FREE WRITING PROSPECTUS | ||
FILED PURSUANT TO RULE 433 | ||
REGISTRATION FILE NO.: 333-228597-07 | ||
The information in this free writing prospectus is preliminary and may be supplemented or changed. This free writing prospectus is not an offering to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
THIS FREE WRITING PROSPECTUS, DATED SEPTEMBER 11, 2020
MAY BE AMENDED OR SUPPLEMENTED PRIOR TO TIME OF SALE
BENCHMARK 2020-B19
The depositor has filed a registration statement (including a prospectus) with the SEC (SEC File No. 333-228597) for the offering to which this free writing prospectus relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities, Inc., Drexel Hamilton, LLC, or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
The securities to which these collateral materials (“Materials”) relate will be described in greater detail in the prospectus expected to be dated in September 2020 (the “Preliminary Prospectus”) that will be included as part of our registration statement. The Preliminary Prospectus will contain material information that is not contained in these Materials (including, without limitation, a detailed discussion of risks associated with an investment in the offered securities under the heading “Risk Factors”).
These Materials are preliminary and subject to change. The information in these Materials supersedes all prior such information delivered to you and will be superseded by any subsequent information delivered prior to the time of sale.
Neither these materials nor anything contained in these materials shall form the basis for any contract or commitment whatsoever. These Materials are not to be construed as an offer to sell or the solicitation of any offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.
The information contained in these Materials may not pertain to any securities that will actually be sold. The information contained in these Materials may be based on assumptions regarding market conditions and other matters as reflected in these Materials. We make no representations regarding the reasonableness of such assumptions or the likelihood that any of such assumptions will coincide with actual market conditions or events, and these Materials should not be relied upon for such purposes. We and our affiliates, officers, directors, partners and employees, including persons involved in the preparation or issuance of these Materials may, from time to time, have long or short positions in, and buy or sell, the securities mentioned in these Materials or derivatives thereof (including options). Information contained in these Materials is current as of the date appearing on these Materials only.
IMPORTANT NOTICE RELATING TO AUTOMATICALLY GENERATED EMAIL DISCLAIMERS
Any legends, disclaimers or other notices that may appear at the bottom of the email communication to which this free writing prospectus is attached relating to (1) these Materials not constituting an offer (or a solicitation of an offer), (2) no representation being made that these Materials are accurate or complete and that these Materials may not be updated or (3) these Materials possibly being confidential, are, in each case, not applicable to these Materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these Materials having been sent via Bloomberg or another system.
LOAN #1: BX INDUSTRIAL PORTFOLIO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
3
LOAN #1: BX INDUSTRIAL PORTFOLIO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
4
LOAN #1: BX INDUSTRIAL PORTFOLIO
Mortgaged Property Information | Mortgage Loan Information | ||||
Number of Mortgaged Properties | 68 | Loan Seller | GACC | ||
Location (City/State) | Various | Cut-off Date Balance(1) | $85,000,000 | ||
Property Type | Various | Cut-off Date Balance per SF(1) | $34.30 | ||
Size (SF) | 11,097,713 | Percentage of Initial Pool Balance | 7.7% | ||
Total Occupancy as of 3/31/2020 | 87.3% | Number of Related Mortgage Loans | One | ||
Owned Occupancy as of 3/31/2020 | 87.3% | Type of Security | Fee Simple/Leasehold | ||
Year Built / Latest Renovation | Various / Various | Mortgage Rate(2) | 3.55000% | ||
Appraised Value | $960,750,000 | Original Term to Maturity (Months) | 77 | ||
Appraisal Date | Various | Original Amortization Term (Months) | NAP | ||
Borrower Sponsor | BREIT Industrial Holdings LLC | Original Interest Only Period (Months) | 77 | ||
Property Management | Link Industrial Management LLC | First Payment Date | 6/9/2020 | ||
Maturity Date | 10/9/2026 | ||||
Underwritten Revenues | $68,219,859 | ||||
Underwritten Expenses | $19,321,765 | Escrows(3) | |||
Underwritten Net Operating Income (NOI) | $48,898,094 | Upfront | Monthly | ||
Underwritten Net Cash Flow (NCF) | $45,568,781 | Taxes | $0 | $0 | |
Cut-off Date LTV Ratio(1) | 39.6% | Insurance | $0 | $0 | |
Maturity Date LTV Ratio(1) | 39.6% | Replacement Reserve | $0 | $0 | |
DSCR Based on Underwritten NOI / NCF(1) | 3.83x / 3.57x | TI/LC | $4,048,428 | $0 | |
Debt Yield Based on Underwritten NOI / NCF(1) | 12.8% / 12.0% | Other | $0 | $0 | |
(1) | The BX Industrial Portfolio Loan (as defined below) is part of a Loan Combination (the “BX Industrial Portfolio Loan Combination”) evidenced by 13 notes, with an aggregate outstanding principal balance as of the Cut-off Date of approximately $649.4 million. The BX Industrial Portfolio Loan Combination is split between (i) a 17-month revolving floating rate loan with five, one-year extension options (the “BX Industrial Portfolio Floating Rate Loan”) with an aggregate Cut-off Date principal balance of approximately $99.4 million, and (ii) a 77-month fixed rate componentized loan (the “BX Industrial Portfolio Fixed Rate Loan”) comprised of (A) a senior fixed rate loan (the “BX Industrial Portfolio Senior Fixed Rate Loan”), with an aggregate Cut-off Date principal balance of $322.4 million evidenced by eight A-Notes, and (B) a subordinate fixed rate loan (the “BX Industrial Portfolio Subordinate Fixed Rate Loan”), with an aggregate Cut-off Date principal balance of $227.6 million, evidenced by Note A-1-B, Note A-1-C-1 and Note A-1-C-2, and Note A-1-D, each of which is subordinate to all notes with a prior alphabetical designation. The BX Industrial Portfolio Senior Fixed Rate Loan is senior to the BX Industrial Portfolio Subordinate Fixed Rate Loan. The interest rate on the BX Industrial Portfolio Floating Rate Loan is LIBOR plus a spread of 1.45000%. The Cut-off Date LTV Ratio, Maturity Date LTV Ratio, DSCR Based on Underwritten NOI/NCF, Debt Yield Based on NOI/NCF and Cut-off Date Balance Per SF information presented in the table above reflects the BX Industrial Portfolio Senior Fixed Rate Loan and approximately $58.283 million of the Cut-off Date balance of the BX Industrial Portfolio Floating Rate Loan (which is assumed to pay pro rata with the BX Industrial Portfolio Senior Fixed Rate Loan). The financial information above related to the B-Note, C-Notes and D-Note calculations, include a pro-rata Cut-off Date Balance of the BX Industrial Portfolio Floating Rate Loan for each respective note. For purposes of the debt service coverage ratio calculations above and herein, LIBOR is assumed to be 0.50000%. See “—The Mortgage Loan” and “—Current Mezzanine or Subordinate Indebtedness” herein. |
(2) | The Mortgage Rate is reflective of the BX Industrial Portfolio Fixed Rate Loan interest rate. The applicable interest rate for the BX Industrial Portfolio Floating Rate Loan is LIBOR (subject to a floor of 0.00000%) plus a spread of 1.45000%. For purposes of all calculations herein, LIBOR is assumed to be 0.50000%. Based on the LIBOR cap of 4.00000%, the BX Industrial Portfolio Loan Combination DSCR Based on Underwritten NOI and DSCR Based on Underwritten NCF are 1.93x and 1.80x, respectively. |
(3) | See “—Escrows” below. |
■ | Sources and Uses. In November 2019, Blackstone Group acquired assets from three Global Logistics Properties (“GLP”) funds for a total purchase price of $18.7 billion. The overall acquisition encompasses approximately 179.0 million SF of urban, infill logistics assets located across the United States. The acquisition of industrial assets from GLP (including properties that are part of the BX Industrial Portfolio) by certain Blackstone entities includes, among other things, the following (i) an acquisition purchase price of approximately $10.6 billion, (ii) total transaction closings costs of approximately $543.6 million and (iii) approximately $2.6 billion of borrower sponsor equity. The BX Industrial Portfolio Loan Combination is a refinance of part of the existing debt used to finance the overall acquisition. |
■ | The Mortgage Loan. The BX Industrial Portfolio mortgage loan (the “BX Industrial Portfolio Loan”) is part of a fixed and floating rate Loan Combination (the “BX Industrial Portfolio Loan Combination”) secured by the borrowers’ fee simple or leasehold interests in 68 industrial properties totaling approximately 11.1 million SF (the “BX Industrial Portfolio Property” or “BX Industrial Portfolio Properties”, and the portfolio comprised of all such properties, the “BX Industrial Portfolio”). The BX Industrial Portfolio Loan Combination is evidenced by 13 notes, with an aggregate outstanding principal balance as of the Cut-off Date of approximately $649.4 million. The BX Industrial Portfolio Loan is evidenced by the fixed rate Note A-1-A-4, Note A-1-A-6 and Note A-1-A-7, with an aggregate original principal balance and outstanding principal balance as of the Cut-off Date of $85.0 million. The BX Industrial Portfolio Loan Combination is split between (i) a 17-month floating rate loan with five, one-year extension options (the “BX Industrial Portfolio Floating Rate Loan”) with an aggregate Cut-off Date principal balance of approximately $99.4 million, and (ii) a 77-month fixed rate loan (the “BX Industrial Portfolio Fixed Rate Loan”) comprised of (A) a senior fixed rate loan (the “BX Industrial Portfolio Senior Fixed Rate Loan”), with an aggregate Cut-off Date principal balance of $322.4 million evidenced by eight A-Notes, including the BX Industrial Portfolio Loan, and (B) a subordinate fixed rate loan (the “BX Industrial Portfolio Subordinate Fixed Rate Loan”) consisting of a B-Note in the Cut-off Date principal balance of $72.6 million (the “BX Industrial Portfolio B-Note”), two C-Notes in the aggregate Cut-off Date principal balance of $110.0 million (the “BX Industrial Portfolio C-Notes”) and a D-Note in the Cut-off Date principal balance of $45.0 million (the “BX Industrial Portfolio D-Note”), with an aggregate Cut-off Date principal balance of $227.6 million. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
5
LOAN #1: BX INDUSTRIAL PORTFOLIO
The loan documents permit the borrowers to prepay the BX Industrial Portfolio Floating Rate Loan and, subject to the satisfaction of certain conditions set forth in the loan agreement, subsequently re-borrow such amounts pursuant to a request for an additional advance (a “Revolving Advance”) from the holder of the BX Industrial Portfolio Floating Rate Loan up to the initial principal balance of the BX Industrial Portfolio Floating Rate Loan; provided that prepayments in connection with the following are considered permanent and may not be re-borrowed: (a) individual BX Industrial Portfolio Property releases, including both regular releases and releases upon an event of default, (b) mandatory prepayments and/or releases made in connection with casualty or condemnation, (c) prepayments to avoid a cash management period caused by failure to satisfy a debt yield test, (d) a voluntary prepayment for which the borrowers have elected that such prepayment will permanently reduce the available amount of the BX Industrial Portfolio Floating Rate Loan and (e) any prepayment made during the continuance of an event of default. In the event that the holder of the BX Industrial Portfolio Floating Rate Loan does not fund a Revolving Advance, the loan documents provide that the borrowers may not reduce, discharge or release any obligations due on the BX Industrial Portfolio Fixed Rate Loan via offset of the disputed amount associated with the Revolving Advance.
Loan Combination Summary | |||||
Note | Original Balance (Fixed) | Cut-off Date Balance (Fixed) | Note Holder | Controlling Piece | Cut-off Date Balance (Floating)(3) |
A-1-A-1 | $80,000,000 | $80,000,000 | Benchmark 2020-IG3 | No(1) | A-2 $99,427,615 Floating Rate Loan
|
A-1-A-2 | 70,000,000 | 70,000,000 | Benchmark 2020-B18 | No | |
A-1-A-5, A-1-A-8 | 37,400,000 | 37,400,000 | JPMDB 2020-COR7 | No | |
A-1-A-3 | 50,000,000 | 50,000,000 | DBJPM 2020-C9 | No | |
A-1-A-4, A-1-A-6, A-1-A-7 | 85,000,000 | 85,000,000 | Benchmark 2020-B19 | No | |
Senior Fixed Rate Notes | $322,400,000 | $322,400,000 | |||
A-1-B | 72,600,000 | 72,600,000 | Benchmark 2020-IG3 (loan-specific certificates) | No(1) | |
A-1-C-1, A-1-C-2 | 110,000,000 | 110,000,000 | Unaffiliated Third Party Investor | No(1) | |
A-1-D | 45,000,000 | 45,000,000 | Unaffiliated Third Party Investor | Yes(1) | |
Loan Combination(2) | $649,427,615 | $649,427,615 |
(1) | The initial controlling note is the BX Industrial Portfolio A-1-D note, so long as no control appraisal period with respect to the A-1-D note is continuing. If and for so long as a control appraisal period with respect to the A-1-D note has occurred and is continuing, then the controlling notes will be the A-1-C-1 and A-1-C-2 notes. If a control appraisal period with respect to the A-1-C-1 and A-1-C-2 notes has occurred and is continuing, then the controlling note will be the A-1-B note. If a control appraisal period with respect to the A-1-B note has occurred and is continuing, then the controlling note will be the A-1-A-1 note. See “Description of the Mortgage Pool—The Loan Combinations—BX Industrial Portfolio Pari Passu AB Loan Combination” in the Preliminary Prospectus. |
(2) | The Loan Combination amount represents the sum of the balances of the BX Industrial Portfolio Floating Rate Loan and the BX Industrial Portfolio Fixed Rate Loan. |
(3) | Note A-2 is held by Deutsche Bank AG, London Branch. |
The BX Industrial Portfolio Fixed Rate Loan has a 77-month interest-only term and will accrue interest at a fixed rate of 3.55000% per annum. The BX Industrial Portfolio Floating Rate Loan has a 17-month interest-only term with five, one-year extension options and will accrue interest at a rate of one-month LIBOR (subject to a floor of 0.00000%) plus a spread of 1.45000% per annum. The BX Industrial Portfolio Loan Combination was primarily used to refinance existing debt secured by the BX Industrial Portfolio Properties, fund upfront reserves and pay closing costs. The scheduled maturity date of the BX Industrial Portfolio Loan is October 9, 2026. The BX Industrial Portfolio Fixed Rate Loan may be voluntarily prepaid in whole or in part with a prepayment fee equal to the greater of the yield maintenance amount or 1% of the unpaid principal balance as of the prepayment date. The BX Industrial Portfolio Fixed Rate Loan is voluntarily prepayable, in whole or in part, without penalty on or after the payment date in April 2029. All voluntary prepayments on the BX Industrial Portfolio Loan Combination are required to be allocated to the BX Industrial Portfolio Floating Rate Loan until repaid in full, and then to the BX Industrial Portfolio Fixed Rate Loan. The first $57.8 million of the BX Industrial Portfolio Floating Rate Loan may be prepaid without any yield maintenance premium or prepayment fee.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
6
LOAN #1: BX INDUSTRIAL PORTFOLIO
■ | The Mortgaged Properties. The BX Industrial Portfolio consists of 68 industrial properties totaling approximately 11.1 million SF located throughout 11 states. The largest state concentrations are in Virginia (25.1% of total net rentable area, 28.7% of UW Base Rent) and Illinois (23.2% of total net rentable area, 22.8% of UW Base Rent), with no other state comprising more than 10.7% of the total net rentable area or more than 14.0% of the UW Base Rent. On a property level, no single BX Industrial Portfolio Property comprises more than 6.8% of the allocated loan amount or more than 6.9% of the UW Base Rent. In addition, five of the BX Industrial Portfolio Properties are leased fee and account for 1.9% of the total allocated loan amount. These five properties are not included in square footage calculations and do not comprise any UW Base Rent. |
As of March 31, 2020, the BX Industrial Portfolio was 87.3% leased to over 125 tenants with no single tenant accounting for more than 6.3% of the BX Industrial Portfolio’s net rentable area. The BX Industrial Portfolio’s ten largest tenants based on UW Base Rent comprise 27.9% of net rentable area and 37.4% of the UW Base Rent. The top three tenants based on UW Base Rent in the BX Industrial Portfolio, which comprise 13.6% of total net rentable area and 19.3% of UW Base Rent, have an investment grade credit rating.
