A wholly owned subsidiary of Jones Lang LaSalle Income Property Trust Inc. defaulted on its mortgage loan collateralized by Metropolitan Park North, a 179,000-square-foot
office building in Seattle, WA.
Nordstrom recently signed a two-year lease extension at the property. At the same time, the firm reduced its space by 49,000 square feet to 86,000 square feet and shaved $14 per square foot off its rental rate.
Given the reduced rent and occupancy by the building's primary tenant, revenue from the property no longer covers debt service payments on the mortgage loan, the subsidiary reported.
The property is currently valued at less than the outstanding debt. The outstanding amount of the mortgage loan is approximately $56.5 million, bearing interest at a fixed rate of 5.73%, and is scheduled to mature in April 2013.
The loan contains an acceleration clause under which the lender may, in the event of a default and without notice, call the outstanding loan balance immediately. During the time the default exists, the lender may also charge default interest at a rate of 9.73%. The loan is non-recourse to the company.
Jones Lang LaSalle Property's borrowing entity ultimately intends to relinquish ownership of the property to AXA Equitable Life Insurance Co. in a deed in lieu of foreclosure transaction.
Keep up weekly on national news, trends and property leads with the Watch List Newsletter, a weekly pdf that includes other news and leads not found on the CoStar Group web news pages.
Sign up for the Watch List E-Mail Alert. A new issue is published late each Wednesday