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CASE STUDY: Discounted Payoff - CMBS


  • Property Type: Office

  • Property Size: 110,800 square feet

  • Origination: 2007

  • Maturity: 2017

  • Current Loan Balance: $19,800,000

  • Occupancy: 68%

  • Debt Service Coverage Ratio: 0.75

  • Loan Status: Defaulted and at Special Servicer (CIII)

  • Property Current Value: $12,600,000

Problem: Property located outside Sacramento, CA where rents have declined steadily since 2008 and new tenants required significant concessions and improvement dollars.  Similar assets in the area were trading for 50%-75% of post-recession values.

Solution: Hart worked with the Borrower from transfer to the special servicer to resolution of the loan.  Hart completed an independent assessment of the market, reviewed projections and presented a proposal to Special Servicer 30 days after transfer from the Master Servicer. Hart discussed all pending and future issues impacting value, including market deterioration, key tenant renewals, stabilization and market conditions to achieve a discounted payoff.


Discounted Payoff of under $12.6 million, a 36% discount from the current unpaid principal.


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