COVID-19 Update. As of September 1, 2020, the BX Industrial Portfolio Properties have remained open. For July and August of 2020, tenants representing approximately 96.6% and 95.1% of the net rentable area, respectively, have paid rent in-full, with the borrowers having collected approximately 97.9% and 88.0% of the underwritten base rent, respectively, based on the underwritten rent roll dated March 31, 2020. Due to lease signings, renewals or rent steps since the underwritten rent roll dated March 31, 2020, the borrower sponsor reported actual collections in July and August of 103.4% and 95.8%, respectively, of the lender’s underwritten base rent. The BX Industrial Portfolio Loan Combination is current through the August 9, 2020 payment date. As of August 9, 2020, the BX Industrial Portfolio Loan Combination is not subject to any modification or forbearance requests.
Portfolio Summary – Top 20(1)(2) | ||||||||
Property Name | City, State | Property Sub-Type | Year Built / Renovated | SF | Clear Height | Occupancy | % of Allocated Loan Amount | % of Total UW Base Rent |
Bridgewater Center 1(3) | Bridgewater, NJ | Warehouse/Storage | 1951 / 1994 | 437,117 | 29 | 0.5% | 6.8% | 0.1% |
401 E Laraway Rd | Joliet, IL | Warehouse/Distribution | 2005 / NAP | 475,104 | 30 | 100.0% | 4.4% | 3.7% |
Rochelle 1 | Rochelle, IL | Warehouse/Distribution | 2005 / NAP | 579,575 | 32 | 100.0% | 3.6% | 3.9% |
350A Salem Church Rd | Mechanicsburg, PA | Warehouse/Distribution | 1990 / NAP | 405,100 | 28 | 100.0% | 3.5% | 4.0% |
Romeoville Bldg 1 | Romeoville, IL | Warehouse/Distribution | 2016 / NAP | 199,924 | 32 | 100.0% | 3.2% | 2.0% |
251 E Laraway Rd | Joliet, IL | Warehouse/Distribution | 2005 / NAP | 374,460 | 30 | 100.0% | 3.1% | 3.0% |
7940 Kentucky | Florence, KY | Flex | 1992 / NAP | 128,077 | 18 | 94.7% | 3.0% | 6.0% |
Mountain Top Distribution Center 2 | Mountain Top, PA | Warehouse/Distribution | 1992 / NAP | 400,000 | 29 | 100.0% | 2.5% | 3.6% |
Enterprise Parkway | Hampton, VA | Flex | 1996 / NAP | 402,652 | 49 | 76.6% | 2.5% | 2.2% |
Cavalier I | Chesapeake, VA | Warehouse/Distribution | 1969 / NAP | 300,117 | 28 | 77.0% | 2.4% | 2.6% |
1910 International | Hebron, KY | Warehouse/Distribution | 1990 / 2004 | 300,000 | 24 | 100.0% | 2.2% | 2.3% |
Glen Dale | Glen Dale, MD | Warehouse/Distribution | 1968 / NAP | 314,590 | 21 | 53.5% | 2.0% | 1.4% |
Romeoville Bldg 2 | Romeoville, IL | Warehouse/Distribution | 2016 / NAP | 199,924 | 32 | 30.9% | 2.0% | 0.8% |
Enterprise Distribution Center 1 | Independence, KY | Warehouse/Distribution | 2005 / NAP | 275,000 | 28 | 100.0% | 1.8% | 2.0% |
2270 Woodale | Mounds View, MN | Warehouse | 1990 / NAP | 144,783 | 22 | 100.0% | 1.8% | 2.0% |
2950 Lexington Ave South | Eagan, MN | Warehouse/Storage | 1979 / NAP | 184,545 | 24 | 100.0% | 1.8% | 1.8% |
Rivers Bend Center 1B | Chester, VA | Warehouse/Distribution | 1998 / NAP | 170,800 | 24 | 100.0% | 1.8% | 1.8% |
DFW Logistics Center (Bldg 4) | Dallas, TX | Warehouse/Distribution | 2018 / NAP | 144,000 | 28 | 100.0% | 1.7% | 1.8% |
Rivers Bend Center 1C | Chester, VA | Flex | 2001 / NAP | 158,400 | 24 | 100.0% | 1.7% | 2.5% |
Territorial | Bolingbrook, IL | Manufacturing | 2001 / NAP | 125,448 | 24 | 100.0% | 1.6% | 2.1% |
Subtotal | 5,719,616 | 53.4% | 49.4% | |||||
Remaining Properties | 5,378,097 | 46.6% | 50.6% | |||||
Total | 11,097,713 | 100.0% | 100.0% | |||||
(1) | Based on the underwritten rent roll as of March 31, 2020. |
(2) | The BX Industrial Portfolio includes five leased fee properties that are not included in square footage calculations and do not comprise any UW Base Rent. The leased fee properties account for 1.9% of the total allocated loan amount. |
(3) | The largest tenant at Bridgewater Center 1 property, Baker & Taylor (410,350 SF) recently vacated in March 2020. On April 28, 2020, the borrower sponsor executed a 6-month lease with Salson Logistics to occupy 349,054 SF at a monthly base rent of $289,424 and a lease expiration date of October 31, 2020. The Salson Logistics base rent is not included in the lender’s underwriting. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
7
LOAN #1: BX INDUSTRIAL PORTFOLIO
Property Sub-Type Summary(1)(2) | ||||||||
Property Sub-Type | # of Properties | SF | % of Total | Occupancy | Allocated Loan Amount | % of Total | UW Base Rent | % of Total |
Warehouse/Distribution | 40 | 8,235,571 | 74.2% | 91.0% | $423,977,413 | 65.3% | $32,470,428 | 65.6% |
Flex | 12 | 1,344,906 | 12.1% | 90.9% | $95,202,976 | 14.7% | $10,102,835 | 20.4% |
Warehouse/Storage | 3 | 723,662 | 6.5% | 39.9% | $55,620,377 | 8.6% | $1,546,381 | 3.1% |
Manufacturing | 4 | 428,799 | 3.9% | 93.7% | $31,666,080 | 4.9% | $2,910,094 | 5.9% |
Warehouse | 2 | 264,783 | 2.4% | 88.5% | $21,702,184 | 3.3% | $1,936,291 | 3.9% |
Suburban | 1 | 61,488 | 0.6% | 12.6% | $5,459,669 | 0.8% | $124,430 | 0.3% |
R&D/Flex | 1 | 38,504 | 0.3% | 100.0% | $3,344,047 | 0.5% | $387,350 | 0.8% |
Leased Fee | 5 | NAP | 0.0% | 0.0% | $12,454,870 | 1.9% | $0 | 0.0% |
Total | 68 | 11,097,713 | 100.0% | 87.3% | $649,427,615 | 100.0% | $49,477,809 | 100.0% |
(1) | Based on the underwritten rent roll as of March 31, 2020. |
(2) | The BX Industrial Portfolio includes five leased fee properties that are not included in square footage calculations and do not comprise any UW Base Rent. The leased fee properties account for 1.9% of the total allocated loan amount. |
The following table presents certain information relating to the major tenants at the BX Industrial Portfolio:
Largest Owned Tenants Based on Underwritten Base Rent(1)(2)
Tenant Name | Property Name | Credit Rating (Fitch/MIS/S&P)(3) | Tenant | % of GLA | UW Base | % of | UW Base Rent | Lease Expiration | Renewal / Extension Options | |||||||||
The United States of America | Various | AAA / Aaa /AAA | 149,627 | 1.3% | $3,426,075 | 6.9% | $22.90 | Various(4)(5) | None | |||||||||
DHL | Various | BBB / A3 / NR | 659,600 | 5.9% | $3,106,077 | 6.3% | $4.71 | 7/31/2021 | 1, 3-year option | |||||||||
Amazon | Various | A+ / A2 / AA- | 695,780 | 6.3% | $2,998,950 | 6.1% | $4.31 | Various(6) | Various | |||||||||
Signify North America Corp | Mountain Top Distribution Center 2 | NR / Baa3 / BBB- | 400,000 | 3.6% | $1,792,000 | 3.6% | $4.48 | 4/30/2022 | 1, 3-year option | |||||||||
National Distribution Centers, LLC | 251 E Laraway Rd | NR / NR / NR | 374,460 | 3.4% | $1,460,394 | 3.0% | $3.90 | 6/30/2021 | 2, 1-year options | |||||||||
Maximus Federal Services, Inc. | Rivers Bend Center 1A | NR / NR / NR | 123,980 | 1.1% | $1,319,472 | 2.7% | $10.64 | 6/30/2022 | 2, 3-year options | |||||||||
Capital One Services, LLC | Rivers Bend Center 1C | A- / Baa1 / BBB | 158,400 | 1.4% | $1,253,768 | 2.5% | $7.92 | 8/31/2023 | 1, 5-year option | |||||||||
Qualis Automotive, L.L.C. | 1910 International | NR / NR / NR | 300,000 | 2.7% | $1,125,000 | 2.3% | $3.75 | 10/31/2022 | 1, 3-year option | |||||||||
Chicago Office Technology Group, Inc. | Territorial | NR / NR / NR | 125,448 | 1.1% | $1,041,051 | 2.1% | $8.30 | 5/8/2023 | None | |||||||||
Jernberg Industries, LLC | Gibraltar | NR / NR / NR | 110,000 | 1.0% | $980,666 | 2.0% | $8.92 | 12/31/2020 | 3, 5-year options | |||||||||
Ten Largest Tenants | 3,097,295 | 27.9% | $18,503,453 | 37.4% | $5.97 | |||||||||||||
Remaining Tenants | 6,592,711 | 59.4% | $30,974,356 | 62.6% | $4.70 | |||||||||||||
Vacant | 1,407,707 | 12.7% | 0 | 0.00% | $0.00 | |||||||||||||
Total / Wtd. Avg. All Owned Tenants | 11,097,713 | 100.0% | $49,477,809 | 100.00% | $5.11 |
(1) | Based on the rent roll dated March 31, 2020. |
(2) | The BX Industrial Portfolio includes five leased fee properties that are not included in square footage calculations and do not comprise any UW Base Rent. |
(3) | Certain ratings are those of the parent company or government whether or not the parent guarantees the lease. |
(4) | The United States of America occupies (i) 7,768 SF at the 514 Butler Rd property with a lease expiration date of July 7, 2033, (ii) 121,345 SF at the 7940 Kentucky property with a lease expiration date of October 31, 2028 and (iii) 20,514 SF at the 2270 Woodale property on a month-to-month lease. |
(5) | The United States of America has the option to terminate its lease in whole or in part at any time after October 31, 2024 with 120 days’ written notice. |
(6) | Amazon occupies (i) 475,104 SF at the 401 E Laraway Rd property with a lease expiration date of July 31, 2025, (ii) 93,048 SF at the Romeoville Bldg 1 with a lease expiration date of July 31, 2029, (iii) 75,980 SF at the Diamond Hill 2 property with a lease expiration date of September 30, 2026 and (iv) 51,648 SF at the 6105 Trenton Ln property with a lease expiration date of May 31, 2025. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
8
LOAN #1: BX INDUSTRIAL PORTFOLIO
The following table presents certain information relating to the lease rollover schedule at the BX Industrial Portfolio, based on initial lease expiration dates:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | Expiring Owned GLA | % of Owned GLA | Cumulative % of | UW Base Rent | % of Total UW | UW Base Rent $ | # of Expiring | |||||||
MTM | 429,581 | 3.9% | 3.9% | $2,129,577 | 4.3% | $4.96 | 13 | |||||||
2020 | 525,625 | 4.7% | 8.6% | $2,908,521 | 5.9% | $5.53 | 9 | |||||||
2021 | 2,232,795 | 20.1% | 28.7% | $10,146,476 | 20.5% | $4.54 | 28 | |||||||
2022 | 1,688,748 | 15.2% | 43.9% | $8,805,626 | 17.8% | $5.21 | 29 | |||||||
2023 | 1,649,237 | 14.9% | 58.8% | $8,286,303 | 16.7% | $5.02 | 22 | |||||||
2024 | 846,761 | 7.6% | 66.4% | $3,851,983 | 7.8% | $4.55 | 18 | |||||||
2025 | 758,426 | 6.8% | 73.3% | $3,582,462 | 7.2% | $4.72 | 10 | |||||||
2026 | 275,895 | 2.5% | 75.8% | $1,484,009 | 3.0% | $5.38 | 6 | |||||||
2027 | 355,367 | 3.2% | 79.0% | $1,720,296 | 3.5% | $4.84 | 9 | |||||||
2028 | 783,933 | 7.1% | 86.0% | $5,669,869 | 11.5% | $7.23 | 11 | |||||||
2029 | 93,048 | 0.8% | 86.9% | $465,240 | 0.9% | $5.00 | 1 | |||||||
2030 | 42,822 | 0.4% | 87.2% | $284,766 | 0.6% | $6.65 | 1 | |||||||
2031 & Thereafter | 7,768 | 0.1% | 87.3% | $142,681 | 0.3% | $18.37 | 2 | |||||||
Vacant | 1,407,707 | 12.7% | 100.0% | NAP | NAP | NAP | NAP | |||||||
Total / Wtd. Avg. | 11,097,713 | 100.0% | $49,477,809 | 100.0% | $5.11 | 159 |
(1) | Based on the underwritten rent roll dated March 31, 2020. |
(2) | Certain tenants may have lease termination options that are not reflected in the Lease Expiration Schedule. |
The following table presents certain information relating to historical leasing at the BX Industrial Portfolio:
Historical Leased %(1)
2017 | 2018 | 2019 | As of 3/31/2020 | |||||
Owned Space | 84.7% | 89.4% | 92.4% | 87.3% |
(1) | Represents the occupancy as of December 31 for each respective year unless otherwise indicated. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
9
LOAN #1: BX INDUSTRIAL PORTFOLIO
■ | Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the BX Industrial Portfolio: |
Cash Flow Analysis
