building and Heinen’s Rotunda Building Property totaling approximately 195,138 square feet, which reported an average occupancy rate of approximately 94.8%. The appraiser concluded to monthly market rents of $1,250 per unit for one bedroom units and $1,830 per unit for two bedroom units.
Appraiser’s Retail and Office Comp Set – The appraiser identified four retail and four office competitive properties for the 1010 Building and Heinen’s Rotunda Building Property totaling approximately 868 units, which reported an average occupancy rate of approximately 91.9%. The appraiser concluded to market rents of $14.50 per square foot, for grocery tenants, $11.00 per square foot for retail tenants, and $16.00 per square foot for office tenants.
The following table presents certain information relating to the appraiser’s market rent conclusion for the 1010 Building and Heinen’s Rotunda Property:
Market Rent Summary(1)
| Grocery | Retail | Office | |
| Market Rent (PSF) | $14.50 | $11.00 | $16.00 |
| Lease Term (Years) | NAV | NAV | NAV |
| Lease Type (Reimbursements) | NAV | NAV | NAV |
| Rent Increase Projection | NAV | NAV | NAV |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
92
| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
The table below presents certain information relating to comparable sales for the 1010 Building and Heinen’s Rotunda Building Property identified by the appraiser:
Comparable Sales - Retail(1)
| Property Name | Location | Rentable Area (SF) | Sale Date | Sale Price | Sale Price (PSF) |
| Whole Foods | Exton, PA | 54,729 | Apr-19 | $22,140,368 | $404.55 |
| Pick’n Save | Oconomowoc, WI | 61,700 | Jul-19 | $13,289,300 | $215.39 |
| Fresh Thyme | Muncie, IN | 28,709 | Jul-19 | $8,446,386 | $294.21 |
| Whole Foods | Kildeer, IL | 50,000 | Feb-20 | $24,900,000 | $498.00 |
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to four comparable residential properties to the 1010 Building and Heinen’s Rotunda Building Property identified by the appraiser:
Competitive Set(1)
| 1010 Building and Heinen’s Rotunda Building (Subject)(2) | Residences at 1717 | Flats at East Bank Apartments | The Standard | The Garfield Apartments | |
| Location | Cleveland, OH | Cleveland, OH | Cleveland, OH | Cleveland, OH | Cleveland, OH |
| Distance to Subject | -- | 0.2 miles | 1.1 miles | 0.5 miles | 0.2 miles |
| Property Type | Mixed Use – Apartment/Commercial | Mixed Use –Retail/Apartment | Mixed Use – Apartment/Commercial | Mixed Use – Apartment/Commercial | Mixed Use – Apartment/Commercial |
| Year Built/Renovated | 1907/2015 | 1958/2014 | 2015/NAP | 1924/2017 | 1895/2017 |
| Number of Units | 90 | 223 | 235 | 281 | 129 |
| Average Monthly Rent (per unit) | |||||
| 1 Bedroom | $1,052 | $1,305 | $1,916 | $1,168 | $1,195 - $1,480 |
| 2 Bedrooms | $1,618 | $2,398 | $2,858 - $10,076 | $1,768 | $1,628 - $1,913 |
| 3 Bedrooms | NAP | NAP | $3,374 | NAP | $3,635 |
| Occupancy | 99.3% | 91.5% | 80.0% | 92.7% | 94.6% |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
93
| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
The following table presents certain information relating to four comparable leases to those at the 1010 Building and Heinen’s Rotunda Building Property:
Comparable Leases(1)
| Property
Name/Location |
Year Built/ Renovated | Total GLA (SF) | Distance from Subject | Occupancy | Lease Term | Tenant Size (SF) | Annual Base Rent PSF | Reimbursement Amount PSF | Lease Type |
| Retail | |||||||||
Gristmill Village Shopping Center 7530 Fredle Drive Painesville, OH |
2001/NAP | 91,580 | 25.6 miles | 88.3% | 5.0 Yrs | 25,000 | $13.00 | NAV | NNN |
Buckeye Plaza 11301 Buckeye Road Cleveland, OH |
1990/1992 | 116,905 | 4.3 miles | 74.6% | 15.0 Yrs | 55,331 | $9.00 | NAV | NNN |
Dave’s Marketplace 5100-5106 Wilson Mills Road Richmond Heights, OH |
1994/2000 | 57,845 | 10.2 miles | 100.0% | 4.0 Yrs | 57,845 | $13.14 | NAV | NNN |
Giant Eagle 3100 Cromer Avenue NW Canton, OH |
1999/NAP | 80,021 | 48.8 miles | 100.0% | 5.0 Yrs | 80,021 | $8.44 | NAV | NNN |
| Office | |||||||||
Fifth Third Center 600 Superior Ave. Cleveland, OH |
1991/NAP | 508,397 | 0.2 miles | 79.0% | 5.0 Yrs | 2,073 | $23.00 | NAV | MG |
The Halle Building 1228 Euclid Ave. Cleveland, OH |
1910/1986 | 409,000 | 0.1 miles | 100.0% | 5.0 Yrs | 14,369 | $15.00 | NAV | FSG |
Caxton Building 812 Huron Road East Cleveland, OH |
1903/1991 | 163,353 | 0.1 miles | 93.0% | 5.0 Yrs | 3,584 | $16.00 | NAV | MG |
Rosetta Center Offices 629 Euclid Avenue Cleveland, OH |
1896/2013 | 292,477 | 0.2 miles | 100.0% | 5.0 Yrs | 28,800 | $19.00 | NAV | MG |
| (1) | Information obtained from the appraisal. |
Escrows.
Real Estate Taxes – The 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents require ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be necessary to pay taxes over the then succeeding twelve months (initially $12,606). Notwithstanding anything herein, to the extent required by the TIF documents, the lender will disburse on a semi-annual basis, real estate tax funds to the TIF escrow agent for the payment of real estate taxes in the amount the 1010 Building and Heinen’s Rotunda Building Borrower is required to deposit with the TIF escrow agent pursuant to the terms of the TIF documents.
Insurance – The 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents require an upfront insurance reserve of $51,667 and ongoing monthly insurance reserves in an amount equal to one-twelfth of the insurance premiums that the lender estimates will be payable for the renewal of the coverage afforded by the policies upon the expiration thereof (initially $4,473).
Replacement Reserves – The 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents require ongoing monthly replacement reserves of $3,012.
TI/LC Reserve – The 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents require ongoing monthly TI/LC reserves of $2,110 for the TI/LCs and related expenses with respect to the commercial space at the 1010 Building and Heinen’s Rotunda Building Property. In addition, to the monthly TI/LC reserve, the 1010 Building and Heinen’s Rotunda Building Borrower is required to deposit into the TI/LC reserve any amounts paid to the 1010 Building and Heinen’s Rotunda Building Borrower in connection with a termination, cancellation, sale or other disposition of any lease or any portion thereof, other than amounts paid for rent and other charges in respect of periods prior to the date of such termination, cancellation, surrender, modification, sale or other disposition.
Debt Service Reserve - The 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents require a springing debt service reserve so long as upon lender’s receipt of any assigned service payments (as defined in the TIF documents) in accordance with the
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
94
| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
TIF documents, lender will deposit such assigned service payments into a reserve fund account for the purposes of establishing a reserve fund to pay monthly debt service payment amounts.
