CLO Loan Secured by Fort Lauderdale Office Tower Enters Special Servicing
By Andrew Coen February 27, 2024 5:11 pm
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Less than five years after acquiring the One Financial Plaza office tower in Downtown Fort Lauderdale, Alliance HP is grappling with distress tied to floating-rate debt issued for the 28-story building.
A $58.5 million loan backed by the 276,572-square-foot property transferred to special servicing in February due to maturity default, according to CRED iQ.
The floating-rate, interest-only loan was originated by Varde Partners in September 2019 and securitized 19 months later as part of the $927.9 million VMC Finance 2021-FL4 collateralized loan obligation (CLO) deal. The loan’s original maturity date was October 2022 with two one-year extension options.
Alliance purchased One Financial Plaza in October 2019 for $82 million from Crocker Partners, two years after the Boca Raton-based developers acquired the building for $86.8 million, The Real Deal reported at the time.
Mike Haas, founder and CEO of CRED iQ, said the loan has encountered a “double whammy” due to rising interest rates on its floating-rate debt coupled with the property not achieving stabilized net operating income (NOI) assumptions. The loan was underwritten with a projected NOI of $5.96 million with the most recent full-year NOI numbering $3.96 million, according to CRED iQ data. Its most recent debt service coverage ratio was only 0.74, Haas said.
The floating-rate loan’s interest rate on One Financial Plaza is now 9.02 percent compared with 3.55 percent at origination in 2019, according to Haas. The latest special servicer commentary for the loan provided by CRED iQ said a modification was “likely” in the form of a principal paydown in exchange for an extension.
One Financial Plaza was built in 1972 and renovated in 2008. The building was 81.8 percent leased in early 2021 but rose to 95 percent leased as of September 2023, according to CRED iQ. Its anchor tenants include Regions Bank, Convey Health Solutions and law firm Nelson Mullins Riley & Scarborough.
Officials at Alliance did not immediately return a request for comment.
Andrew Coen can be reached at acoen@commercialobserver.com