2017 | 2018 | 2019 | T-12 3/31/2020 | Underwritten | Underwritten PSF | |
Base Rent | $43,755,073 | $43,647,125 | $50,879,764 | $51,531,584 | $49,477,809 | $4.46 |
Contractual Rent Steps(1) | 0 | 0 | 0 | 0 | 1,340,873 | $0.12 |
Value of Vacant Space | 0 | 0 | 0 | 0 | 11,899,234 | $1.07 |
Total Reimbursement Revenue | 14,024,977 | 14,425,751 | 16,951,400 | 16,820,366 | 17,301,645 | $1.56 |
Other Income | 1,961,648 | 2,043,742 | 309,016 | 330,389 | 99,533 | $0.01 |
Less: Bad Debt/Abatements | (834,770) | (1,307,105) | (1,377,111) | (635,171) | 0 | $0.00 |
Less: Vacancy | 0 | 0 | 0 | 0 | (11,899,234) | ($1.07) |
Effective Gross Income | $58,906,928 | $58,809,513 | $66,763,069 | $68,047,168 | $68,219,859 | $6.15 |
Real Estate Taxes | 8,152,906 | 8,193,458 | 8,932,002 | 8,705,953 | 10,366,547 | $0.93 |
Insurance | 656,152 | 636,196 | 668,401 | 665,525 | 611,507 | $0.06 |
Management Fees | 807,687 | 813,304 | 1,679,835 | 789,265 | 907,868 | $0.08 |
Total Other Expenses | $6,069,165 | $6,996,614 | $7,167,196 | $6,928,265 | $7,435,842 | $0.67 |
Total Operating Expenses | $15,685,910 | $16,639,572 | $18,447,435 | $17,089,007 | $19,321,765 | $1.74 |
Net Operating Income | $43,221,019 | $42,169,941 | $48,315,634 | $50,958,160 | $48,898,094 | $4.41 |
TI/LC | 0 | 0 | 0 | 0 | 2,219,543 | $0.20 |
Capital Expenditures | 0 | 0 | 0 | 0 | 1,109,771 | $0.10 |
Net Cash Flow | $43,221,019 | $42,169,941 | $48,315,634 | $50,958,160 | $45,568,781 | $4.11 |
Occupancy | 84.7% | 89.4% | 92.4% | 87.3% | 87.3% | |
NOI Debt Yield(2) | 11.4% | 11.1% | 12.7% | 13.4% | 12.8% | |
NCF DSCR(3) | 3.39x | 3.31x | 3.79x | 3.99x | 3.57x | |
(1) | Represents rent steps taken through June 2021. |
(2) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the BX Industrial Portfolio Senior Fixed Rate Loan and approximately $58.283 million of the Cut-off Date balance of the BX Industrial Portfolio Floating Rate Loan (which is assumed to pay pro rata with the BX Industrial Portfolio Senior Fixed Rate Loan). |
(3) | Based on the interest only debt service payments of the BX Industrial Portfolio Senior Fixed Rate Loan and on approximately $58.283 million of the Cut-off Date balance of the BX Industrial Portfolio Floating Rate Loan (which is assumed to pay pro rata with the BX Industrial Portfolio Senior Fixed Rate Loan). The interest rate on the BX Industrial Portfolio Floating Rate Loan is LIBOR plus a spread of 1.45000%. For purposes of the debt service coverage ratio calculations above and herein, LIBOR is assumed to be 0.50000%. |
■ | Appraisal. According to the appraisal, the BX Industrial Portfolio has an aggregate “as-is” appraised value of $960,750,000 as of an effective date ranging from July 10, 2019 to August 1, 2019. |
■ | Environmental Matters. The Phase I environmental reports dated from between July 19, 2019 and September 24, 2019 identified recognized environmental conditions at certain of the BX Industrial Portfolio Properties. Please see “Description of the Mortgage Pool-Environmental Considerations” in the Preliminary Prospectus for more information. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
10
LOAN #1: BX INDUSTRIAL PORTFOLIO
■ | Market Overview and Competition. The BX Industrial Portfolio Properties are located throughout 11 states which include the following top five states by SF, Virginia (25.1% of NRA; 28.7% of UW Base Rent), Illinois (23.2% of NRA; 22.8% of UW Base Rent), Kentucky (10.7% of NRA; 14.0% of UW Base Rent), Ohio (10.6% of NRA; 5.5% of UW Base Rent) and Pennsylvania (9.5% of NRA; 9.9% of UW Base Rent). |
Geographic Summary(1)(2) | ||||||||
State | # of Properties | SF | % of Total | Occupancy | Allocated Loan Amount | % of Total | UW Base Rent | % of Total |
VA | 19 | 2,783,855 | 25.1% | 88.6% | $162,083,920 | 25.0% | $14,178,600 | 28.7% |
IL | 14 | 2,579,841 | 23.2% | 93.6% | $158,603,381 | 24.4% | $11,279,283 | 22.8% |
KY | 8 | 1,187,058 | 10.7% | 99.4% | $67,870,509 | 10.5% | $6,921,518 | 14.0% |
OH | 6 | 1,174,650 | 10.6% | 78.0% | $37,603,470 | 5.8% | $2,743,658 | 5.5% |
PA | 4 | 1,059,600 | 9.5% | 100.0% | $53,914,230 | 8.3% | $4,898,077 | 9.9% |
MN | 7 | 735,645 | 6.6% | 93.4% | $51,457,379 | 7.9% | $4,015,681 | 8.1% |
NJ | 3 | 659,117 | 5.9% | 29.4% | $54,187,214 | 8.3% | $1,614,361 | 3.3% |
TX | 4 | 380,157 | 3.4% | 100.0% | $38,490,666 | 5.9% | $2,212,521 | 4.5% |
MD | 1 | 314,590 | 2.8% | 53.5% | $13,103,205 | 2.0% | $707,917 | 1.4% |
KS | 1 | 223,200 | 2.0% | 100.0% | $9,622,666 | 1.5% | $906,192 | 1.8% |
CA | 1 | NAP | 0.0% | 0.0% | $2,490,974 | 0.4% | $0 | 0.0% |
Total | 68 | 11,097,713 | 100.0% | 87.3% | $649,427,615 | 100.0% | $49,477,809 | 100.0% |
(1) | Based on the underwritten rent roll as of March 31, 2020. |
(2) | The BX Industrial Portfolio includes five leased fee properties that are not included in square footage calculations and do not comprise any UW Base Rent. The leased fee properties account for 1.9% of the total allocated loan amount. |
Market Summary(1)(2) | ||||||||||
Market | # of Properties | SF | % of Total | Allocated Loan Amount | % of Total | UW Base Rent | Occupancy | Market Rent Per SF(2) | Market Vacancy(2) | |
South Virginia | 19 | 2,783,855 | 25.1% | $162,083,920 | 25.0% | $14,178,600 | 88.6% | $7.42 | 3.6% | |
Chicago | 14 | 2,579,841 | 23.2% | $158,603,381 | 24.4% | $11,279,283 | 93.6% | $7.37 | 6.1% | |
Cincinnati | 14 | 2,361,708 | 21.3% | $105,473,979 | 16.2% | $9,665,176 | 88.8% | $5.32 | 5.2% | |
Northern NJ | 3 | 659,117 | 5.9% | $54,187,214 | 8.3% | $1,614,361 | 29.4% | $10.12 | 4.1% | |
Eastern / Central PA | 4 | 1,059,600 | 9.5% | $53,914,230 | 8.3% | $4,898,077 | 100.0% | $5.78 | 8.0% | |
Minneapolis | 7 | 735,645 | 6.6% | $51,457,379 | 7.9% | $4,015,681 | 93.4% | $6.98 | 3.4% | |
Dallas/Fort Worth | 4 | 380,157 | 3.4% | $38,490,666 | 5.9% | $2,212,521 | 100.0% | $6.77 | 6.3% | |
Washington DC | 1 | 314,590 | 2.8% | $13,103,205 | 2.0% | $707,917 | 53.5% | $12.05 | 6.1% | |
Kansas City | 1 | 223,200 | 2.0% | $9,622,666 | 1.5% | $906,192 | 100.0% | $5.43 | 4.9% | |
Bay Area | 1 | NAP | NAP | $2,490,974 | 0.4% | $0 | NAP | NAP | NAP | |
Total | 68 | 11,097,713 | 100.0% | $649,427,615 | 100.0% | $49,477,809 | 87.3% | $7.01 | 5.2% | |
(1) | Based on the underwritten rent roll as of March 31, 2020. |
(2) | The BX Industrial Portfolio includes five leased fee properties that are not included in square footage calculations and do not comprise any UW Base Rent. The leased fee properties account for 1.9% of the total allocated loan amount. The Bay Area Market includes the 273 Industrial Way property which is a leased fee property with no attributable rent or SF. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
11
LOAN #1: BX INDUSTRIAL PORTFOLIO
Top 20 Properties - Submarket Analysis(1) | ||||||||
Property Name | Allocated Loan Amount | % of Total | UW Base Rent | % of Total | Market(2) | Submarket(2) | Submarket Rent Per SF(2) | Submarket Vacancy(2) |
Bridgewater Center 1 | $44,155,072 | 6.8% | $28,567 | 0.1% | Northern NJ | Central New Jersey Warehouse/Distribution | $7.28 | 1.9% |
401 E Laraway Rd | $28,867,999 | 4.4% | $1,824,886 | 7.5% | Chicago | Interstate 80 Corridor | $3.85 | 10.0% |
Rochelle 1 | $23,613,068 | 3.6% | $1,934,972 | 7.9% | Chicago | Interstate 39 Corridor | $3.08 | 4.9% |
350A Salem Church Rd | $22,521,134 | 3.5% | $1,972,837 | 8.1% | Eastern / Central PA | I-81/I-78 Corridor | $4.82 | 6.8% |
Romeoville Bldg 1 | $20,542,004 | 3.2% | $985,726 | 4.0% | Chicago | Interstate 55 | $4.72 | 9.7% |
251 E Laraway Rd | $19,859,546 | 3.1% | $1,460,394 | 6.0% | Chicago | Interstate 80 Corridor | $3.85 | 10.0% |
7940 Kentucky | $19,791,300 | 3.0% | $2,951,805 | 12.1% | Cincinnati | Florence/Richwood Industrial | $4.02 | 1.3% |
Mountain Top Distribution Center 2 | $16,447,253 | 2.5% | $1,792,000 | 7.3% | Eastern / Central PA | Mountain Top | $4.95 | 4.2% |
Enterprise Parkway | $15,969,532 | 2.5% | $1,077,433 | 4.4% | South Virginia | Copeland | $6.64 | 1.9% |
Cavalier I | $15,764,794 | 2.4% | $1,272,656 | 5.2% | South Virginia | Cavalier | $7.51 | 4.7% |
1910 International | $14,195,139 | 2.2% | $1,125,000 | 4.6% | Cincinnati | Airport Industrial | $4.51 | 3.9% |
Glen Dale | $13,103,205 | 2.0% | $707,917 | 2.9% | Washington DC | Suburban Maryland Industrial | $8.30 | 8.8% |
Romeoville Bldg 2 | $12,898,468 | 2.0% | $396,043 | 1.6% | Chicago | Interstate 55 | $4.72 | 9.7% |
Enterprise Distribution Center 1 | $11,943,026 | 1.8% | $975,150 | 4.0% | Cincinnati | Florence/Richwood Industrial | $4.02 | 1.3% |
2270 Woodale | $11,670,042 | 1.8% | $987,996 | 4.0% | Minneapolis | North Central | $6.69 | 4.2% |
2950 Lexington Ave South | $11,465,305 | 1.8% | $880,314 | 3.6% | Minneapolis | South Central | $5.24 | 4.9% |
Rivers Bend Center 1B | $11,397,059 | 1.8% | $890,195 | 3.6% | South Virginia | Southeast Richmond | $5.18 | 3.6% |
DFW Logistics Center (Bldg 4) | $11,192,321 | 1.7% | $885,773 | 3.6% | Dallas/Fort Worth | DFW Airport Industrial | $4.63 | 4.4% |
Rivers Bend Center 1C | $10,782,846 | 1.7% | $1,253,768 | 5.1% | South Virginia | Southeast Richmond | $5.18 | 3.6% |
Territorial | $10,578,108 | 1.6% | $1,041,051 | 4.3% | Chicago | Interstate 55 | $4.72 | 9.7% |
Total | $346,757,221 | 53.4% | $24,444,483 | 100.0% |
(1) | Based on the underwritten rent roll as of March 31, 2020. |
(2) | Source: Appraisal. |
■ | The Borrower. The borrowers, listed in Annex-A-1 to the Preliminary Prospectus, are each a single purpose Delaware limited liability company structured to be bankruptcy remote with two independent directors in the organizational structure. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the BX Industrial Portfolio Loan Combination. The borrower sponsor and nonrecourse carve-out guarantor is BREIT Industrial Holdings LLC, an affiliate of the Blackstone Group, L.P. The liability of the non-recourse carveout guarantor in the event of a bankruptcy action by or against the related borrowers or guarantor is limited to 10% of the then-outstanding principal balance of the BX Industrial Portfolio Loan Combination, plus the enforcement cost relating to such bankruptcy action. In addition, for so long as the borrowers maintain the environmental insurance policy required under the loan agreement, the non-recourse carveout guarantor will have no liability under the related environmental indemnity agreement, and such guarantor’s liability relating to the borrowers’ failure to maintain the environmental insurance policy is capped at the amount of coverage required for such policy. |
The Blackstone Group, L.P. (NYSE: BX) is an investment firm with approximately $538 billion of assets under management as of March 31, 2020 across real estate funds, private equity funds, credit businesses and hedge fund solutions. Blackstone Group’s Real Estate group was founded in 1991 and has over $161 billion of real estate assets under management. The global team consists of over 550 Blackstone Real Estate professionals around the world, with both investments and people in North America, Europe, Asia, and Latin America.