Lockbox and Cash Management. The 1010 Building and Heinen’s Rotunda Building Mortgage Loan requires a springing lockbox and a springing cash management. Upon the occurrence and continuance of a Cash Sweep Event (as defined below) the 1010 Building and Heinen’s Rotunda Building Borrower is required to establish a lender-controlled lockbox account and instruct tenants to deposit rents into such lockbox account. The 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents also require that all revenues received by the 1010 Building and Heinen’s Rotunda Building Borrower or property manager be deposited into the lockbox account within one business day of receipt. Pursuant to the 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents, all excess funds on deposit are required to be applied as follows (a) if a Cash Sweep Event (as defined below) is not in effect, to the 1010 Building and Heinen’s Rotunda Building Borrower; and (b) if a Cash Sweep Event is in effect due to the existence of a Critical Tenant Trigger Event (as defined below) to the critical tenant TI/LC subaccount until the applicable Critical Tenant Trigger Event Cure (as defined below) has occurred. If a Cash Sweep Event is in effect but a Critical Tenant Trigger Event is not in effect, then funds will be applied to the excess cash flow account.
A “Cash Sweep Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | a bankruptcy action of the 1010 Building and Heinen’s Rotunda Building Borrower, guarantor or property manager; |
| (iii) | a Cash Sweep DSCR Trigger Event (as defined below); or |
| (iv) | a Critical Trigger Event (as defined below). |
A Cash Sweep Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default has been accepted or waived by lender; |
| ● | with regard to clause (ii) above, when such bankruptcy action petition has been discharged, stayed, or dismissed within 60 days of such filing among other conditions for the 1010 Building and Heinen’s Rotunda Building Borrower or guarantor and within 120 days for the property manager, with respect to the property manager, the 1010 Building and Heinen’s Rotunda Building Borrower replacing the property manager with a qualified property manager acceptable to the lender; |
| ● | with regard to clause (iii) above, the date the amortizing debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.15x for two consecutive quarters; and |
| ● | with regard to clause (iv) above, the date the applicable Critical Tenant Trigger Event Cure has occurred. |
A “Cash Sweep DSCR Trigger Event” will occur on any day the debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.15x.
A “Critical Tenant Trigger Event” will occur upon:
| (i) | if Heinen’s or any other tenant occupying the space currently occupied by such tenant (a “Critical Tenant” and each related lease, a “Critical Tenant Lease”) gives notice of its intention to not extend or renew its lease or to terminate its lease or the applicable Critical Tenant Lease is otherwise terminate; |
| (ii) | on or prior to six months prior to the then applicable expiration date or termination date under its lease, if the Critical Tenant has failed to give notice of its election to renew its lease; |
| (iii) | on or prior to the date on which the Critical Tenant is required under its lease to notify the landlord of its election to renew its lease, and the Critical Tenant fails to give such notice; |
| (iv) | an event of default under the Critical Tenant Lease occurs or is continuing; |
| (v) | if a bankruptcy action with respect to the Critical Tenant or guarantor of any Critical Tenant occurs; |
| (vi) | if the Critical Tenant elects to pay reduced rent (including, without limitation, percentage rent in lieu of fixed rent) pursuant to any right or remedy contained in the applicable Critical Tenant Lease; or |
| (vii) | if the Critical Tenant discontinues its normal business operations. |
A “Critical Tenant Trigger Event Cure” will occur upon:
| ● | with regard to clause (i), (ii) or (iii) above, the date that (1) the Critical Tenant Lease extension is executed and delivered to lender by the 1010 Building and Heinen’s Rotunda Building Borrower and the related tenant improvement costs, leasing commissions and other material costs and expenses have been deposited into the critical tenant TI/LC account; or (2) a Critical Tenant Space Re-Tenanting Event (as defined below) has occurred; |
| ● | with regard to clause (iv) above, after a cure of the applicable default; |
| ● | with regard to clause (v) above, after an affirmation of the Critical Tenant lease in the applicable bankruptcy proceeding and confirmation that the Critical Tenant is actually paying all rents and other amounts under the lease; |
| ● | with regard to clause (vi) above, the Critical Tenant re-commences the payment of full unabated rent; or |
| ● | with regard to clause (vii) above, the Critical Tenant re-commences its normal business operations or a Critical Tenant Space Re-Tenanting Event (as defined below) has occurred. |
A “Critical Tenant Space Re-Tenanting Event” will occur on the date each of the following conditions has been satisfied: (i) the Critical Tenant space is leased to one or more replacement tenants for a term of at least five years and on terms that are acceptable to the lender; (ii) all tenant improvement costs, leasing commissions and other material costs and expenses relating to the re-letting of the
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
95
| Mixed Use – Multifamily/Retail/ | Loan #8 | Cut-off Date Balance: | $24,250,000 | |
| Office | 1010 Building and Heinen’s Rotunda Building | Cut-off Date LTV: | 57.0% | |
| 1010 Euclid Avenue | U/W NCF DSCR: | 1.38x | ||
| Cleveland, OH 44114 | U/W NOI Debt Yield: | 8.8% |
space have been paid in full; and (iii) the replacement tenant(s) are conducting normal business operations at the related Critical Tenant space.
