TREPP, LLC: New Jersey RE Loans Update

Borrower Gives Up on Newark Hotel

April commentary from the special servicer handling the $53.8 million Sheraton at Newark International Airport revealed the borrower is not interested in a modification, but will cooperate with a foreclosure. (A Commercial Real Estate Direct piece tipped us off to the note.) The loan, which backs 2.4% of JPMCC 2006-CB17, was transferred to special servicing last month and is now listed as 90+ days delinquent.

The Sheraton at Newark International Airport loan is backed by a 504-unit, full service hotel in Newark, New Jersey. The hotel, which was built in 1989 and renovated in 2005, was originally a Radisson, then converted to a Sheraton, and later a DoubleTree. The property was appraised “as is” at $76 million at securitization and $84 million “as-stabilized.” Full-year 2013 DSCR came in at 0.77x on 67% occupancy. WatchList commentary from February cited improvement since the switch to DoubleTree management in 2012, but there has been a similar step-up in expenses and competition.

Although losses on the JPMCC deal are fairly low at 1.7%, interest shortfalls reach all the way to the B tranche. Worse, is that 21.2% of collateral in the deal is REO, including the largest loan in the deal ($263 million Bank of America Plaza). Total delinquency is 24.6%.

New Jersey Mall to Special Servicing

After being added to the WatchList in the April rolling period, the $32.8 million Linden Plaza is headed to the special servicer for “imminent default” according to a Fitch note on Wednesday. Anchor tenant Walmart, which occupies 41% of space, is apparently moving across the street to a new development. 2014 projections for Linden Plaza show a $0.58 million shortfall based on current occupancy.

Linden Plaza is a 277,974 square-foot mall in Linden, New Jersey that was securitized in 2006 with an appraised value of $45.5 million. Occupancy has fallen from 99% in 2012 to 73% in 2013 when DSCR came in at 1.18x. WatchList comments indicate that the property will need $5 million to stabilize the property after the loss of Walmart. The loan is paid through March and due to mature in 2016.

Linden Plaza backs 1.1% of JPMCC 2006-LDP7, which currently carries 6.6% delinquency and 3.4% in cumulative bond loss. Interest shortfalls currently touch the B tranche

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