The borrowers are affiliates of the borrowers under the MGM Grand & Mandalay Bay Loan Combination.
■ | Escrows. At loan origination, the borrowers deposited approximately $4,048,428 into a rollover reserve account for existing tenant improvements and leasing costs. |
On each payment date during the continuance of a Trigger Period (as defined below), the borrowers are required to deposit (i) 1/12 of the estimated annual real estate taxes payable during the next 12 months into a real estate tax reserve, (ii) 1/12 of the estimated annual insurance premiums into an insurance reserve, (iii) $0.15 per SF into a replacement reserve, subject to a cap of twelve times the monthly deposit amount, (iv) $0.35 per SF into a rollover reserve for tenant improvements and leasing commissions, subject to a cap of twelve times the monthly deposit amount and (v) the applicable ground rent amount required under the ground leases into a ground rent reserve.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
12
LOAN #1: BX INDUSTRIAL PORTFOLIO
■ | Lockbox and Cash Management. The BX Industrial Portfolio Loan Combination is structured with a hard lockbox and springing cash management. The borrowers are required to cause all rents to be deposited directly into a lender approved lockbox account. All funds received by such borrowers or the manager are required to be deposited in the lockbox account within two business days following receipt. During the continuance of a Trigger Period, all funds on deposit in the lockbox account are required to be swept not less than twice per week into a lender-controlled cash management account and applied on each payment date and disbursed in accordance with the loan agreement. Provided no Trigger Period is continuing, funds on deposit in the lockbox accounts will be disbursed to the borrowers’ operating account. |
A “Trigger Period” means a period commencing upon the occurrence of: (i) an event of default under the BX Industrial Portfolio Loan Combination or (ii) a Low Debt Yield Period (as defined below).
A Trigger Period may be cured (a) with respect to clause (i) above, upon the acceptance by the lender of a cure of such event of default, and (b) with respect to clause (ii) above, the Low Debt Yield Period has been cured as set forth below.
A “Low Debt Yield Period” will commence upon (i) the debt yield of the BX Industrial Portfolio Loan Combination being less than 6.50% as of the last day of any calendar quarter during the period up to and including November 9, 2022 and (ii) the debt yield of the BX Industrial Portfolio Loan Combination being less than 6.75% as of the last day of two consecutive calendar quarters at any time after November 9, 2022 (collectively, the “Debt Yield Threshold”), and will end if (i) the BX Industrial Portfolio Loan Combination exceeds the applicable Debt Yield Threshold for two consecutive quarters or (ii) the borrowers make a prepayment such that the debt yield is at least equal to the Debt Yield Threshold in accordance with the terms of the loan agreement.
■ | Property Management. The BX Industrial Portfolio Property is managed by Link Industrial Management LLC, an affiliate of the borrowers, and sub-managed by third party sub-managers. |
■ | Current Mezzanine or Subordinate Indebtedness. The BX Industrial Portfolio Subordinate Fixed Rate Loan is comprised of (i) the BX Industrial Portfolio B-Note in the amount of $72.6 million, the BX Industrial Portfolio C-Notes in the amount of $110.0 million and the BX Industrial Portfolio D-Note in the amount of $45.0 million. The BX Industrial Portfolio B-Note will accrue interest at a fixed rate of 3.55000% per annum. The BX Industrial Portfolio C-Notes will accrue interest at a fixed rate of 3.55000% per annum and were sold to an unaffiliated third party investor. The BX Industrial Portfolio D-Note will accrue interest at a fixed rate of 3.55000% per annum and was sold to an unaffiliated third party investor. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. None. |
For additional information, see “Description of the Mortgage Pool—The Loan Combinations—The BX Industrial Portfolio Pari Passu-AB Loan Combination” in the Preliminary Prospectus.
Financial Information(3)(4)(8) | |||||
Tranche (Fixed Rate) | Cut-off Date Balance | Tranche (Floating Rate) | LTV Cut-off | U/W DSCR NCF | U/W Debt Yield NOI |
Mortgage Loan | $85,000,000 | $99,427,615 Floating Rate Debt | |||
Pari Passu Notes | $237,400,000 | ||||
Total Senior Fixed Rate Notes | $322,400,000 | 39.6% | 3.57x | 12.8% | |
B-Note | $72,600,000 | 48.5% | 2.92x | 10.5% | |
C-Notes | $110,000,000 | 62.1% | 2.28x | 8.2% | |
D-Note | $45,000,000 | 67.6% | 2.09x | 7.5% | |
Whole Loan | $649,427,615 | 67.6% | 2.09x | 7.5% |
(1) | The financial information presented in the table above relating to the Senior Fixed Rate Notes reflects the BX Industrial Portfolio Senior Fixed Rate Loan and approximately $58.283 million of the Cut-off Date balance of the BX Industrial Portfolio Floating Rate Loan (which is assumed to pay pro rata with the BX Industrial Portfolio Senior Fixed Rate Loan). The financial information above related to the B-Note, C-Notes and D-Note calculations, include a pro-rata Cut-off Date Balance of the BX Industrial Portfolio Floating Rate Loan for each respective note. For purposes of the debt service coverage ratio calculations above, LIBOR is assumed to be 0.50000%. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
13
LOAN #1: BX INDUSTRIAL PORTFOLIO
■ | Release of Collateral. The borrowers are permitted to prepay a portion of the BX Industrial Portfolio Floating Rate Loan in an aggregate amount not to exceed $57,800,000 at any time without a spread maintenance payment. Any voluntary prepayment will first be allocated to the BX Industrial Portfolio Floating Rate Loan until it is prepaid in full and then to the BX Industrial Portfolio Fixed Rate Loan. |
The borrowers may obtain the release of an individual property upon, among other terms and conditions outlined in the loan documents, (i) prepayment by the borrowers of the Adjusted Release Amount (as defined below) for the individual property to be released, (ii) no event of default is continuing; (iii) the debt yield with respect to the remaining properties following the release must be equal to or greater than the greater of (1) 7.5% and (2) the lesser of (a) the debt yield immediately prior to such release and (b) 8.5%, and (iv) satisfaction of REMIC related conditions. Any such prepayment allocable to the BX Industrial Portfolio Floating Rate Loan prior to October 9, 2020, will require a spread maintenance premium equal to the product of (x) 1.450%, (y) the amount prepaid and (z) a fraction, the numerator of which is the number of days from the date of prepayment to and including October 9, 2020, and the denominator of which is 360. Any such prepayment allocable to the BX Industrial Portfolio Fixed Rate Loan prior to March 9, 2026 will require a yield maintenance premium in an amount equal to the greater of (a) 1.00% of the amount prepaid and (b) a yield maintenance premium. In the event that there is an undrawn Revolving Advance on the BX Industrial Portfolio Floating Rate Loan that is available for borrowing at the time of the partial release, the borrowers may, in lieu of paying the Adjusted Release Amount, cause the available amount of such undrawn Revolving Advance to be reduced by an amount equal to the Adjusted Release Amount; provided that the borrowers have paid any spread maintenance payment then due. In addition, the borrowers are permitted to obtain the release of an individual BX Industrial Portfolio Property in order to (a) cure an event of default relating to such property or (b) for a ground leased BX Industrial Portfolio Property, cure an event of default relating to a default under such a ground lease. In each instance, satisfaction of the debt yield requirement above is not required to obtain such a release, and such a release will not trigger any prepayment or yield maintenance premiums. See “Description of the Mortgage Pool—Certain Terms of the Mortgage Loans—Partial Releases” in the Preliminary Prospectus.
“Adjusted Release Amount” means for any individual BX Industrial Portfolio Property to be released, the sum of (a) the Amortized Release Amount for such property and (b) the applicable Release Price Premium for such property.
“Amortized Release Amount” means, for any individual BX Industrial Portfolio Property, the original allocated loan amount for such property, as such amount may be reduced by certain prepayments permitted under the loan documents.
“Release Price Premium” means, for each individual BX Industrial Portfolio Property, an amount equal to (a) 5% of the Amortized Release Amount for the applicable property until 30% of the original principal balance of the BX Industrial Portfolio Loan Combination has been prepaid in accordance with the loan documents and (b) thereafter, 10% of the Amortized Release Amount for the applicable property.
■ | Terrorism Insurance. The borrowers are required to maintain terrorism insurance in an amount equal to the full replacement cost of the BX Industrial Portfolio, as well as 24 months of rental loss and/or business interruption coverage, together with a 12-month extended period of indemnity following restoration. For so long as the Terrorism Risk Insurance Program Reauthorization Act of 2015 or subsequent statute, reauthorization or extension thereof (“TRIPRA”) is in effect and continues to cover both foreign and domestic acts, the lender is required to accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. In the event (A) TRIPRA is no longer in effect or (B) is modified resulting in a material increase in terrorism insurance premiums, or (C) there is a disruption in the terrorism insurance marketplace as the result of a terrorism event occurring which results in a material increase in terrorism insurance premiums, the borrower will not be required to pay insurance premiums in order to obtain terrorism coverage in excess of two times the amount of the insurance premium that is payable in respect of the property and business interruption/rental loss insurance required under the Loan Combination documents (without giving effect to the cost of terrorism, flood, wind and earthquake components of such insurance) at the time that such terrorism coverage is excluded from the applicable insurance policy. See “Risk Factors—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
14
LOAN #2: COLEMAN HIGHLINE
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
15
LOAN #2: COLEMAN HIGHLINE
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
16
LOAN #2: COLEMAN HIGHLINE
Mortgaged Property Information | Mortgage Loan Information | ||||||||||||
Number of Mortgaged Properties | 1 | Loan Seller | GACC | ||||||||||
Location (City/State) | San Jose, CA | Cut-off Date Balance(3) | $85,000,000 | ||||||||||
Property Type | Office | Cut-off Date Balance per SF(2) | $406.88 | ||||||||||
Size (SF) | 380,951 | Percentage of Initial Pool Balance | 7.7% | ||||||||||
Total Occupancy as of 9/6/2020 | 100.0% | Number of Related Mortgage Loans | None | ||||||||||
Owned Occupancy as of 9/6/2020 | 100.0% | Type of Security | Fee Simple | ||||||||||
Year Built / Latest Renovation | 2020 / NAP | Mortgage Rate | 2.80000% | ||||||||||
Appraised Value(1) | $305,100,000 | Original Term to Maturity (Months) | 120 | ||||||||||
Appraisal Date | 10/1/2020 | Original Amortization Term (Months) | NAP | ||||||||||
Borrower Sponsor | LDH, LLC; Sansome Guarantor LLC | Original Interest Only Period (Months) | 120 | ||||||||||
Property Management | Hunter Properties, Inc. | First Payment Date | 10/6/2020 | ||||||||||
Maturity Date | 9/6/2030 | ||||||||||||
Underwritten Revenues | $21,806,104 | ||||||||||||
Underwritten Expenses | $5,806,707 | Escrows(4) | |||||||||||
Underwritten Net Operating Income (NOI) | $15,999,397 | Upfront | Monthly | ||||||||||
Underwritten Net Cash Flow (NCF) | $15,999,397 | Taxes | $814,077 | $203,519 | |||||||||
Cut-off Date LTV Ratio(2) | 50.8% | Insurance | $0 | $0 | |||||||||
Maturity Date LTV Ratio(2) | 50.8% | Replacement Reserve | $0 | $0 | |||||||||
DSCR Based on Underwritten NOI / NCF(2) | 3.64x / 3.64x | TI/LC | $0 | $0 | |||||||||
Debt Yield Based on Underwritten NOI / NCF(2) | 10.3% / 10.3% | Other | $6,871,099 | $0 | |||||||||
Sources and Uses | |||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||
Loan Combination Amount | $155,000,000 | 100.0% | Loan Payoff | $140,528,275 | 90.7% | ||||||||
Upfront Reserves | 7,685,176 | 5.0 | |||||||||||
Closing Costs | 4,456,905 | 2.9 | |||||||||||
Return of Equity | 2,329,643 | 1.5 | |||||||||||
Total Sources | $155,000,000 | 100.0% | Total Uses | $155,000,000 | 100.0% | ||||||||
(1) | The appraised value represents the “As Stabilized” appraised value, which assumes free rent has burned off and rent commencement has begun. The sole tenant, Roku, has begun the buildout of its space and approximately $1.9 million was reserved upfront for tenant improvements and free rent. Based on the “As-Is” appraised value as of July 13, 2020 equal to $301.1 million, the Cut-off Date LTV and Balloon LTV are 51.5%. In addition, the appraisal concluded to a “Hypothetical Go Dark” appraised value of $242.9 million as of July 13, 2020. Based on the “Hypothetical Go Dark” appraised value, the Cut-off Date LTV and Balloon LTV are 63.8%. |
(2) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the Coleman Highline Loan Combination (as defined below). |
(3) | The Cut-off Date Balance of $85,000,000 represents the controlling Note A-1 and non-controlling Note A-4 and Note A-5, and is part of the Coleman Highline Loan Combination, which is evidenced by six pari passu senior notes and has an aggregate outstanding principal balance as of the Cut-off Date of $155,000,000. See “—The Mortgage Loan” below. |
(4) | See “—Escrows” below. |
■ | The Mortgage Loan. The mortgage loan (the “Coleman Highline Loan”) is secured by a first mortgage encumbering the borrower’s fee simple interest in a newly constructed Class A office building located in San Jose, California (the “Coleman Highline Property”), and is part of a loan combination (the “Coleman Highline Loan Combination”) evidenced by six pari passu notes with an aggregate initial principal balance of $155,000,000. The Coleman Highline Loan is evidenced by the controlling Note A-1 and non-controlling Note A-4 and Note A-5, which have an aggregate outstanding principal balance as of the Cut-off Date of $85,000,000, and represents approximately 7.7% of the Initial Pool Balance. |
Loan Combination Summary | |||||
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece | |
A-1, A-4, A-5 | $85,000,000 | $85,000,000 | Benchmark 2020-B19 | Yes | |
A-2 | $30,000,000 | $30,000,000 | DBJPM 2020-C9 | No | |
A-3, A-6 | $40,000,000 | $40,000,000 | DBRI(1) | No | |
Total | $155,000,000 | $155,000,000 |
(1) | Expected to be contributed to one or more future securitization transactions. |