Property Management. The 1010 Building and Heinen’s Rotunda Building Property is managed by Geis Property Management, LLC, an affiliate of the 1010 Building and Heinen’s Rotunda Building Borrower sponsor.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Terrorism Insurance. The 1010 Building and Heinen’s Rotunda Building Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the 1010 Building and Heinen’s Rotunda Building Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the 1010 Building and Heinen’s Rotunda Building Property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
96
| Multifamily – Mid Rise | Loan #9 | Cut-off Date Balance: | $23,200,000 | |
| 2302 Webster Avenue | 2302 Webster | Cut-off Date LTV: | 66.7% | |
| Bronx, NY 10458 | U/W NCF DSCR: | 1.72x | ||
| U/W NOI Debt Yield: | 7.2% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
97
| Multifamily – Mid Rise | Loan #9 | Cut-off Date Balance: | $23,200,000 | |
| 2302 Webster Avenue | 2302 Webster | Cut-off Date LTV: | 66.7% | |
| Bronx, NY 10458 | U/W NCF DSCR: | 1.72x | ||
| U/W NOI Debt Yield: | 7.2% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 9 – 2302 Webster | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Ladder Capital Finance LLC | Single Asset/Portfolio: | Single Asset | ||||
| Credit
Assessment (DBRSM/Fitch/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Multifamily – Mid Rise | ||||
| Original Principal Balance: | $23,200,000 | Location: | Bronx, NY | ||||
| Cut-off Date Balance: | $23,200,000 | Size: | 71 Units | ||||
| % of Initial Pool Balance: | 3.1% | Cut-off Date Balance Per Unit: | $326,760.56 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Unit: | $326,760.56 | ||||
| Borrower Sponsors: | Ayush Kapahi and Michael Froning | Year Built/Renovated: | 2020/NAP | ||||
| Guarantors: | Ayush Kapahi and Michael Froning | Title Vesting: | Leasehold | ||||
| Interest Rate: | 3.806% | Property Manager: | Self-managed | ||||
| Note Date: | June 30, 2021 | Current Occupancy (As of): | 98.6% (6/25/2021) | ||||
| Seasoning: | 0 months | YE 2020 Occupancy(2): | NAV | ||||
| Maturity Date: | July 6, 2031 | YE 2019 Occupancy(2): | NAV | ||||
| Interest-Only Period: | 120 months | YE 2018 Occupancy(2): | NAV | ||||
| Loan Term (Original): | 120 months | YE 2017 Occupancy(2): | NAV | ||||
| Amortization Term (Original): | NAP | As-Stabilized Appraised Value(3): | $34,800,000 | ||||
| Loan Amortization Type: | Interest Only | As-Stabilized Appraised Value Per Unit: | $490,140.85 | ||||
| Call Protection: | L(24),D(92),O(4) | As-Stabilized Appraisal Valuation Date(3): | July 1, 2021 | ||||
| Lockbox Type: | Springing | ||||||
| Additional Debt: | None | Underwriting and Financial Information | |||||
| Additional Debt Type (Balance): | NAP | TTM NOI (2): | NAV | ||||
| YE 2020 NOI(2): | NAV | ||||||
| YE 2019 NOI(2): | NAV | ||||||
| YE 2018 NOI(2): | NAV | ||||||
| YE 2017 NOI(2): | NAV | ||||||
| U/W Revenues: | $2,082,495 | ||||||
| Escrows and Reserves(1) | U/W Expenses: | $519,714 | |||||
| Initial | Monthly | Cap | U/W NOI: | $1,562,781 | |||
| Taxes | $116,569 | $58,285 | NAP | U/W NCF: | $1,540,827 | ||
| Insurance | $31,285 | $3,476 | NAP | U/W DSCR based on NOI/NCF: | 1.75x / 1.72x | ||
| Replacement Reserve | $0 | $1,139 | NAP | U/W Debt Yield based on NOI/NCF(4): | 7.2% / 7.1% | ||
| TI/LC Reserve | $0 | $691 | NAP | U/W Debt Yield at Maturity based on NOI/NCF(4): | 7.2% / 7.1% | ||
| Earnout Reserve(4) | $3,550,778 | $0 | NAP | ||||
| Ground Reserve | $12,500 | $12,542 | NAP | Cut-off Date LTV Ratio(3): | 66.7% | ||
| Outstanding Leases Obligation Reserve | $368,323 | $0 | NAP | LTV Ratio at Maturity(3): | 66.7% | ||
| Sources and Uses | ||||||||||||||
| Sources | Uses | |||||||||||||
| Original mortgage loan amount | $23,200,000 | 99.6 | % | Loan Payoff | $18,334,444 | 78.7 | % | |||||||
| Sponsor equity | $90,000 | 0.4 | Closing costs | $876,101 | 3.8 | |||||||||
| Upfront Reserves | $4,079,455 | 17.5 | ||||||||||||
| Total Sources | $23,290,000 | 100.0 | % | Total Uses | $23,290,000 | 100.0 | % | |||||||
| (1) | See “Escrows” section below. |
| (2) | Historical cash flows and occupancy figures for 2020 and before are not available as the 2302 Webster Property (as defined below) was built in 2020 and received a certificate of occupancy in January 2021. |
| (3) | The 2302 Webster Property has an As-Is Appraised Value of $34,600,000 as of March 10, 2021. At the time of valuation, the 2302 Webster Property was in the process of leasing up after it received a certificate of occupancy in January 2021. The multifamily units at the 2302 Webster Property are 98.6% leased as of June 25, 2021.The borrower sponsors are in the process of obtaining a 25-year ICAP tax abatement with respect to the commercial component of the 2302 Webster Property and 35-year 421-a tax exemption with respect to the residential component of the 2302 Webster Property, for which the 2302 Webster Mortgage Loan will be full recourse until full and irrevocable receipt of the tax abatement and exemption. The appraised value was calculated based on the assumption that the tax abatement and exemption are obtained. The Cut-off Date LTV Ratio based on the As-Is Appraised Value is 67.1%. |
| (4) | The UW NOI Debt Yield and UW NCF Debt Yield are calculated based on the Cut-off Date Balance of the 2302 Webster Mortgage Loan (as defined below) net of a $1,407,692 portion of a $3,550,778 upfront earnout reserve (such portion of the earnout reserve being allocable to Clifford Glover Day Care, which has signed a letter of intent to occupy space at the 2302 Webster Property), which earnout reserve will be released to the 2302 Webster Borrower (as defined below) upon satisfaction of the following conditions: (i) no event of default is continuing, (ii) no Cash Management Trigger Event (as defined below) exists, (iii) upon each of the three commercial retail tenants being in occupancy, open for business and paying unabated base rent, as evidenced by individual tenant estoppels and (iv) to the extent that an NCF debt yield of 7.00% is achieved calculated by netting any funds remaining in the earnout reserve from the outstanding principal balance of the 2302 Webster Mortgage Loan. The funds from the earnout reserve will be disbursed pro rata as each of the commercial tenants meet the earnout conditions. In the event the earnout conditions are |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
99
| Multifamily – Mid Rise | Loan #9 | Cut-off Date Balance: | $23,200,000 | |
| 2302 Webster Avenue | 2302 Webster | Cut-off Date LTV: | 66.7% | |
| Bronx, NY 10458 | U/W NCF DSCR: | 1.72x | ||
| U/W NOI Debt Yield: | 7.2% |
| not met within 12 months of the 2302 Webster Mortgage Loan origination (or 24 months so long as the 2302 Webster Borrower is pursuing diligent efforts to satisfy the earnout reserve conditions) plus up to an additional 60 days in either case solely in order to obtain the required tenant estoppel, the 2302 Webster Mortgage Loan shall be paid down by the outstanding balance of the earnout reserve. The UW NOI Debt Yield and UW NCF Debt Yield (both as of the Cut-off Date and at maturity), without netting the $1,407,692 portion of the holdback, are 6.7% and 6.6%, respectively. |
The Mortgage Loan. The mortgage loan (the “2302 Webster Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the leasehold interest in a 71 unit multifamily building located in Bronx, New York (the “2302 Webster Property”).
The Borrower and Borrower Sponsors. The borrower under the 2302 Webster Mortgage Loan is 2306 Webster Development LLC (the “2302 Webster Borrower”), a New York limited liability company and single purpose entity with one independent director. Legal counsel to the 2302 Webster Borrower delivered a non-consolidation opinion in connection with the origination of the 2302 Webster Mortgage Loan. The two non-recourse carveout guarantors and borrower sponsors of the 2302 Webster Mortgage Loan are Ayush Kapahi and Michael Froning. Mr. Kapahi is the principal and founding partner of HKS Capital Partners, has over 15 years of experience and has a real estate portfolio comprised of 2,164 multifamily units with a total portfolio value over $1 billion. Mr. Froning has ownership interests in thirty properties.
