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Fee Reduction Due to Maturity Default

Asset Details:

Property Type: Unanchored Retail

Property Size: 45,795 square feet

Origination: 2007

Maturity: 2017

Current Loan Balance: $8,799,918

Occupancy: 93%

Debt Service Coverage Ratio: .94

Loan Status: Maturity Default 

Problem: The loan was transferred to special servicing due to a maturity default while take-out financing was being secured. Anticipating a closing to occur shortly after maturity, the Sponsor requested the payoff statement, only to find the special servicer assessed an exorbitant fee designated as “Noteholder Costs” for holding the note in special servicing for 30 days.

Result: c Hart had the knowledge, experience, and understanding of CMBS loan documents, as well as the Pooling and Servicing Agreement governing the loan, to make a valid argument as to why these costs were unjustified. Additionally, Hart’s business model allows for continuous interaction with Special Servicers allowing it to experience first-hand the changes in Special Servicing requirements in this evolving market. These changes are driven in large part by the large wave of loan maturities for vintage loans, as well as the loss in servicing rights within the securitization, and the rapid decline in the ability to fund asset expenses.


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