The Coleman Highline Loan Combination, which accrues interest at an interest rate of 2.80000% per annum, has an original principal balance and an outstanding principal balance as of the Cut-off Date of $155.0 million. The Coleman Highline Loan Combination had an initial term of 120 months, has a remaining term of 120 months and is interest only for the full term. The scheduled maturity date of the Coleman Highline Loan Combination is the due date in September 2030. Voluntary prepayment of the Coleman Highline Loan Combination is permitted on or after March 6, 2030 without a payment of any prepayment premium. Provided no event of default under the Coleman Highline Loan Combination documents is continuing, defeasance of the Coleman Highline Loan Combination with direct, non-callable obligations of the United States of America or other obligations, which are “government securities” permitted under the Coleman Highline Loan Combination documents is permitted at any time after the earlier of (a) the second anniversary of the closing date of the final securitization that holds any portion of the Coleman Highline Loan Combination and (b) August 7, 2023.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
17
LOAN #2: COLEMAN HIGHLINE
■ | The Mortgaged Property. The Coleman Highline Property is a newly developed three-building, 380,951 SF Class A office complex situated on an 8.82-acre site in San Jose, California. The Coleman Highline Property is the second phase of the greater Coleman Highline mixed-use development, which is expected to include on-site retail, a mix of restaurants, a public market, and a collection of food trucks and caterers. Built in 2020, the Coleman Highline Property features architecture with expansive glass line, large 32,000 SF floorplates and 14’ slab-to-slab heights. The Coleman Highline Property is comprised of Building 3 (194,790 SF; the “Building 3 Space”), Building 4 (163,272 SF; the “Building 4 Space”), and Building A2 (22,889 SF; the “Building A2 Space”), all of which are fully leased to Roku (as defined below). Buildings 3 and 4 are office buildings, and Building A2 is an amenities building which is expected to feature dining options, conference rooms and an auditorium. The Coleman Highline Property also includes a parking garage (the “Collateral Parking Structure”) with 1,219 parking spaces, for a parking ratio of approximately 3.2 parking spaces per 1,000 SF of NRA. The Collateral Parking Structure is subject to a Declaration of Covenants, Conditions and Restrictions (the “CCR”), pursuant to which: (i) all parking structures on the Coleman Highline Property and the neighboring phase of the development (“Phase I”) are to be utilized for shared parking among the Coleman Highline Property and Phase I and (ii) all parking structures throughout the Coleman Highline development are subject to various control rights of a “Declarant” which is an affiliate of the borrower sponsor. The Declarant has agreed that, notwithstanding anything to the contrary contained in the CCR: (i) the parking structure on the Coleman Highline Property will be insured in accordance with the terms of the Coleman Highline Loan Combination documents, (ii) any proceeds of the foregoing insurance will be held by the lender and made available for restoration, (iii) the Coleman Highline Property will always have access to sufficient parking to satisfy all legal requirements (including zoning requirements) as well as all requirements relating to parking set forth in the Roku lease at the Coleman Highline Property, and (iv) the Coleman Highline Property will always have access to no less than (x) 65 parking spaces in the parking structures and surface parking located on the Coleman Highline Property on an exclusive basis and (y) 1,116 parking spaces in the parking structures and surface parking located on the Coleman Highline Property and Phase I on a non-exclusive basis. As of September 6, 2020, the Coleman Highline Property was 100.0% leased to Roku as its United States headquarters location. |
Roku, Inc. (“Roku”) (380,951 SF; 100.0% of NRA; 100.0% of UW Base Rent) was founded in 2002 and is a leading television streaming platform in the United States by base installed, representing 39% of the market share. Roku operates in two segments: Player and Platform, the first of which is a hardware-based purchase, the second of which is an ongoing paid subscription to platform access. Roku engages in “over the top” (OTT) television streaming with approximately 40 million global users as of March 2020. The platform offers approximately 5,000 domestic streaming channels and approximately 3,000 international streaming channels. Roku has expanded as a result of the increase in demand for streaming services and as of 2019, had 1,650 employees, doubling its employee count over the prior two years. The Coleman Highline Property is expected to serve as Roku’s United States headquarters, spread between the Coleman Highline Property and Coleman Highline Phase I, which includes two additional office buildings and an amenities building 100% leased to Roku. As of March 31, 2020, Roku had 39.8 million active accounts and streaming hours of 13.2 billion, increases over the prior year quarter of 37% and 49%, respectively, which helped increase revenues by 55% in the same quarter. Roku expects its new account growth, streaming hours, and employee headcount to accelerate as a result of the COVID-19 pandemic as demand for streaming content from home increases. As of December 31, 2019, Roku reported a net loss of $59.9 million and total revenue of $1.1 billion, representing an increase of 52.0% from December 31, 2018, with $515.5 million of cash and cash equivalents. In the second quarter of 2020, Roku reported a net loss of $43.1 million and added 3.2 million incremental active accounts to reach 43.0 million total accounts.
Roku recently signed a 10-year, seven-month NNN lease that will expire on September 30, 2030, with an initial annual base rent of $44.50 per SF. In addition, Roku received six months of free rent, and its official rent commencement date is October 1, 2020. Roku has a one-time option to extend its lease for seven years at 97.5% of fair market value with 15-18 months’ notice. Roku does not have any termination or contraction options.
As of March 2020, Building 3 is fully built out and Roku began moving employees into the space prior to the start of the COVID-19 pandemic. Building 4 is fully built out except for floor coverings and cubicles, which Roku is expected to hold off on installing in the near term as they evaluate the post-COVID work environment. The landlord has satisfied all of its tenant improvement obligations and provided Roku an $82.50 per SF tenant improvement allowance of which approximately $458,533 remained outstanding as of the origination date of the Coleman Highline Loan Combination. The borrower sponsor indicated that Roku intends to move roughly 30% of its workforce back into Building 3 by the end of 2020 assuming the current shelter in place order in Santa Clara County is lifted. The work remaining on Building 4 is expected to be completed and furnished by the end of 2020, with Roku taking occupancy by the end of the first quarter of 2021. We cannot assure you that Roku will take occupancy as expected or at all.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
18
LOAN #2: COLEMAN HIGHLINE
COVID-19 Update. As of the September 6, 2020 underwritten rent roll, the Coleman Highline Property is 100.0% leased. The sole tenant is currently in a free rent period with rent commencing in October 2020 and has not requested any lease modifications. The first payment date of the Coleman Highline Loan Combination is October 6, 2020, based on the loan documents. As of September 6, 2020, the Coleman Highline Loan Combination is not subject to any modification or forbearance request.
The following table presents certain information relating to the sole tenant at the Coleman Highline Property:
Sole Tenant Based on Underwritten Base Rent(1)
Tenant Name | Credit Rating | Tenant | % of GLA | UW Base | % of Total | UW Base | Lease | Renewal / |
Roku, Inc.(2)(3) | NR / NR / NR | 380,951 | 100.0% | $16,950,792 | 100.0% | $44.50 | 9/30/2030 | 1, 7-year option |
All Tenants | 380,951 | 100.0% | $16,950,792 | 100.0% | $44.50 | |||
Vacant | 0 | 0.0% | NAP | NAP | NAP | |||
Total / Wtd. Avg. All Owned Tenants | 380,951 | 100.0% | $16,950,792 | 100.0% | $44.50 |
(1) | Based on the rent roll dated September 6, 2020. |
(2) | Roku has no termination or contraction options. |
(3) | Roku is expected to take occupancy of Building 4 (163,272 SF) of the Coleman Highline Property in the first quarter of 2021. We cannot assure you that Roku will take occupancy as expected or at all. |
The following table presents certain information relating to the lease rollover schedule at the Coleman Highline Property, based on initial lease expiration dates:
Lease Expiration Schedule(1)
Year Ending December 31 | Expiring Owned GLA | % of Owned GLA | Cumulative % of | UW Base Rent | % of Total | UW Base Rent $ | # of Expiring | |||||||
MTM | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2020 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2021 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2022 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2023 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2024 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2025 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2026 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2027 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2028 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2029 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||
2030 | 380,951 | 100.0% | 100.0% | $16,950,792 | 100.0% | $44.50 | 1 | |||||||
2031 & Thereafter | 0 | 0.0% | 100.0% | $0 | 0.0% | $0.00 | 0 | |||||||
Vacant | 0 | 0.0% | 100.0% | NAP | NAP | NAP | NAP | |||||||
Total / Wtd. Avg. | 380,951
| 100.0%
| $16,950,792
| 100.0%
| $44.50
| 1
|
(1) Based on the underwritten rent roll dated September 6, 2020.
The following table presents certain information relating to historical leasing at the Coleman Highline Property:
Historical Leased %
2018 | 2019 | As of 9/6/2020 | |
Owned Space | NAP | NAP | 100.0%(1) |
(1) | Based on the underwritten rent roll dated September 6, 2020. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
19
LOAN #2: COLEMAN HIGHLINE
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the Coleman Highline Property: |
Cash Flow Analysis(1)
Underwritten | Underwritten $ per SF | |
Base Rent | $16,950,792 | $44.50 |
Rent Steps(2) | 512,002 | 1.34 |
Reimbursements | 5,491,000 | 14.41 |
Vacancy & Credit Loss(3) | (1,147,690) | (3.01) |
Effective Gross Income | $21,806,104 | $57.24 |
Real Estate Taxes | 2,394,345 | $6.29 |
Insurance | 419,997 | $1.10 |
Management Fee | 654,183 | $1.72 |
Other Operating Expenses | 2,338,182 | $6.14 |
Total Operating Expenses | $5,806,707 | $15.24 |
Net Operating Income | $15,999,397 | $42.00 |
TI/LC | 0 | 0.00 |
Capital Expenditures | 0 | 0.00 |
Net Cash Flow | $15,999,397 | $42.00 |
Occupancy | 100.0% | |
NOI Debt Yield(4) | 10.3% | |
NCF DSCR(5) | 3.64x |
(1) | Historical financial information is not available because the Coleman Highline Property was recently built in 2020 with the sole tenant taking occupancy in March 2020 |
(2) | Represents 12 months of rent steps. |
(3) | Represents an underwritten economic vacancy of 5.0%. |
(4) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the Coleman Highline Loan Combination. |
(5) | Based on the interest only debt service payments of the Coleman Highline Loan Combination. |
■ | Appraisal. According to the appraisal, the Coleman Highline Property has an “as stabilized” appraised value of $305,100,000 as of an effective date of October 1, 2020, which assumes free rent has burned off and rent commencement has begun. The “as-is” appraised value is $301,100,000 as of July 13, 2020. |
Appraisal Approach | “As Stabilized” Value | Discount Rate | Capitalization Rate |
Direct Capitalization Approach | $303,900,000 | N/A | 5.25% |
Discounted Cash Flow Approach | $305,100,000 | 6.75% | 5.75%(1) |
(1) | Represents the terminal capitalization rate. |
■ | Environmental Matters. The Phase I environmental report dated July 20, 2020 identified a recognized environmental condition at the Coleman Highline Property. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus for more information. In addition, an environmental indemnity agreement was entered into between the borrower, lender and related guarantors upon loan origination. See “—The Borrower” below. |
■ | Market Overview and Competition. The Coleman Highline Property is located within the San Jose Airport submarket, which is adjacent to the Mineta San Jose International Airport, and a 15-minute drive north of Downtown San Jose. |
The Coleman Highline Property is positioned across a pedestrian bridge from the Santa Clara Caltrain station, the most widely used mode of public transit between San Francisco and San Jose. The Santa Clara station also serves as a “Baby Bullet” stop with transit times of roughly 60 and 15 minutes to San Francisco and Palo Alto, respectively. The Coleman Highline Property is the second phase of the greater Coleman Highline mixed-use development. Phase I includes two additional office buildings, both fully leased to Roku, with a total Roku SF at the Coleman Highline mixed-use development of 738,057 SF. A fourth phase of the greater Coleman Highline mixed-use development is scheduled to be completed by 2021 and is expected to feature additional office space that is 100% leased to Verizon. The Coleman Highline Property is located in an area with a concentration of major technology companies including Google, Apple, Netflix and Facebook. According to a third-party market research report, the estimated 2020 population within a one-, three-, and five-mile radius was projected to be 10,205, 176,399, and 642,978, respectively. The population within the same radii is expected to grow 0.37%, 2.31%, and 2.14%, respectively, over the next five years. The 2020 average household income within a one-, three-, and five-mile radius was $130,114, $135,262, and $140,271.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
20
LOAN #2: COLEMAN HIGHLINE
According to the appraisal, as of the first quarter of 2020, the San Jose Airport submarket consisted of approximately 5.5 million SF of office space with an overall market vacancy of 8.6% and average asking rents of approximately $3.69 per SF.
The following chart displays six lease comparables for the Coleman Highline Property. Comparable buildings were built between 1984 and 2021 and range in size from 42,188 SF to 643,990 SF. Initial asking rents at the comparable properties ranged between $42.00 and $49.20 per SF (net leases) with a weighted average of approximately $46.71 per SF. The appraisal concluded a market rent at the Coleman Highline Property of $46.20 per SF. The Coleman Highline Property has an in-place rent of $44.50 per SF.