The Property. The 2302 Webster Property consists of a newly constructed residential building located on the east side of Webster Avenue between East 183rd and East 184th Streets in the Belmont neighborhood of the Bronx. The 8-story building has a gross building area of 63,518 square feet and was constructed in 2020. The building has a total of 71 residential units. The 71 units have a net rentable area of 56,485 square feet. The rentable residential units consist of 48 market rate units (leased to section 8 tenants) and 22 affordable units. The affordable units are leased through the CityFHEPS program. CityFHEPS is a rental assistance supplement to help individuals and families find and keep housing. It is administered by the Department of Social Services (DSS), which includes both the Department of Homeless Services (DHS) and the Human Resources Administration (HRA). The borrower sponsors have been leasing the remaining 70% market rate units exclusively to tenants with Section 8 vouchers. The 2021 average underwritten Section 8 rents are $1,900 per month for studio units, $1,945 per month for one bedroom units, and $2,069 per month for two bedroom units. According to the appraisal, the Section 8 rents are generally in-line with market rate rents in the local area. The building was constructed as a 70/30 development under the Affordable New York Program. As such, the 2302 Webster Property will benefit from a 35-year Affordable New York tax exemption. The related mortgage loan seller valued the tax savings from the abatement separately in its underwriting analysis. The rentable residential units have an average unit size of 578 square feet. The residential rental units at the 2302 Webster Property are currently 98.6 percent leased as of June 25, 2021. There is currently one vacant market rate unit. In addition to the residential units, the 2302 Webster Property also has a commercial component consisting of three retail suites and one community facility suite. The three commercial suites contain a total net rentable area of 8,985 square feet.
A portion of the retail component will benefit from a 25-year Industrial & Commercial Abatement Program (ICAP). The related mortgage loan seller valued the tax savings from the abatement separately in its underwriting analysis. The 2302 Webster Property also has a garage parking component with a total of 36 parking spaces. An affiliate of the 2302 Webster Borrower has signed a master lease for the parking garage with annual rent of $64,800, which expires in June 2036. The amenities at the development are located on the second floor and consist of two recreation rooms, a common laundry room, and bicycle storage.
The 2302 Webster Property is subject to a ground lease with approximately 96 years remaining. The rent is $150,500 per year for the first five years (through October 2022), followed by 2.0% annual increases. The lessor is G.J.B. Realty Corp., which has no affiliation with the borrower sponsors.
The following table presents certain information relating to the unit mix of the 2302 Webster Property:
Unit Mix Summary(1)
| Unit Type | Total
No. of Units |
Occupied Units |
%
of Total Units |
Occupancy | Average
Unit Size (SF) |
Average
|
| Studio 70% | 6 | 6 | 8.5% | 100.0% | 450 | $1,900 |
| 1 Bed 70% | 28 | 28 | 39.4% | 100.0% | 550 | $1,945 |
| 2 Bed 70% | 15 | 14 | 21.1% | 93.3% | 650 | $2,069 |
| 1 Bed 30% Affordable | 11 | 11 | 15.5% | 100.0% | 650 | $3,044 |
| 2 Bed 30% Affordable | 11 | 11 | 15.5% | 100.0% | 550 | $2,526 |
| Total/Weighted Average | 71 | 70 | 100.0% | 98.6% | 578 | $2,228 |
| (1) | Based on the underwritten rent roll as of June 25, 2021. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
100
| Multifamily – Mid Rise | Loan #9 | Cut-off Date Balance: | $23,200,000 | |
| 2302 Webster Avenue | 2302 Webster | Cut-off Date LTV: | 66.7% | |
| Bronx, NY 10458 | U/W NCF DSCR: | 1.72x | ||
| U/W NOI Debt Yield: | 7.2% |
The following table presents historical occupancy percentages of the residential rental units at the 2302 Webster Property:
Historical Occupancy
12/31/2017(1) | 12/31/2018(1) | 12/31/2019(1) | 12/31/2020(1) | 6/25/2021(2) | ||||
| NAV | NAV | NAV | NAV | 98.6% |
| (1) | Occupancy not available as the 2302 Webster Property was built in 2020 and received a certificate of occupancy in January 2021. |
| (2) | Information obtained from the underwritten rent roll dated June 25, 2021. |
COVID-19. As of the date hereof, the 2302 Webster Mortgage Loan is not subject to any modification or forbearance agreement, and the 2302 Webster Borrower has not requested any modification or forbearance to the 2302 Webster Loan terms.
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the 2302 Webster Property:
Cash Flow Analysis(1)
| U/W | %(2) | U/W $ per Unit |
||||||
| Base Rent | $1,924,620 | 89.9 | % | $27,107.32 | ||||
| Concessions | 0 | 0.0 | 0.00 | |||||
| Bad Debt | 0 | 0.0 | 0.00 | |||||
| Gross Potential Rent | $1,924,620 | 89.9 | % | $27,107.32 | ||||
| Other Income(3) | 215,613 | 10.1 | 3,036.81 | |||||
| Net Rental Income | $2,140,233 | 100.0 | % | $30,144.13 | ||||
| (Vacancy & Credit Loss)(4) | (57,739) | (3.0 | ) | (813.22) | ||||
| Effective Gross Income | $2,082,495 | 97.3 | % | $29,330.91 | ||||
| Real Estate Taxes | 42,516 | 2.0 | 598.82 | |||||
| Insurance | 38,111 | 1.8 | 536.77 | |||||
| Management Fee | 62,475 | 3.0 | 879.93 | |||||
| Other Operating Expenses | 376,612 | 18.1 | 5,304.39 | |||||
| Total Operating Expenses | $519,714 | 25.0 | % | $7,319.92 | ||||
| Net Operating Income | $1,562,781 | 75.0 | % | $22,010.99 | ||||
| Capital Expenditures | 21,954 | 1.1 | 309.21 | |||||
| Net Cash Flow | $1,540,827 | 74.0 | % | $21,701.78 | ||||
| NOI DSCR | 1.75x | |||||||
| NCF DSCR | 1.72x | |||||||
| NOI Debt Yield(5) | 7.2% | |||||||
| NCF Debt Yield(5) | 7.1% | |||||||
| (1) | Historical cash flow figures for 2020 and before are not available as the 2302 Webster Property was built in 2020 and received a certificate of occupancy in January 2021. |
| (2) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (3) | Other Income is comprised of commercial and parking income. |
| (4) | The underwritten economic vacancy is 3.0%. The residential rental units at the 2302 Webster Property were 98.6% leased as of June 25, 2021. |
| (5) | The NOI Debt Yield and NCF Debt Yield are based on the 2302 Webster Mortgage Loan amount net of the allocated holdback of $1,407,692 for Clifford Glover Day Care, which has signed a letter of intent to occupy space at the 2302 Webster Property. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
101
| Multifamily – Mid Rise | Loan #9 | Cut-off Date Balance: | $23,200,000 | |
| 2302 Webster Avenue | 2302 Webster | Cut-off Date LTV: | 66.7% | |
| Bronx, NY 10458 | U/W NCF DSCR: | 1.72x | ||
| U/W NOI Debt Yield: | 7.2% |
Appraisal. As of the appraisal valuation date of July 1, 2021, the 2302 Webster Property had an “as-stabilized” appraised value of $34,800,000.
Environmental Matters. According to the Phase I environmental site assessment dated May 13, 2021, there was no evidence of any recognized environmental conditions at the 2302 Webster Property.
Market Overview and Competition. The 2302 Webster Property is located within Bronx County, New York. New York City consists of five counties at the mouth of the Hudson River in the southeast area of New York State. The borough of Manhattan, also referred to as New York County, forms the political, financial and cultural core of the city. The city’s other boroughs are Brooklyn, Queens, Staten Island, and the Bronx, otherwise known as Kings, Queens, Richmond, and Bronx counties, respectively. The area’s mass transit infrastructure connects the five boroughs as well as the surrounding suburban areas, forming the Greater New York Region. This region covers 21 counties in the southeastern section of New York State, southwestern corner of Connecticut, and Central and Northern New Jersey.
