Fitch Ratings announced on Wednesday that the $190mn StratReal Industrial Portfolio I in BACM 2007-1 entered special servicing after struggling with weak underlying performance for two years.
The loan is the third largest behind Banc of America Commercial Mortgage Trust, 2007-1, consisting of 8.5% of the collateral pool. With this latest transfer, the top three loans in the deal are now with the special servicer (30.6% of the pool is made up of those three loans), Trepp analysts said in a report on Wednesday.
According to a Barclays report published yesterday, the Portfolio I loan is backed by 13 industrial/distribution properties. Eight of the properties are located in Columbus, Ohio, four in Memphis, TN ($66.4mn in allocated balance), and one in Woodland, California ($18.4mn in allocated balance).
The note was underwritten with a DSCR of 1.32x. By 2010, that had dipped to 1.07x. In 2011, the portfolio fell even with further with DSCR coming in at 0.79x before edging up to 0.81x in 2012.
In Dec. 2012, the similar $186mn StratReal Industrial Portfolio II in JPMCC 2007-LDPX moved into specail servicing. By March the borrower verbally agreed to a deed-in-lieu of foreclosure, according to Barclays. “We would usually expect a loan of this size and of a portfolio nature to be modified,” said the analysts in the report. “However, the loan and the underlying properties are very similar to the StratReal Industrial Portfolio II and it is possible the borrower may decide to hand in the keys for these properties as well.”
Trepp analysts said that delinquency rates for the industrial property sector have risen sharply and a number of big industrial of big industrial loans have run into problems. “The last 12 months has been a bit of a rough patch for CMBS loans backed by industrial properties,” said Trepp analysts in the report.