Summary of Comparable Office Leases(1)
Property Name | Tenant Name | Tenant Leased Space (SF) | Lease Sign Date | Lease Term (years) | Base Rent Per SF |
Coleman Highline, San Jose, CA | Roku | 380,951 | Aug 2018(2) | 10.6(2) | $44.50(2) |
2390 Mission College Boulevard, Santa Clara, CA | InfoBlox, Inc. | 42,188 | May 2020 | 10.5 | $42.00 |
4301-4401 Great America Parkway, Santa Clara, CA | Airbnb | 301,163 | Dec 2019 | 11.0 | $45.00 |
6220 America Center Drive, San Jose, CA | Bill.com | 232,253 | Dec 2019 | 10.0 | $45.00 |
Coleman Highline Phase 4, San Jose, CA | Verizon | 643,990 | Jul 2019 | 15.0 | $49.20 |
675 Creekside Way, Campbell, CA | 8x8, Inc. | 177,815 | Jul 2019 | 11.0 | $44.40 |
3315 Scott Boulevard, Santa Clara, CA | Edelman Financial | 157,205 | Jul 2019 | 6.1 | $46.20 |
(1) | Source: Appraisal. |
(2) | Based on the underwritten rent roll |
■ | The Borrower. The borrower is CAP OZ 34, LLC, a single purpose Delaware limited liability company structured to be bankruptcy remote with two independent directors in the organizational structure. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Coleman Highline Loan Combination. The borrower sponsor and nonrecourse carve-out guarantors are Sansome Guarantor LLC (an affiliate of Sansome Partners) and LDH, LLC (an affiliate of Hunter Properties), which are liable on a several basis, at 95% and 5%, respectively. Along with the borrower and related lender, Sansome Guarantor LLC and LDH, LLC entered into an environmental indemnity agreement upon loan origination; pursuant to such agreement, the indemnitee will not seek recourse for any indemnified matters against Sansome Guarantor LLC and LDH, LLC to the extent the applicable matters (the “Indemnified Obligations”) are either covered pursuant to the environmental insurance policy required pursuant to Coleman Highline Loan Combination documents (the “PLL Insurance”) or are the obligation of the former occupant at the Coleman Highline Property, and such former occupant is in compliance with the operative documents requiring its adherence to certain environmental covenants, obligations and restrictions applicable to the Coleman Highline Property (said covenants, obligations, and restrictions, the “Prior Owner Documents”). Notwithstanding the foregoing, Sansome Guarantor LLC and LDH, LLC will become fully liable for the foregoing Indemnified Obligations in the event that either: (a) Sansome Guarantor LLC and LDH, LLC fail to diligently pursue payment and satisfaction of the Indemnified Obligations under the PLL Insurance and/or the Prior Owner Documents (as applicable) or (b) the Indemnified Obligations are not paid and satisfied by the insurance company providing the PLL Insurance or the applicable party pursuant to the Prior Owner Documents, in either case for any reason whatsoever, within 180 days of the indemnitee making demand of Sansome Guarantor LLC and LDH, LLC for the applicable Indemnified Obligation(s). |
Founded in 1997 by Sandy Dean, Sansome Partners is a San Francisco-based investment firm, with offices in Seattle, Boston, and New York, that makes long-term investments in businesses and assets. Sansome Partners is one of the main investment vehicles for the Fisher Family, the founders of both GAP and Banana Republic, and has deployed over $3.0 billion of private equity capital since inception. Additionally, Sansome Partners manages an over $1.0 billion long-only fund, targeting 10 positions in publicly-traded companies. Over the last 20 years, Hunter Properties, through the development arm Hunter Storm, LLC, has leveraged its multiple product-type development experience with its entitlement experience to complete several real estate projects. More recently, the firm has focused on transit-oriented development (TOD) and mixed-use development.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
21
LOAN #2: COLEMAN HIGHLINE
■ | Escrows. At loan origination of the Coleman Highline Loan Combination, the borrower funded reserves of (i) approximately $814,077 for real estate taxes (equivalent to 48 months of tax payments), (ii) approximately $5,000,000 for a debt service reserve, and (iii) approximately $1,871,099 related to the remaining free rent (in the amount of $1,412,566) and tenant improvement allowance (in the amount of $458,533) pursuant to the Roku lease. |
On each due date, the borrower is required to deposit (i) 1/12 of an amount which would be sufficient to pay taxes for the next ensuing 12 months (currently equivalent to $203,519), (ii) 1/12 of the estimated annual insurance premiums into an insurance reserve, unless an acceptable blanket insurance policy is in place (an acceptable blanket policy is currently in place), (iii) solely to the extent the Single Tenant Condition (as defined below) fails to be satisfied as of the applicable due date, approximately $6,350 into a replacement reserve account for annual capital expenditures and (iv) solely to the extent the Single Tenant Condition fails to be satisfied as of the applicable due date, $47,620 into a rollover account for tenant improvements and leasing commissions that may be incurred.
A “Single Tenant Condition” means (i) a single tenant lease is in full force and effect and (ii) no Coleman Highline Trigger Period (as defined below) has occurred and is then continuing.
■ | Lockbox and Cash Management. The Coleman Highline Loan Combination is structured with a hard lockbox and springing cash management. The borrower is required to cause tenants to deposit rents directly into a lender-approved lockbox account (the “Clearing Account”). In addition, the borrower and the property manager are required to deposit all rents and gross revenue from the Coleman Highline Property into the Clearing Account within one business day of receipt. Provided no Coleman Highline Trigger Period exists, funds deposited into the Clearing Account are required to be swept on a daily basis into the borrower’s operating account. Once a Coleman Highline Trigger Period occurs, such funds are required to be swept on a daily basis into the deposit account and applied and disbursed in accordance with the loan documents. |
A “Coleman Highline Trigger Period” will commence upon the occurrence of (i) an event of default under the Coleman Highline Loan Combination, (ii) the debt yield is less than 8.0% on the last day of any calendar quarter, (iii) the commencement of a Lease Sweep Period (as defined below), or (iv) the disbursement of funds from the debt service reserve account; and will end if, (A) with respect to clause (i), the event of default under the Coleman Highline Loan Combination has been cured and such cure has been accepted by the lender (and no other event of default under the Coleman Highline Loan Combination is then continuing) or (B) with respect to clause (ii), the debt yield is at least 8.0% on the last day of any calendar quarter or (C) with respect to clause (iii), such Lease Sweep Period has ended pursuant to the terms thereof (and no other Lease Sweep Period is then continuing) or (D) with respect to clause (iv), the earliest to occur of (x) the satisfaction of all Debt Service Reserve Release Conditions (as defined below) and (y) the reimbursement of any portion of the debt service reserve funds that have been allocated to the monthly debt service payment.
A “Lease Sweep Period” will commence on the first monthly payment date following the occurrence of any of the following: (a) the earliest of (i) the date that is 12 months prior to the stated maturity date of the Coleman Highline Loan Combination, (ii) the date that is 15 months prior to the earliest stated expiration (including the stated expiration of any renewal term) of the Roku lease (or a replacement lease that covers all or any portion of the Roku premises) (a “Lease Sweep Lease”), provided, however, if the entirety of any “dark” portion is demised to a subtenant that is reasonably approved by the lender (which subtenant must be open and operating in the entirety of said space and must either (x) be of a credit quality and reputation that is not materially less as compared with the tenant pursuant to the applicable Lease Sweep Lease (as determined by the lender in its reasonable discretion) or (y) have an investment grade rating) pursuant to a sublease that is co-terminous with the applicable Lease Sweep Lease (the “Sublease Conditions”), the foregoing 15 month period will be extended to 24 months or (iii) the date required under a Lease Sweep Lease by which the tenant thereunder is required to give notice of its exercise of a renewal option thereunder (and such renewal has not been so exercised); (b) the date that a Lease Sweep Lease (or any material portion thereof) is surrendered, cancelled or terminated prior to its then current expiration date or the receipt by the borrower or the property manager of written notice from any tenant under a Lease Sweep Lease of its intent to surrender, cancel or terminate the Lease Sweep Lease (or any material portion thereof prior to its then current expiration date); (c) the occurrence of a Go Dark Trigger (as defined below); (d) upon a monetary or material non-monetary default under a Lease Sweep Lease by the tenant thereunder that continues beyond any applicable notice and cure period; or (e) the occurrence of a Lease Sweep Tenant (as defined below) insolvency proceeding.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
22
LOAN #2: COLEMAN HIGHLINE
A Lease Sweep Period will end upon the first to occur of the following: (A) in the case of clauses (a), (b), and (c) above, (I) either (x) the entirety of the applicable premises, or applicable portion thereof, is leased pursuant to one or more qualified leases or (y) a portion of the applicable premises, or applicable portion thereof, is leased pursuant to one or more qualified leases so as to cause the Coleman Highline Property to achieve a debt yield of 8.0% and (II) sufficient funds have been accumulated (or otherwise deposited) in the lease sweep account (during the continuance of the subject Lease Sweep Period) to cover all anticipated leasing expenses, free rent periods, and/or rent abatement periods with respect to such qualified leases and any shortfalls in required payments under the loan documents or operating expenses as a result of any anticipated down time prior to the commencement of payments under such qualified leases; (B) in the case of clause (a) above, the date on which the applicable tenant (I) irrevocably exercises its renewal or extension option with respect to either (x) all of its premises or (y) a portion of the applicable premises, or applicable portion thereof, is leased pursuant to one or more qualified leases so as to cause the Coleman Highline Property to achieve a debt yield of 8.0%, and (II) sufficient funds have been accumulated (or deposited) in the lease sweep account (during the continuance of the subject Lease Sweep Period) to cover all anticipated leasing expenses, free rent periods and/or rent abatement periods with respect to such renewal or extension; (C) in the case of clause (d) above, the date on which the subject default has been cured, and no other monetary or material non-monetary default under the Lease Sweep Lease occurs for a period of six consecutive months following such cure; (D) in the case of clause (c) above, (x) Roku (or a replacement tenant that occupies all or any portion of the Roku premises) resumes operation of its business in the entirely of the applicable premises and continuously operates for at least 30 days or (y) the date on which the lease sweep funds in the lease sweep account in connection with the Go Dark Trigger (as defined below) pursuant to clause (c) above equals or exceeds the Lease Sweep Go Dark Deposit Amount (as defined below) or the borrower delivers a letter of credit (which satisfies the requirements set forth in the loan documents) in an amount equal to the Lease Sweep Go Dark Deposit Amount or (z) the date on which either the Sublease Conditions are satisfied, or the tenant achieves an investment grade rating; (E) in the case of clause (e) above, either (a) the applicable Lease Sweep Tenant insolvency proceeding has terminated and the applicable Lease Sweep Lease has been affirmed, assumed or assigned in a manner reasonably satisfactory to the lender or (b) the applicable Lease Sweep Lease has been assumed and assigned to a third party in a manner reasonably satisfactory to the lender; and (F) in the case of clauses (a), (b), (d), and (e) above, the date on which (x) the funds in the lease sweep account collected with respect to the Lease Sweep Lease in question (including any lease termination payments with respect to such Lease Sweep Lease deposited into the lease sweep account) is equal to the Lease Sweep Deposit Amount (as defined below) applicable to such space, (y) the borrower delivers to the lender a letter of credit in the foregoing amount or (z) the borrower deposits an amount equal to the deficient amount for deposit into the lease sweep account, unless, in any such case, the applicable premises has been leased pursuant to one or more leases which, in the aggregate, (x) require the borrower to incur expenses, including the payment of brokerage commissions, completion of tenant improvements or payment of tenant allowances, and/or (y) provide for free rent periods and/or rent abatement periods with respect to rent amounts, which, in the lender’s determination, exceed the Lease Sweep Deposit Amount applicable to such premises (in which case the Lease Sweep Period in question will continue until the borrower satisfies clause (A) above).
A “Lease Sweep Go Dark Deposit Amount” means: (x) solely with respect to a Lease Sweep Period commencing upon the occurrence of a Go Dark Trigger prior to August 7, 2026, an amount equal to the portion of the rentable square feet of the applicable Lease Sweep Lease in which the applicable tenant has “gone dark” multiplied by $60.00 and (y) for the period from and after August 7, 2026, an amount equal to the total rentable square feet of the applicable Lease Sweep Lease multiplied by $60.00.
A “Lease Sweep Deposit Amount” means an amount equal to the total rentable square feet of the applicable Lease Sweep Lease multiplied by $60.00.
A “Lease Sweep Tenant” means a tenant under a Lease Sweep Lease or, if such tenant’s obligations are guaranteed by its direct or indirect parent company (if any), such parent company.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
23
LOAN #2: COLEMAN HIGHLINE
A “Go Dark Trigger” will be deemed to occur on the date on which any Lease Sweep Tenant discontinues its business (i.e., “goes dark”) in more than 50% of its space at the Coleman Highline Property, not including the Building A2 Space, or gives notice that it intends to discontinue its business in greater than 50% of its applicable premises at the Coleman Highline Property, not including the Building A2 Space, provided, however, for so long as any such discontinuation of operations by a Lease Sweep Tenant satisfies any of the following conditions, no Go Dark Trigger will be deemed to occur in connection with any of the following (each a “Go Dark Exception”): (i) either: (A) such discontinuation is effectuated in order to comply with governmental restrictions which restrict the use or occupancy of the Coleman Highline Property in connection with the COVID-19 pandemic or any other pandemic or epidemic (a “SIP Order”), and the applicable Lease Sweep Tenant resumes operations in its space within 90 days after such SIP Order is lifted or (B) such discontinuation occurs prior to August 7, 2022 in connection with such Lease Sweep Tenant’s commercially reasonable safety protocols relating to the COVID-19 pandemic; provided further that the applicable Lease Sweep Tenant resumes operations in its applicable premises no later than August 7, 2022; (ii) such discontinuation is related to upgrades or renovations to the premises pursuant to the Lease Sweep Lease and lasts for a period of no longer than 180 days; (iii) such discontinuation is in connection with an ongoing restoration of the Coleman Highline Property following a casualty and lasts for a period of no longer than 12 months after receipt of all applicable governmental permits and approvals necessary to complete the applicable restoration; (iv) any cessation by the Lease Sweep Tenant of all or some of the applicable premises so long as during the period that such discontinuation of operations continues, such Lease Sweep Tenant (or any parent entity that has guaranteed all of such Lease Sweep Tenant’s obligations pursuant to the Lease Sweep Lease) maintains an investment grade rating; or (v) the Sublease Conditions are satisfied with respect to the applicable Lease Sweep Lease. In addition to the Go Dark Exceptions identified in the above, no Go Dark Trigger will have occurred with respect to Roku not yet having commenced operating in the Building B4 Space in connection with Roku performing the initial buildout and occupancy of its space (provided that the initial buildout and occupancy have completed and operations commence on or before the earlier to occur of (x) August 7, 2022 and (y) one year after the termination of any SIP Order in place as of the origination date).