Following the 2.3% annual increase in gross metro product (GMP) to $809.1 billion in 2019, the City’s 2020 GMP fell 7.4% year over year to measure $749 billion due to COVID-19-related disruption to all business sectors. According to the appraisal, GMP is forecast to exhibit positive annual growth of 3.5% in 2021 and is projected to continue registering positive in all subsequent years in the forecast period with the greatest growth occurring in 2022 at 6.2%. According to the appraisal GMP growth is also forecast to outpace the growth of gross national product (GNP) in 2022.
The 2302 Webster Property is located in the Bronx submarket. As of the third quarter 2020, the Bronx multifamily submarket reported a total vacancy rate of 4.0% and average asking monthly rent per unit of $1,350.
Appraiser’s Competitive Set – The appraiser identified seven primary competitive properties for the 2302 Webster Property totaling 482 units, which have an average occupancy rate of approximately 94.9%. The appraiser concluded to monthly market rents per unit ranging from $994 to $3,884.
The following table presents certain information relating to comparable multifamily properties for the 2302 Webster Property:
Competitive Property Summary
Property Name Address |
No.
Units |
Avg.
Unit Size (SF) |
Year Built/ Renov. |
Occ. (%) |
Dist from Subject |
Beds/Bath | Appraisal Quoted
|
Appraisal Quoted
|
2302 Webster(1) 2302 Webster Avenue Bronx, NY |
71 | 450 578 608 |
2020/ NAP |
98.6% | N/A | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$1,900 $1,945 $2,217 |
$41.45 $35.91 $35.47 |
2330 Hoffman Street(2) Bronx, NY |
57 | 400 650 700 1,167 |
2018/ NAP |
87.7% | 0.6 miles | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$1,801 $2,426 $3,235 |
$33.25 $41.59 $33.26 |
Hudson 192(2) 4469 Broadway New York, NY |
85 | 500 700 1,000 |
2008/ NAP |
89.4% | 2.7 miles | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$1,606 $2,087 $2,718 |
$38.54 $35.78 $32.62 |
The Stack(2) 4857 Broadway New York, NY |
28 | 450 750 1,100 1,500 |
2013/ NAP |
92.9% | 2.8 miles | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$2,056 $2,208 $3,004 $3,884 |
$54.83 $35.33 $32.77 $31.07 |
2483 Cambreleng Avenue(2) Bronx, NY |
21 | 500 650 |
2008/ NAP |
100% | 1.2 miles | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$1,392 $1,851 |
$33.41 $34.17 |
Axe Kingsbridge(2) 2763 Morris Avenue Bronx, NY |
70 | 337 622 754 |
2017/ NAP |
100% | 1.6 miles | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$1,576 $1,675 $2,017 |
$56.12 $32.32 $32.10 |
700 Rosewood Street(2) Bronx, NY |
125 | 450 550 650 |
2011/ NAP |
94.4% | 3.6 miles | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$1,265 $1,349 $1,636 |
$33.73 $29.43 $30.20 |
Riverview Tower(2) 1514 Sedgwick Avenue Bronx, NY |
96 | 400 550 700 |
2004/ NAP |
100% | 2.4 miles | Studio 1 BR / 1 Bath 2 BR / 2 Bath 3 BR / 2 Bath |
$994 $2,102 $2,435 |
$29.82 $45.86 $41.74 |
| (1) | Information obtained from the underwritten rent roll dated June 25, 2021. |
| (2) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
102
| Multifamily – Mid Rise | Loan #9 | Cut-off Date Balance: | $23,200,000 | |
| 2302 Webster Avenue | 2302 Webster | Cut-off Date LTV: | 66.7% | |
| Bronx, NY 10458 | U/W NCF DSCR: | 1.72x | ||
| U/W NOI Debt Yield: | 7.2% |
Escrows.
Real Estate Taxes – The 2302 Webster Mortgage Loan documents require reserves for real estate taxes with upfront collections of $116,569 and monthly collections currently equal to $58,285.
Insurance – The 2302 Webster Mortgage Loan documents require reserves for insurance premiums with upfront collections of $31,285 and monthly collections currently equal to $3,476.
TI/LC Reserve – The 2302 Webster Mortgage Loan documents require monthly collections of $691 for tenant improvements and leasing commissions.
Ground Reserve – The 2302 Webster Mortgage Loan documents require with respect to ground rent an upfront deposit equal to $12,500 and require monthly deposits currently equal to $12,542.
Replacement Reserves – The 2302 Webster Mortgage Loan documents require ongoing monthly replacement reserves of $1,139.
Outstanding Leases Obligation Reserve - The 2302 Webster Mortgage Loan documents require an upfront reserve for outstanding lease obligations for the three commercial tenants of $368,323.
Earnout Reserve - The 2302 Webster Mortgage Loan documents require a $3,550,778 upfront earnout reserve, which will be released to the 2302 Webster Borrower upon satisfaction of the following conditions: (i) no event of default is continuing, (ii) no Cash Management Trigger Event exists, (iii) upon each of the three commercial retail tenants being in occupancy, open for business and paying unabated base rent (the “earnout conditions”), as evidenced by individual tenant estoppels and (iv) to the extent that an NCF debt yield of 7.00% is achieved calculated by netting any funds remaining in the earnout reserve from the outstanding principal balance of the 2302 Webster Mortgage Loan. The funds from the earnout reserve will be disbursed to the 2302 Webster Borrower pro rata as each of the commercial tenants meet the earnout conditions. In the event the earnout conditions are not met within 12 months of loan origination (or 24 months so long as the 2302 Webster Borrower is pursuing diligent efforts to satisfy the earnout reserve conditions) plus up to an additional 60 days in either case solely in order to obtain the required tenant estoppel, the 2302 Webster Mortgage Loan may be paid down by the outstanding balance of the earnout reserve.
Lockbox and Cash Management. Upon the occurrence and continuance of a Cash Management Trigger Event (as defined below), the 2302 Webster Borrower is required to establish a lender-controlled lockbox account, and the 2302 Webster Borrower and property manager are required to deposit all rents into the lockbox account. During a Cash Management Trigger Event, funds in the lockbox accounts are required to be swept to a lender-controlled cash management account, and all excess funds (after payment of required monthly reserve deposits, debt service, operating and capital expenses) are required to be swept to an excess cash flow subaccount controlled by the lender.
A “Cash Management Trigger Event” will commence upon (i) the occurrence of an event of default under the 2302 Webster Mortgage Loan documents (ii) an event of default under the property management agreement or (iii) if the debt service coverage ratio is less than 1.10x and will end (x) with respect to clause (i) above, upon the cure (if applicable) of such event of default, (y) with respect to clause (ii) above, if the default under the property management has been cured or the property management agreement has been replaced in accordance with the 2302 Webster Mortgage Loan documents and (z) with respect to clause (iii) above, if the 2302 Webster Property achieves a debt service coverage ratio of at least 1.10x for at least two consecutive quarters. The 2302 Webster Borrower will have the right to avoid the Cash Management Trigger Event related to clause (iii) above by posting cash or letters of credit equal to $89,577 on an annual basis.
Property Management. The 2302 Webster Property is self-managed.
