Oaktree Capital Management and its affiliates are sponsoring a new privately offered commercial mortgage backed securities in the market backed by non-performing loan (NPL) and real-estate-owned (REO) properties.
ORES 2014-LV3 is a non-performing loan (NPL) securitization of 356 NPLs, 71 performing loans, and 142 real-estate-owned (REO) properties, which are related to 382 unique borrower relationships, according to a presale report from Kroll Bond Ratings.
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The assets have an aggregate unpaid principal balance (UPB) of $899.3 million, were acquired for $455.8 million. The transaction is structured as a liquidation vehicle that monetizes recoveries from the assets to pay the rated notes.
The underlying collateral is comprised of commercial and multifamily real estate properties (69.6% of acquisition basis), land (26.5%), residential assets (residential; 3.4%), and other non-real estate collateral (0.5%).
The collateral is concentrated in the southern United States. The top-three state exposures are Florida (24.7%), Illinois (12.9%), and Georgia (10.7%).
The assets were acquired by private investment funds managed by Oaktree between the first quarter of 2011 and first quarter of 2014, via 14 NPL and REO portfolio acquisitions from 12 institutions, according to Kroll Bond Ratings.
The largest portfolio (34%) is comprised of 18 CRE assets that previously served as collateral in various CMBS transactions and were acquired by Oaktree from special servicer CW Capital Asset Management LLC (CW Capital) in February 2014.
Relationship 1: Realmark Group, LLC (three assets)
The Realmark Group, LLC relationship consists of three individual tracts of land totaling 836 acres within the Cape Coral-Fort Myers and Punta Gorda Florida MSAs. The properties served as collateral for five first mortgage loans that defaulted at their maturity dates in January 2012 and subsequently were taken back by the lender. The assets had a total unpaid principal balance of $30.8 million.
The first land tract, Truckers Grade, is comprised of 564 acres in Punta Gorda, of which 358 acres are planned for industrial use, 63 acres are planned for office/retail use, and the remaining 143 acres are earmarked for preservation.
The second tract, Judd Creek, consists of 193 acres of entitled land in Cape Coral. The land is entitled for 1,100 multifamily units (170 acres) and 200,000 square feet (23 acres) of retail/office space. Of the 193 acres, 143 are upland and the remaining 50 are wetlands.
The third track, Entrada, is comprised of 79 acres and is in Cape Coral, of which, 50 acres are planned for retail use, 10 acres are planned for residential use, and 17 acres are planned for retail/office use.
Relationship 2: The Trails Shopping Center (single asset)
The Trails Shopping Center relationship consists of a 135,286-square-foot anchored retail shopping center in Ormond Beach, FL. The property previously served as collateral for a loan that was securitized in the CWCI 2007-C2 CMBS transaction, which defaulted in March 2012. The property subsequently became REO, prior to its acquisition from CW Capital in a bulk purchase, which resulted in a loss of 28.5% of the CMBS loan’s outstanding principal balance. The asset had a total unpaid principal balance of $24 million and the projected resolution year is 2016.
The Trails Shopping Center is comprised of 15 retail buildings on 19.24 acres, one of which is anchored by a Publix grocery store. The Publix building was constructed in 1978, and much of the remaining buildings, which form a lifestyle center, were built between 2001 and 2010. As of November 2013, the property was approximately 87.6% occupied and included over 25 national and regional retailers, which include the Publix Super Market (38,866 square feet) anchor and a 10,800-square-foot CVS.
Relationship 3: 500 Davis Center (one asset)
The 500 Davis Center relationship consists of a 121,856-square-foot office building in Evanston, IL. The property previously served as collateral for a loan that was securitized in the JPMCC 2007-LD11 CMBS transaction, which was transferred to the special servicer in March 2009. The property subsequently was taken back by its lender in June 2010, prior to its acquisition from CW Capital in a bulk purchase, which resulted in a loss of 69.6% of the CMBS loan’s outstanding principal balance. The asset had a total unpaid principal balance of $17.9 million and the projected resolution year is 2016.
The 10-story office building includes ground-level retail space and 230 parking spaces. The building was constructed in 1976 and renovated in 2006, 2012 and 2013. Recent improvements include a redesigned lobby, updated common areas and restrooms, renovated elevator cabs, parking garage renovations, and reconditioned water and fire protection systems. As of January 2014 the property was 68% occupied by approximately 25 tenants with an average base rent was $21.90 per square foot. The property’s largest tenant, American Massage Therapy Associates, occupies 18,394 square feet (14.6% of the total square footage).
Earlier this year, CWCapital Asset Management LLC sold the bulk of a portfolio of 134 real estate and commercial mortgage loan assets with an unpaid principal balance of $3.43 billion.
CWCapital marketed the a portfolio through CBRE and Auction.com. The sales are projected to have an overall recovery rate averaging $0.66 on the dollar, resulting in proceeds of $2.26 billion to the CMBS trusts involved in the sale.
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