A “Debt Service Reserve Release Conditions” will be met so long as each of the following conditions is satisfied after July 7, 2021: (i) no Coleman Highline Trigger Period is then continuing (other than pursuant to clause (iv) in the definition of Coleman Highline Trigger Period set forth above); (ii) each tenant under a Lease Sweep Lease has timely made all rental payments (including, without limitation, any payments of additional rent, common area maintenance expenses, tax assessments) due under any Lease Sweep Lease for the immediately preceding three full calendar month period; (iii) the debt service coverage ratio is equal to or exceeds 3.42x; and (iv) no portion of the debt service reserve funds has been allocated to the monthly debt service payment during the immediately preceding 11 full calendar month period.
■ | Property Management. The Coleman Highline Property is managed by Hunter Properties, Inc., an affiliate of the borrower. |
■ | Current Mezzanine or Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. None. |
■ | Release of Collateral. Not permitted. |
■ | Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the Coleman Highline Property, as well as 18 months of rental loss and/or business interruption coverage, together with a 6-month extended period of indemnity following restoration. For so long as the Terrorism Risk Insurance Program Reauthorization Act of 2015 or any replacement, reauthorization or extension thereof (“TRIPRA”) is in effect and continues to cover both foreign and domestic acts, the lender is required to accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. In the event TRIPRA is no longer in effect, the borrower will not be required to pay any insurance premiums solely with respect to such terrorism coverage in excess of two times the amount of the insurance premium that is payable in respect of the property and business interruption/rental loss insurance required under the Coleman Highline Loan Combination documents (without giving effect to the cost of terrorism and earthquake components of such insurance) at the time that such terrorism coverage is excluded from the applicable insurance policy. See “Risk Factors—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
24
LOAN #3: AMAZON INDUSTRIAL PORTFOLIO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
25
LOAN #3: AMAZON INDUSTRIAL PORTFOLIO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
26
LOAN #3: AMAZON INDUSTRIAL PORTFOLIO
Mortgaged Property Information | Mortgage Loan Information | ||||||||||
Number of Mortgaged Properties | 2 | Loan Seller | GSMC | ||||||||
Location (City/State) | Various / Various | Cut-off Date Principal Balance(3) | $80,000,000 | ||||||||
Property Type | Industrial | Cut-off Date Principal Balance per SF(2) | $81.19 | ||||||||
Size (SF) | 1,713,210 | Percentage of Initial Pool Balance | 7.2% | ||||||||
Total Occupancy as of 9/1/2020 | 100.0% | Number of Related Mortgage Loans | None | ||||||||
Owned Occupancy as of 9/1/2020 | 100.0% | Type of Security | Fee Simple | ||||||||
Year Built / Latest Renovation | 2017 / NAP | Mortgage Rate | 3.2500% | ||||||||
Appraised Value(1) | $215,000,000 | Original Term to Maturity (Months) | 107 | ||||||||
Appraisal Date | 7/13/2020 | Original Amortization Term (Months) | NAP | ||||||||
Borrower Sponsor | JDM Real Estate Funds, LLC | Original Interest Only Period (Months) | 107 | ||||||||
Property Management | CBRE, Inc. | First Payment Date | 9/6/2020 | ||||||||
Maturity Date | 7/6/2029 | ||||||||||
Underwritten Revenues | $13,375,374 | ||||||||||
Underwritten Expenses | $2,281,427 | Escrows(4) | |||||||||
Underwritten Net Operating Income (NOI) | $11,093,948 | Upfront | Monthly | ||||||||
Underwritten Net Cash Flow (NCF) | $10,922,627 | Taxes | $0 | $0 | |||||||
Cut-off Date LTV Ratio(1)(2) | 64.7% | Insurance | $0 | $0 | |||||||
Maturity Date LTV Ratio(2) | 64.7% | Replacement Reserves | $0 | $0 | |||||||
DSCR Based on Underwritten NOI / NCF(2) | 2.42x / 2.38x | TI/LC | $0 | $0 | |||||||
Debt Yield Based on Underwritten NOI / NCF(2) | 8.0% / 7.9% | Other | $0 | $0 | |||||||
Sources and Uses | |||||||||||
Sources | $ | % | Uses | $ | % | ||||||
Loan Combination Amount | $139,100,000 | 64.8% | Purchase Price | $214,000,000 | 99.7% | ||||||
Principal’s New Cash Contribution | 75,606,988 | 35.2 | Closing Costs | 706,988 | 0.3 | ||||||
Total Sources | $214,706,988 | 100.0% | Total Uses | $214,706,988 | 100.0% | ||||||
(1) | The Appraised Value is based on an aggregate “as-is” value of the Amazon Industrial Portfolio Properties (as defined below). |
(2) | Calculated based on the aggregate outstanding balance of the Amazon Industrial Portfolio Loan Combination (as defined below). |
(3) | The Cut-off Date Principal Balance of $80,000,000 represents the controlling Note A-1 of the $139,100,000 Amazon Industrial Portfolio Loan Combination, which is evidenced by three pari passu notes. See “—The Mortgage Loan” below. |
(4) | See “—Escrows” below. |
■ | The Mortgage Loan. The mortgage loan (the “Amazon Industrial Portfolio Loan”) is part of a loan combination (the “Amazon Industrial Portfolio Loan Combination”) consisting of three pari passu notes with an outstanding aggregate principal balance of $139,100,000 and is secured by first mortgages encumbering the fee simple interests in a portfolio of two warehouse/distribution industrial properties located in Kansas City, Kansas (the “6925 Riverview Avenue Property”) and Jacksonville, Florida (the “12900 Pecan Park Road Property”, and together with the 6925 Riverview Avenue Property, each, individually, an “Amazon Industrial Portfolio Property”, and, collectively, the “Amazon Industrial Portfolio Properties”). The Amazon Industrial Portfolio Loan, evidenced by the controlling note A-1, has an outstanding principal balance as of the Cut-off Date of $80,000,000 and represents approximately 7.2% of the Initial Pool Balance. The related pari passu companion loans are evidenced by the non-controlling note A-2 (with an outstanding principal balance as of the Cut-off Date of $35,000,000) and the non-controlling note A-3 (with an outstanding principal balance as of the Cut-off Date of $24,100,000). The Amazon Industrial Portfolio Loan Combination was originated by Goldman Sachs Bank USA on July 30, 2020. The Amazon Industrial Portfolio Loan Combination has an interest rate of 3.2500% per annum. The borrowers utilized the proceeds of the Amazon Industrial Portfolio Loan Combination to acquire the Amazon Industrial Portfolio Properties and pay origination costs. |
The Amazon Industrial Portfolio Loan Combination had an initial term of 107 months and has a remaining term of 106 months as of the Cut-off Date. The Amazon Industrial Portfolio Loan Combination requires payments of interest only for the entire term of the Amazon Industrial Portfolio Loan Combination. The stated maturity date is the due date in July 2029. Voluntary prepayment of the Amazon Industrial Portfolio Loan Combination is prohibited prior to January 6, 2029. The borrowers have the option to defease the entire $139.1 million principal balance of the Amazon Industrial Portfolio Loan Combination in whole (but not in part) after the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized and (ii) July 30, 2023.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
27
LOAN #3: AMAZON INDUSTRIAL PORTFOLIO
The table below summarizes the promissory notes that comprise the Amazon Industrial Portfolio Loan Combination. The relationship between the holders of the Amazon Industrial Portfolio Loan Combination is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Loan Combinations—The Serviced Pari Passu Loan Combinations” in the Preliminary Prospectus.
Loan Combination Summary | |||||
Note | Original Balance | Cut-off Date Balance | Note Holder(s) | Controlling Piece | |
Note A-1 | $80,000,000 | $80,000,000 | BMARK 2020-B19 | Yes | |
Note A-2 | 35,000,000 | 35,000,000 | DBJPM 2020-C9 | No | |
Note A-3 | 24,100,000 | 24,100,000 | GSBI(1) | No | |
Total Senior Notes | $139,100,000 | $139,100,000 |
(1) | Expected to be contributed to one or more future securitization transactions. |
■ | The Mortgaged Properties. The Amazon Industrial Portfolio Properties consist of two, single-story single tenant industrial buildings totaling 1,713,210 SF located in Kansas City, Kansas and Jacksonville, Florida. As of September 1, 2020, the Amazon Industrial Portfolio Properties were 100.0% occupied by Amazon.com Services, LLC (“Amazon Services”). The Amazon Industrial Portfolio Properties were built-to-suit for Amazon Services and are each similar in nature. |
The following table presents certain information relating to the Amazon Industrial Portfolio Properties:
Property Name | City | State | % of Allocated Loan Amount | Total GLA | Year Built | As-Is Appraised Value | UW Base Rent |
6925 Riverview Avenue | Kansas City | Kansas | 49.6% | 856,605 | 2017 | $107,000,000 | $5,139,080 |
12900 Pecan Park Road | Jacksonville | Florida | 50.4 | 856,605 | 2017 | 108,000,000 | 5,216,359 |
Total | 100.0% | 1,713,210 | $215,000,000 | $10,355,439 |
The 6925 Riverview Avenue Property is an 856,605 SF, Class A industrial warehouse/distribution property located on an approximately 126.95-acre site in Kansas City, Kansas. Interstate 70 provides access to the 6925 Riverview Avenue Property, which also provides access to the Kansas City metro area. Kansas City International Airport is located approximately 24 miles of the 6925 Riverview Avenue Property. The 6925 Riverview Avenue Property was built-to-suit for Amazon Services in 2017 and serves as an automatic robotic sort facility. The 6925 Riverview Avenue Property includes 8.1% of office space and features 47 dock doors, two drive-in doors and 41-ft clear heights. The 6925 Riverview Avenue Property includes 200 trailer parking spaces and 2,500 car parking spaces for a total of 2,700 parking spaces, resulting in a parking ratio of approximately 3.2 spaces per 1,000 SF.
The 12900 Pecan Park Road Property is an 856,605 SF, Class A industrial warehouse/distribution property located on an approximately 180.56-acre site in Jacksonville, Florida. Interstate 95 and Interstate 295 provides access to the 12900 Pecan Park Road Property, which also provides access to the Jacksonville metro area. Jacksonville International Airport is located within 2.8 miles of the 12900 Pecan Park Road Property. The 12900 Pecan Park Road Property was built-to-suit for Amazon Services in 2017 and serves as an automatic robotic sort facility. The 12900 Pecan Park Road Property includes 8.0% of office space and features 47 dock doors, two drive-in doors and 41-ft clear heights. The 12900 Pecan Park Road Property includes 200 trailer parking spaces and 2,500 parking spaces for a total of 2,700 parking spaces, resulting in a parking ratio of approximately 3.2 spaces per 1,000 SF.
The 6925 Riverview Avenue Property is subject to an industrial revenue bond (the “IRB”) and PILOT lease structure. In July 2016, the previous owner of the 6925 Riverview Avenue Property, RELP Turner, LLC (“RELP”), and the Unified Government of Wyandotte County/Kansas City, Kansas (the “Municipality”) entered into a development agreement (the “Development Agreement”) pursuant to which the Municipality agreed to issue an IRB with a maximum principal amount of $138.01 million, maturing in December 1, 2027. RELP entered into a performance agreement, which granted RELP a 100% abatement of taxes on the 6925 Riverview Avenue Property for calendar years 2018-2027, provided that the IRB remains outstanding, provided that RELP pays $5,000 per year in lieu of taxes for the duration of the tax abatement. RELP leased the 6925 Riverview Avenue Property to the Municipality pursuant to a base lease (the “PILOT Base Lease”); the Municipality leased the 6925 Riverview Avenue Property to RELP pursuant to a lease (the “PILOT Lease” and together with the PILOT Base Lease, the “PILOT Leases”), and RELP subleased the 6925 Riverview Avenue Property to Amazon Services. JDM AMZN KC, LLC’s (the “Kansas Borrower”) sole rent obligations under the PILOT Lease are to pay principal and interest when due under the IRB. RELP purchased the IRB at issuance for
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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$138.01 million and the proceeds were disbursed to RELP as reimbursement for the development costs of the 6925 Riverview Avenue Property. The Kansas Borrower acquired RELP’s interests in the IRB, the IRB bond indenture, the performance agreement, the PILOT Leases and the Development Agreement (collectively, the “PILOT Documents”). Since the Kansas Borrower is the owner of the IRB, there are no cash payments due to any third party under the IRB. The Kansas Borrower has pledged the IRB to the lender as collateral, and a foreclosure on the IRB is subject to the procedures set forth in the PILOT Documents.
As successor-in-interest to RELP under the Development Agreement, the Kansas Borrower will be required to satisfy certain ongoing covenants in order to maintain the tax abatement, including: (1) Amazon Services is required to continuously operate and employ at least 1,000 full time employees until July 31, 2032 at the 6925 Riverview Avenue Property, subject to major casualty and condemnation; and (2) Amazon Services and the borrowers will be required to become dues paying members of the KCK Area Chamber of Commerce and the Wyandotte Econ Dev Corp. If there is a default under the Development Agreement that remains uncured following 90 days’ notice from the Municipality, then the Municipality will be entitled to: (1) receive $1.5 million of liquidated damages from the borrowers, (2) terminate the Development Agreement, and (3) recover the amount of any tax abatement previously received by RELP or the borrowers, including any sales tax exemptions received by RELP, the borrowers or Amazon Services in connection with the IRB (the Development Agreement provided that personal property and services purchased entirely with the proceeds of the IRB for the construction of the 6925 Riverview Avenue Property were exempt from Kansas’s 6.5% sales tax). Potential liability for defaults under the Development Agreement could exceed $30 million, and, following a foreclosure the lender would assume the Kansas Borrower’s obligations under the Development Agreement, as well as the Kansas Borrower’s interests under the PILOT Documents and in the IRB. However, under the Amazon Services lease for the 6925 Riverview Avenue Property (the “Kansas Amazon Lease”), Amazon Services agrees to perform those obligations of the Kansas Borrower under the Development Agreement that are under the tenant’s control, and Amazon Services indemnifies the Kansas Borrower for all liability arising from a default by the Kansas Borrower under the Development Agreement, except to the extent the same relates to a default by the landlord under the Amazon Lease. This indemnity is guaranteed by Amazon Services’ guarantor, Amazon.com, Inc.