Partial Release. None.
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. The 2302 Webster Property is subject to a ground lease with G.J.B. Realty Corp., as the ground lessor, which ground lease has an expiration of October 18, 2116. The annual rent due under the ground lease for the 2302 Webster Property is $150,500 through October 2022, followed by 2.0% annual increases thereafter with no resets.
Terrorism Insurance. The 2302 Webster Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the 2302 Webster Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the 2302 Webster Property, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
103
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,750,000 | |
| 1410 30th Avenue Northwest | The Wyatt at Northern Lights | Cut-off Date LTV: | 63.7% | |
| Minot, North Dakota 58703 | U/W NCF DSCR: | 1.94x | ||
| U/W NOI Debt Yield: | 8.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
104
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,750,000 | |
| 1410 30th Avenue Northwest | The Wyatt at Northern Lights | Cut-off Date LTV: | 63.7% | |
| Minot, North Dakota 58703 | U/W NCF DSCR: | 1.94x | ||
| U/W NOI Debt Yield: | 8.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
105
| No. 10 – The Wyatt at Northern Lights | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | LMF Commercial, LLC | Single Asset/Portfolio: | Single Asset | ||||
| Credit
Assessment (DBRSM/Fitch/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Multifamily – Garden | ||||
| Original Principal Balance: | $22,750,000 | Location: | Minot, ND | ||||
| Cut-off Date Balance: | $22,750,000 | Size: | 276 Units | ||||
| % of Initial Pool Balance: | 3.0% | Cut-off Date Balance Per Unit: | $82,428 | ||||
| Loan Purpose: | Acquisition | Maturity Date Balance Per Unit: | $82,428 | ||||
| Borrower Sponsors: | Tim Edwards, Wesley D. Hill and Darrin N. Jones | Year Built/Renovated: | 2014/NAP | ||||
| Guarantors: | Tim Edwards, Wesley D. Hill and Darrin N. Jones | Title Vesting: | Fee | ||||
| Interest Rate: | 4.3400% | Property Manager: | WestCorp Management Group One, Inc. | ||||
| Note Date: | June 25, 2021 | Current Occupancy (As of): | 98.2% (6/14/2021) | ||||
| Seasoning: | 0 months | YE 2020 Occupancy: | 91.5% | ||||
| Maturity Date: | July 6, 2031 | YE 2019 Occupancy: | 96.8% | ||||
| IO Period: | 120 months | YE 2018 Occupancy: | 86.2% | ||||
| Loan Term (Original): | 120 months | YE 2017 Occupancy(2): | NAV | ||||
| Amortization Term (Original): | NAP | As-Is Appraised Value: | $35,700,000 | ||||
| Loan Amortization Type: | Interest Only | As-Is Appraised Value Per Unit: | $129,348 | ||||
| Call Protection: | L(24),D(91),O(5) | As-Is Appraisal Valuation Date: | May 26, 2021 | ||||
| Lockbox Type: | Springing | Underwriting and Financial Information | |||||
| Additional Debt: | None | TTM NOI (5/31/2021): | $1,927,651 | ||||
| Additional Debt Type (Balance): | NAP | YE 2020 NOI: | $1,805,576 | ||||
| YE 2019 NOI: | $1,821,515 | ||||||
| YE 2018 NOI(2): | NAP | ||||||
| U/W Revenues: | $3,390,664 | ||||||
| U/W Expenses: | $1,380,060 | ||||||
| Escrows and Reserves(1) | U/W NOI: | $2,010,604 | |||||
| Initial | Monthly | Cap | U/W NCF: | $1,941,604 | |||
| Taxes | $179,400 | $29,900 | NAP | U/W DSCR based on NOI/NCF: | 2.01x / 1.94x | ||
| Insurance | $11,364 | $5,411 | NAP | U/W Debt Yield based on NOI/NCF: | 8.8% / 8.5% | ||
| Replacement Reserves | $0 | $5,750 | $345,000 | U/W Debt Yield at Maturity based on NOI/NCF: | 8.8% / 8.5% | ||
| Cut-off Date LTV Ratio: | 63.7% | ||||||
| LTV Ratio at Maturity: | 63.7% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $22,750,000 | 64.1% | Purchase price | $35,000,000 | 98.6% | |||
| Borrower sponsor equity | 12,761,500 | 35.9 | Closing costs | 320,736 | 0.9 | |||
| Upfront reserves | 190,764 | 0.5 | ||||||
| Total Sources | $35,511,500 | 100.0% | Total Uses | $35,511,500 | 100.0% | |||
| (1) | See “Escrows” section below. |
| (2) | The borrower acquired The Wyatt at Northern Lights Property (as defined below) in 2021. As such, not all historical occupancy and NOI information is available. |
The Mortgage Loan. The mortgage loan (“The Wyatt at Northern Lights Mortgage Loan”) is evidenced by a single promissory note secured by a first priority fee mortgage encumbering a multifamily garden property (“The Wyatt at Northern Lights Property”) located in Minot, North Dakota.
The Borrower and Borrower Sponsors. The borrower comprises three tenants-in-common: Edwards Wyatt LLC, Hill Wyatt LLC and Jones Wyatt LLC (collectively, “The Wyatt at Northern Lights Borrower”), each a single purpose Delaware limited liability company with one independent director. The non-recourse carveout guarantors and borrower sponsors of The Wyatt at Northern Lights Mortgage Loan are Tim Edwards, Wesley D. Hill and Darrin N. Jones.
Wesley D. Hill is the owner of Hill Properties, a real estate management, brokerage and investment company based in Chico, California. Hill Properties has over 750 apartment units currently under management in California, Oregon and Washington. Mr. Hill and Mr. Edwards own Multifamily Asset Advisors, a full-service consulting and asset management firm. Multifamily Asset Advisors has approximately $200.0 million of assets under management and ownership in California, Oregon, Utah and Washington. Darrin Norman
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
106
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,750,000 | |
| 1410 30th Avenue Northwest | The Wyatt at Northern Lights | Cut-off Date LTV: | 63.7% | |
| Minot, North Dakota 58703 | U/W NCF DSCR: | 1.94x | ||
| U/W NOI Debt Yield: | 8.8% |
Jones has been passive real estate investors since 2005. Mr. Jones currently has ownership in 495 units in Springfield, Oregon and 108 units in Clarkston, Washington.
The Property. The Wyatt at Northern Lights Property is a 276-unit garden multifamily property located in Minot, North Dakota. Built from 2014 to 2016, The Wyatt at Northern Lights Property consists of eight, three-story buildings, situated on a 15.0-acre site. The Wyatt at Northern Lights Property’s unit mix includes 108 one-bedroom/one-bathroom units, 144 two-bedroom/two-bathroom units and 24 three-bedroom/two-bathroom units, with an average unit size of 969 square feet. Common area amenities at The Wyatt at Northern Lights Property include a fitness center, indoor heated pool/spa, dry sauna, 10-seat theatre room, library, business center, clubhouse, coffee café, playground, package locker delivery system and garages. Unit amenities include stainless steel appliances, granite countertops, modern lighting, full size washer and dryer, central air conditioning and wood laminate flooring. During 2019 to 2021, The Wyatt at Northern Lights Property underwent capital improvements of approximately $324,526 or $1,176 per unit for interior and exterior renovations, flooring replacement, appliances, electrical and landscaping and parking renovations. Onsite parking is provided by 443 uncovered parking spaces and 208 garage parking spaces for a total of 651 parking spaces, resulting in a parking ratio of approximately 2.4 spaces per unit. As of June 14, 2021, The Wyatt at Northern Lights Property was 98.2% leased.
