$265M Stamford Office Property Stabilizes, Remains on Watchlist
The $265 million loan backing 400 Atlantic Street in Stamford, Conn., has emerged from special servicing and been returned to master servicer Wells Fargo, according to servicing commentary and data from Trepp. The loan—which is current and matures in June 2018—remains on the servicing watchlist.
The loan makes up 5.39 percent of Goldman Sachs-sponsored GS 2007-GG10 commercial mortgage-backed security. It was transferred to special servicer CW Capital in October 2014 for imminent default before being returned to master servicer Wells Fargo in June 2016.
C-III Asset Management took over special servicing in April. A month later the borrower, a group of investors led by Alan Landis of the Landis Group, requested an A/B loan modification but withdrew the request, according to a bondholder familiar with the loan. The loan is now being “monitored” and was returned to the master servicer as a “corrected loan.”
“Usually when a notable loan is in special servicing for a while, it will be put on the watchlist afterwards so that performance can be monitored,” explained Sean Barrie, an analyst with Trepp. “Since the loan was going through some financial distress, the servicer wants to see if metrics pick up following the work that was done.”
The property is a 527,000-square-foot Class A office building. Constructed in 1980, it comprises 487,000 square feet of office space, 5,000 square feet of retail space, a cafeteria, fitness center and a 908-space parking garage, according to data from Trepp.
The building’s top three tenants accounted for 83 percent of occupancy. UBS leases 265,00 square feet, International Paper took 132,000 square feet until December 2015 and American Express leased 37,000 square feet until September 2014. UBS’ lease expires in September 2018, but it has already vacated the building and is currently sub-leasing 183,000 square feet of its space.
The borrower has negotiated a direct lease with Harman, a sub-tenant in the former International Paper space. Harmon is using the space as its headquarters and is taking the 14th and 15th floors for a seven-year term. Brazilian bank BTG has taken a direct lease for the 11th floor, formerly leased by American Express, in a 10-year term. Charter Communications, a sub-tenant in the UBS space, has agreed to a direct lease on the seventh and 12th floors through 2018 and is thinking about expanding further, according to servicing notes.
As of March, the property was 77 percent occupied, and the debt service coverage ratio was 0.73x, down from the year-end DSCR of 1.21x. Servicing commentary reports that the Stamford office market is experiencing vacancy rates near 30 percent, and the borrower has offered significant free rent and tenant improvement allowances to secure new leases.
The loan was appraised last November for $133.7 million.
Representatives for the Landis Group did not return requests for comment.