The following table presents certain information relating to the unit mix of The Wyatt at Northern Lights Property:
Unit Mix Summary(1)
| Unit Type | Total No. of Units | Occupied Units | % of Total Units | Occupancy | Average Unit Size (SF) | Average Underwritten Monthly Rent per Unit |
| 1 Bedroom / 1 Bathroom | 108 | 107 | 39.1% | 99.1% | 758 | $793 |
| 2 Bedrooms / 2 Bathrooms | 144 | 140 | 52.2% | 97.2% | 1,068 | $963 |
| 3 Bedrooms / 2 Bathrooms | 24 | 24 | 8.7% | 100.0% | 1,324 | $1,225 |
| Total/Weighted Average | 276 | 271 | 100.0% | 98.2% | 969 | $919 |
| (1) | Information obtained from the underwritten rent roll. |
The following table presents historical occupancy percentages at The Wyatt at Northern Lights Property:
Historical Occupancy
12/31/2018(1) |
12/31/2019(1) |
12/31/2020(1) |
6/14/2021(2) |
| 86.2% | 96.8% | 91.5% | 98.2% |
| (1) | Information obtained from The Wyatt at Northern Lights Borrower sponsor. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19 Update. As of June 14, 2021, The Wyatt at Northern Lights Property is open and operating. As of the date hereof, collection at The Wyatt at Northern Lights Property was at 96.7% of total units and at 98.6% of total UW base rent. As of the date hereof, The Wyatt at Northern Lights Mortgage Loan is not subject to any modification or forbearance agreement, and The Wyatt at Northern Lights Borrower has not requested any modification or forbearance to The Wyatt at Northern Lights Mortgage Loan terms.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
107
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,750,000 | |
| 1410 30th Avenue Northwest | The Wyatt at Northern Lights | Cut-off Date LTV: | 63.7% | |
| Minot, North Dakota 58703 | U/W NCF DSCR: | 1.94x | ||
| U/W NOI Debt Yield: | 8.8% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at The Wyatt at Northern Lights Property:
Cash Flow Analysis
| 2019 | 2020 | TTM 5/31/2021 |
U/W | %(1) | U/W $ per Unit | |
| Base Rent | $2,986,900 | $3,023,002 | $3,042,815 | $2,989,824 | 84.4% | $10,833 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
58,380 |
1.6 |
212 |
| Gross Potential Rent | $2,986,900 | $3,023,002 | $3,042,815 | $3,048,204 | 86.0% | $11,044 |
| Other Income(2) | 529,020 |
483,698 |
494,329 |
494,329 |
14.0 |
1,791 |
| Net Rental Income | $3,515,920 | $3,506,700 | $3,537,144 | $3,542,533 | 100.0% | $12,835 |
| (Vacancy & Credit Loss) | (323,503) |
(384,234) |
(298,381) |
(151,869)(3) |
(5.0) |
(550) |
| Effective Gross Income | $3,192,417 | $3,122,466 | $3,238,763 | $3,390,664 | 95.7% | $12,285 |
| Real Estate Taxes | 271,169 | 287,272 | 279,971 | 358,800 | 10.6 | 1,300 |
| Insurance | 70,695 | 84,138 | 89,569 | 64,936 | 1.9 | 235 |
| Management Fee | 95,338 | 93,671 | 97,065 | 101,720 | 3.0 | 369 |
| Other Operating Expenses | 933,700 |
851,809 |
844,507 |
854,604 |
25.2 |
3,096 |
| Total Operating Expenses | $1,370,902 | $1,316,890 | $1,311,112 | $1,380,060 | 40.7% | $5,000 |
| Net Operating Income | $1,821,515 | $1,805,576 | $1,927,651 | $2,010,604 | 59.3% | $7,285 |
| Capital Expenditures | 0 |
0 |
0 |
69,000 |
2.0 |
250 |
| Net Cash Flow | $1,821,515 | $1,805,576 | $1,927,651 | $1,941,604 | 57.3% | $7,035 |
| NOI DSCR | 1.82x | 1.80x | 1.93x | 2.01x | ||
| NCF DSCR | 1.82x | 1.80x | 1.93x | 1.94x | ||
| NOI Debt Yield | 8.0% | 7.9% | 8.5% | 8.8% | ||
| NCF Debt Yield | 8.0% | 7.9% | 8.5% | 8.5% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Other Income includes (i) utility income of $175,056, (ii) parking income of $138,303 and (iii) other income of $176,970 which include month-to-month fees, application fees, cleaning fees, late fees, cable income, pet fees, admin/legal fees, non-sufficient funds fees, corporate units/furniture, damage income, key/lock change and miscellaneous income. |
| (3) | The underwritten economic vacancy is 5.0%. As of June 14, 2021, The Wyatt at Northern Lights Property was 98.2% leased. |
Appraisal. As of the appraisal valuation date of May 26, 2021, The Wyatt at Northern Lights Property had an “as-is” appraised value of $35,700,000.
Environmental Matters. According to the Phase I environmental site assessment dated June 14, 2021, there was no evidence of any recognized environmental conditions at The Wyatt at Northern Lights Property.
Market Overview and Competition. The Wyatt at Northern Lights Property is located in Minot, Ward County, North Dakota, within the Minot, North Dakota micropolitan statistical area (the “Minot MSA”). Minot is located in the north central part of North Dakota. The Minot MSA economy is primarily driven by services, retail trade, and agriculture/mining and public administration. Major employers within the Minot MSA include Minot Air Force Base, Trinity Health, Minot Public Schools, City of Minot and Minot State University. Minot Air Force Base (“Minot AFB”) is located approximately 13 miles north of The Wyatt at Northern Lights Property. Minot AFB employs approximately 5,551 active duty members and has approximately 5,584 family members and 1,060 civilians who live near the Minot AFB.
Access to the Minot area is provided via U.S. Highway 83 and U.S. Highway 2. U.S. Highway 83 is a north-south route that provides access to Bismarck, which is approximately 120 miles south of Minot. The immediate area surrounding The Wyatt at Northern Lights Property is characterized by single family and multifamily uses. Minot State University is located approximately 2.1 miles southeast of The Wyatt at Northern Lights Property. As of fall 2020, Minot State University had approximately 2,920 students consisting of 1,948 full time students and 972 part time students. Dakota Square Mall is located approximately 5.6 miles south of The Wyatt at Northern Lights. The mall is anchored by Scheels, Target, Barnes & Noble, Ross Dress for Less and JC Penney. Other national retailers include T-Mobile, Old Navy, T.J. Maxx, AMC Theater, Party City, ULTA, and Victoria’s Secret. Other retailers within the area include Walmart, Best Buy, Hobby Lobby, Kohl’s, and Menards. According to the appraisal, the 2020 population within a one-, three- and five-mile radius of The Wyatt at Northern Lights Property is 4,052, 26,935 and 48,474, respectively, with an average household income within a one-, three-, and five-mile radius of The Wyatt at Northern Lights Property of approximately $81,478, $72,614 and $74,043, respectively.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
108
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,750,000 | |
| 1410 30th Avenue Northwest | The Wyatt at Northern Lights | Cut-off Date LTV: | 63.7% | |
| Minot, North Dakota 58703 | U/W NCF DSCR: | 1.94x | ||
| U/W NOI Debt Yield: | 8.8% |
According to a third party market research report, as of the first quarter of 2021, the Minot multifamily submarket contained approximately 6,517 units, a reported 5.7% vacancy rate representing a 0.2% decrease year-over-year, and an average asking rent per unit of $895 representing a 2.4% increase year-over-year.
Appraiser’s Comp Set – The appraiser identified four competitive properties for The Wyatt at Northern Lights Property totaling 795 units, which reported a weighted average occupancy rate of approximately 99.0%. The appraiser concluded to monthly market rents of $879 per unit for one bedroom/one bathroom units, $1,077 per unit for two bedroom/two bathroom units and $1,369 per unit for three bedroom/two bathroom units.
Competitive Set(1)
| The Wyatt at Northern Lights (Subject)(2) | Northern Highlands | The Commons and Landing at Southgate | The Plaza Apartments | Minot Place | |
| Location | Minot, ND | Minot, ND | Minot, ND | Minot, ND | Minot, ND |
| Distance to Subject | -- | 0.3 miles | 6.4 miles | 6.1 miles | 8.1 miles |
| Property Type | Garden/Low Rise | Garden/Low Rise | Mid/High Rise | Garden/Low Rise | Garden/Low Rise |
| Year Built/Renovated | 2014-2016/NAP | 2014/NAP | 2014/NAP | 2008/NAP | 2011/NAP |
| Number of Units | 276 | 239 | 341 | 71 | 144 |
| Average Monthly Rent (per unit) | |||||
| Studio | NAP | NAP | NAP | NAP | $775 |
| 1 Bedroom | $793 | $995 | $605 - $963 | $832 - $960 | $968 |
| 2 Bedrooms | $963 | $1,100 - $1,237 | $993 - $1,295 | $945 - $1,168 | $945 - $975 |
| 3 Bedrooms | $1,225 | $1,401 | $1,035 - $1,843 | $1,210 - $1,502 | $1,195 |
| Occupancy | 98.2% | 99.6% | 99.4% | 100.0% | 97.2% |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
Escrows.
Real Estate Taxes – The Wyatt at Northern Lights Mortgage Loan documents require an upfront real estate tax reserve of $179,400 and ongoing monthly real estate tax reserves in the amount equal to one-twelfth of the real estate taxes that the lender estimates will be necessary to pay taxes over the then succeeding twelve months (initially $29,900).
Insurance – The Wyatt at Northern Lights Mortgage Loan documents require an upfront insurance reserve of $11,364 and ongoing monthly insurance premium reserves in the amount equal to one-twelfth of the insurance premiums that the lender estimates will be necessary to pay insurance premiums over the then succeeding twelve months (initially $5,411).
Replacement Reserves – The Wyatt at Northern Lights Mortgage Loan documents require ongoing monthly replacement reserves of $5,750, subject to a cap of $345,000.
Lockbox and Cash Management. The Wyatt at Northern Lights Mortgage Loan requires a springing lockbox and springing cash management. Upon the occurrence and continuance of a Cash Management Trigger Event (as defined below) The Wyatt at Northern Lights Borrower is required to establish a lender-controlled lockbox account and instruct tenants to deposit rents into such lockbox account. The Wyatt at Northern Lights Mortgage Loan documents also require that all revenues received by The Wyatt at Northern Lights Borrower or property manager be deposited into the lockbox account within two business days of receipt. Pursuant to The Wyatt at Northern Lights Mortgage Loan documents, all excess funds on deposit are required to be applied as follows (a) if a Cash Sweep Event (as defined below) is not in effect, to The Wyatt at Northern Lights Borrower; and (b) if a Cash Sweep Event is in effect, funds will be applied to an excess cash flow account controlled by the lender, to be held by the lender as additional security for The Wyatt at Northern Lights Mortgage Loan.
A “Cash Management Trigger Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | The Wyatt at Northern Lights Borrower’s second late debt service payment within a 12-month period; |
| (iii) | a bankruptcy action of The Wyatt at Northern Lights Borrower, guarantor or property manager; or |
| (iv) | a Cash Management DSCR Trigger Event (as defined below). |
A Cash Management Trigger Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default has been accepted or waived by the lender; |
| ● | with regard to clause (ii) above, when the debt service payments have been paid on time for 12 consecutive months; |
| ● | with regard to clause (iii) above, when such bankruptcy action petition has been discharged, stayed, or dismissed within 30 days of such filing among other conditions for The Wyatt at Northern Lights Borrower or guarantor and within 120 days for the property manager, with respect to the property manager, The Wyatt at Northern Lights Borrower replacing the property manager with a qualified manager acceptable to the lender; and |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
109
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,750,000 | |
| 1410 30th Avenue Northwest | The Wyatt at Northern Lights | Cut-off Date LTV: | 63.7% | |
| Minot, North Dakota 58703 | U/W NCF DSCR: | 1.94x | ||
| U/W NOI Debt Yield: | 8.8% |
| ● | with regard to clause (iv) above, the date the amortizing debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.20x for two consecutive quarters. |
A “Cash Management DSCR Trigger Event” will occur on any day the debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.20x for The Wyatt at Northern Lights Mortgage Loan.
A “Cash Sweep Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | a bankruptcy action of The Wyatt at Northern Lights Borrower, guarantor or property manager; or |
| (iii) | a Cash Sweep DSCR Trigger Event (as defined below). |
A Cash Sweep Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default has been accepted or waived by the lender; |
| ● | with regard to clause (ii) above, when such bankruptcy action petition has been discharged, stayed, or dismissed within 60 days of such filing among other conditions for The Wyatt at Northern Lights Borrower or guarantor and within 120 days for the property manager, with respect to the property manager, The Wyatt at Northern Lights Borrower replacing the property manager with a qualified manager acceptable to the lender; and |
| ● | with regard to clause (iii) above, the date the amortizing debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.15x for two consecutive quarters. |
A “Cash Sweep DSCR Trigger Event” will occur on any day the debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.15x for The Wyatt at Northern Lights Mortgage Loan.
Property Management. The Wyatt at Northern Lights Property is managed by WestCorp Management Group One, Inc., a third-party property management company.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Terrorism Insurance. The Wyatt at Northern Lights Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by The Wyatt at Northern Lights Borrower provides coverage for terrorism in an amount equal to the full replacement cost of The Wyatt at Northern Lights Property, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2021-C60 | Transaction Contact Information |
V. Transaction Contact Information
Questions regarding this Structural and Collateral Term Sheet may be directed to any of the following individuals:
| Wells Fargo Securities, LLC | |
| Brigid Mattingly | Tel. (312) 269-3062 |
| A.J. Sfarra | Tel. (212) 214-5613 |
| Alex Wong | Tel. (212) 214-5615 |
| Credit Suisse Securities (USA) LLC | |
| Brendan Jordan | Tel. (212) 325-1924 |
| Julia Powell | Tel. (212) 325-3294 |
| UBS Securities LLC | |
| Nicholas Galeone | Tel. (212) 713-8832 |
| Siho Ham | Tel. (212) 713-1278 |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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