Amazon.com Services, Inc. (1,713,210 SF; 100.0% of NRA; 100.0% of UW Base Rent). Incorporated in 2002 and based in Seattle, Washington, Amazon Services distributes consumer products, which are later sold by Amazon through its website. Amazon Services operates as a wholly owned subsidiary of Amazon.com (“Amazon”). Founded in 1994, Amazon is a multinational technology company focusing in e-commerce, cloud computing, and artificial intelligence, and is headquartered in Seattle, Washington. At the Amazon Industrial Portfolio Properties, Amazon Services leases in aggregate 1,713,210 SF under triple net leases (except for certain landlord obligations as set forth in the Amazon Industrial Portfolio Loan Combination documents) expiring on July 31, 2032. The Amazon Services leases are guaranteed by Amazon.com, Inc. and each has four, five-year renewal options remaining.
COVID-19 Update. As of September 1, 2020 the Amazon Industrial Portfolio Properties are open. For June, July, and August 2020, 100% of the UW Base Rent payments were collected. As of September 1, 2020, the Amazon Industrial Portfolio Loan Combination is not subject to any modification or forbearance request.
The following table presents certain information relating to the tenants at the Amazon Industrial Portfolio Properties:
Tenant Summary(1)
Tenant Name | Credit Rating (Fitch/MIS/S&P)(2) | Tenant GLA | % of GLA | UW Base Rent | % of Total | UW Base | Lease | Renewal / | ||||
Amazon (Kansas City) | A+ / A2 / AA- | 856,605 | 50.0% | $5,139,080 | 49.6% | $6.00 | 7/31/2032 | 4, 5-year options | ||||
Amazon (Jacksonville) | A+ / A2 / AA- | 856,605 | 50.0 | 5,216,359 | 50.4 | 6.09 | 7/31/2032 | 4, 5-year options | ||||
Total Occupied | 1,713,210 | 100.0% | $10,355,439 | 100.0% | $6.04 | |||||||
Vacant | 0 | 0.0 | 0 | 0.0 | 0.00 | |||||||
Totals / Wtd. Avg. | 1,713,210 | 100.0% | $10,355,439 | 100.0% | $6.04 |
(1) | Based on the underwritten rent roll dated as of September 1, 2020 with rent steps through September 2021. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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The following table presents certain information relating to the lease rollover schedule for the Amazon Industrial Portfolio Properties based on initial lease expiration dates:
Lease Expiration Schedule(1)
Year Ending | Expiring Owned | % of Owned | Cumulative % of | UW | % of Total UW | UW Base Rent | # of Expiring | |||||||
MTM | 0 | 0.0% | 0.0% | $0 | 0.0% | $ 0.00 | 0 | |||||||
2020 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2021 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2022 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2023 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2024 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2025 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2026 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2027 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2028 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2029 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2030 | 0 | 0.0 | 0.0% | 0 | 0.0 | 0.00 | 0 | |||||||
2031 & Thereafter | 1,713,210 | 100.0 | 100.0% | 10,355,439 | 100.0 | 6.04 | 2 | |||||||
Vacant | 0 | 0.0 | 100.0% | NAP | NAP | NAP | NAP | |||||||
Total | 1,713,210 | 100.0% | $10,355,439 | 100.0% | $6.04 | 2 |
(1) | Based on the underwritten rent roll dated as of September 1, 2020 with rent steps through September 2021. |
The following table presents certain information relating to historical occupancy for the Amazon Industrial Portfolio Properties:
Historical Leased %(1)
2018 | 2019 | As of 9/1/2020 |
100.0% | 100.0% | 100.0% |
(1) | As provided by the borrowers and reflects year-end occupancy for the indicated year ended December 31 unless specified otherwise. |
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow for the Amazon Industrial Portfolio Properties: |
Cash Flow Analysis(1)(2)
Underwritten(3) | Underwritten | |||
Base Rental Revenue | $10,355,439 | $6.04 | ||
Contractual Rent Steps(4) | 1,011,476 | 0.59 | ||
Reimbursement Revenue | 2,281,427 | 1.33 | ||
Gross Revenue | $13,648,341 | $7.97 | ||
Vacancy Loss | (272,967) | (0.16) | ||
Effective Gross Revenue | $13,375,374 | $7.81 | ||
Real Estate Taxes | $1,445,951 | $0.84 | ||
Insurance | 539,304 | 0.31 | ||
Management Fee | 155,332 | 0.09 | ||
Other Operating Expenses | 140,840 | 0.08 | ||
Total Operating Expenses | $2,281,427 | $1.33 | ||
Net Operating Income | $11,093,948 | $6.48 | ||
Replacement Reserves | 171,321 | 0.10 | ||
TI/LC | 0 | 0.00 | ||
Net Cash Flow | $10,922,627 | $6.38 | ||
Occupancy | 100.0% | |||
NOI Debt Yield(5) | 8.0% | |||
NCF DSCR(5) | 2.38x |
(1) | Certain items such as straight line rent, interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring or non-operating items were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | Historical financials are unavailable as the Amazon Industrial Portfolio Properties were acquired at origination. |
(3) | Underwritten cash flow is based on the underwritten rent roll dated September 1, 2020 inclusive of rent steps through September 2021. |
(4) | Rent steps reflect the present value of rent steps through the entire lease term. |
(5) | Calculated based on the aggregate outstanding balance of the Amazon Industrial Portfolio Loan Combination. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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■ | Appraisals. According to the appraisals, the Amazon Industrial Portfolio Properties had an aggregate “as-is” portfolio appraised value of $215,000,000 as of July 13, 2020. |
■ | Environmental Matters. According to the Phase I environmental reports dated as of July 21, 2020, there are no recognized environmental conditions or recommendations for further action at the Amazon Industrial Portfolio Properties. |
■ | Market Overview and Competition. The Amazon Industrial Portfolio Properties consist of two properties in two states. |
Kansas City Industrial Market (49.6% of Portfolio Underwritten Base Rent): According to the appraisal, the 6925 Riverview Avenue Property is located within the Kansas City industrial market and the Kansas City, Kansas submarket. As of first quarter 2020, the Kansas City industrial market had approximately 312.1 million SF of industrial space with a vacancy rate of 4.7% and asking rent of approximately $5.66 per SF. As of first quarter 2020, the Kansas City industrial market reported positive absorption of 2.8 million SF, 6.6 million SF under construction and 434,000 SF completed. The Kansas City, Kansas submarket reported 1.8 million SF of space with a vacancy rate of 0.8% and asking rent of approximately $5.61 per SF, as of first quarter 2020. The Kansas City, Kansas submarket reported negative absorption of 14,500 SF, 406,000 under construction and no new completions.
Jacksonville Industrial Market (50.4% of Portfolio Underwritten Base Rent): According to the appraisal, the 12900 Pecan Park Road Property is located within the Jacksonville industrial market and the Northeast submarket. As of first quarter 2020, the Jacksonville industrial market had approximately 143.0 million SF of industrial space with a vacancy rate of 5.0% and asking rent of approximately $7.64 per SF. As of first quarter 2020, the Jacksonville industrial market reported positive absorption of 401,446 SF, 704,581 SF under construction and 1.4 million SF completed. The Northeast submarket reported 4.7 million SF of space with a vacancy rate of 6.2% and asking rent of approximately $5.90 per SF, as of first quarter 2020. The Northeast submarket reported positive absorption of 700 SF, no new construction and 279,000 SF completed.
6925 Riverview Avenue Comparable Industrial Leases(1) | ||||||
Property Name / Location | Year Built | Tenant Name | Tenant Leased Space | Lease Date | Lease Term (years) | Base Rent per SF |
6925 Riverview Avenue Kansas City, KS | 2017 | Amazon.com Services, LLC(2) | 856,605(2) | Jul 17(2) | 15.1(2) | $6.00(2) |
14901 Andrews Road Kansas City, MO | 2016 | Honeywell International | 275,193 | Jun 20 | 5.0 | $4.20 |
Inland Port V Gardner, KS | 2016 | Hostess | 765,000 | Dec 19 | 6.5 | $3.92 |
I-35 Logistics Park Building C Olathe, KS | 2018 | IT Renew | 315,000 | Dec 19 | 12.0 | $3.90 |
Lenexa Logistics Centre North 1 Lenexa, KS | 2017 | Turns5 Inc. | 363,063 | Aug 18 | 5.0 | $3.87 |
ELHC VIII Edgerton, KS | 2017 | Hopkins Manufacturing | 406,426 | Jun 18 | 16.0 | $3.72 |
I-35 Logistics Park Building C Olathe, KS | 2018 | KGP | 251,873 | Jan 18 | 7.0 | $4.05 |
(1) | Source: Appraisal. |
(2) | Based on the underwritten rent roll dated as of September 1, 2020. Base Rent per SF includes rent steps through September 2021. |
12900 Pecan Park Road Comparable Industrial Leases(1) | ||||||
Property Name / Location | Year Built | Tenant Name | Tenant Leased Space | Lease Date | Lease Term (years) | Base Rent per SF |
12900 Pecan Park Road Jacksonville, FL | 2017 | Amazon.com Services, LLC(2) | 856,605(2) | Aug 17(2) | 15.0(2) | $6.09(2) |
13483 103rd Street Jacksonville, FL | 2019 | Wayfair | 1,012,570 | Jan 20 | 10.3 | $4.10 |
6282 Imeson Road – Bld 1 Jacksonville, FL | 2019 | Winsupply | 272,480 | Aug 19 | 10.3 | $4.73 |
10501 Cold Storage Road – Building C Jacksonville, FL | 2019 | Larose Industrial | 300,000 | Jul 19 | 10.7 | $4.75 |
Sears Logistics Services Jacksonville, FL | 2008 | GE Appliances | 815,203 | Jun 19 | 10.0 | $4.24 |
11530 New Berlin Road Jacksonville, FL | 2009 | Gildan | 305,000 | Nov 18 | 5.0 | $3.75 |
(1) | Source: Appraisal. |
(2) | Based on the underwritten rent roll dated as of September 1, 2020. Base Rent per SF includes rent steps through September 2021. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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■ | The Borrowers. The borrowers are JDM AMZN KC, LLC and JDM AMZN JAX, LLC, each a Delaware limited liability company. Each borrower is structured to be a single purpose bankruptcy-remote entity, having two independent directors in its organizational structure. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the Amazon Industrial Portfolio Loan Combination. |
The borrower sponsor and non-recourse carveout guarantor is JDM Real Estate Funds, LLC (“JDM REF”), a real estate investment fund manager that primarily acquires and holds properties leased to credit tenants through triple-net leases throughout the United States. JDM REF focuses on real estate that is operated by a single tenant, and its diversified portfolio of triple-net leased assets includes corporate offices, data centers, and an industrial facility. JDM REF was founded and is controlled by Jerry Colangelo, David Eaton and Mel Shultz, who have led the business together for over 37 years and who collectively possess over 125 years of real estate, sports and entertainment, development and operational experience.
■ | Escrows. |
Tax Reserve. The borrowers are required to deposit into a real estate tax reserve, on a monthly basis during the continuance of an Amazon Industrial Portfolio Trigger Period, 1/12 of the estimated annual real estate taxes (initially estimated at $120,496), unless Amazon Services pays the real estate taxes directly as required by the Amazon Industrial Portfolio Loan Combination documents or reimburses the borrowers for the same. If such Amazon Industrial Portfolio Trigger Period is caused solely by an Amazon Industrial Portfolio Lease Sweep Period, then the borrowers will only be required to deposit the portion of taxes attributable to the Amazon Industrial Portfolio Properties or property causing such Amazon Industrial Portfolio Lease Sweep Period, and in each case, the amount required to be deposited with take into account the PILOT documents.
Insurance Reserve. The borrowers are required to deposit into an insurance reserve, on a monthly basis during the continuance of an Amazon Industrial Portfolio Trigger Period, 1/12 of estimated insurance premiums, unless Amazon Services has obtained the insurance policies required by the Amazon Industrial Portfolio Loan Combination documents and is paying the insurance premiums or reimbursing the borrowers for the same. If such Amazon Industrial Portfolio Trigger Period is caused solely by an Amazon Industrial Portfolio Lease Sweep Period, then the borrowers will only be required to deposit the portion of insurance premiums attributable to the Amazon Industrial Portfolio Properties or Property causing such Amazon Industrial Portfolio Lease Sweep Period.
TI/LC Reserve. The borrowers are required to deposit into a replacement reserve, on a monthly basis during the continuance of an Amazon Industrial Portfolio Trigger Period, an amount equal to approximately $71,383.75 in the aggregate for TI/LC reserves. If such Amazon Industrial Portfolio Trigger Period is caused solely by an Amazon Industrial Portfolio Lease Sweep Period, then the borrowers will only be required to deposit the portion of the TI/LC reserve attributable to the Amazon Industrial Portfolio Properties or Property causing such Amazon Industrial Portfolio Lease Sweep Period.
Capital Expenditure Reserve. The borrowers are required to deposit into a rollover reserve, on a monthly basis during the continuance of an Amazon Industrial Portfolio Trigger Period, an amount equal to approximately $14,276.75 in the aggregate for Capital Expenditure reserves. If such Amazon Industrial Portfolio Trigger Period is caused solely by an Amazon Industrial Portfolio Lease Sweep Period, then the borrowers will only be required to deposit the portion of the Capital Expenditure reserves attributable to the Amazon Industrial Portfolio Properties or Property causing such Amazon Industrial Portfolio Lease Sweep Period.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #3: AMAZON INDUSTRIAL PORTFOLIO
■ | Lockbox and Cash Management. The Amazon Industrial Portfolio Loan Combination is structured with a hard lockbox and springing cash management. The borrowers were required to establish a lockbox account and deliver notices to each tenant within five business days following the opening of the lockbox account directing each tenant to remit all payments under the applicable lease directly to the lockbox account. On each business day during the continuance of an Amazon Industrial Portfolio Trigger Period (as defined below), all amounts in the deposit account are required to be remitted to a lender-controlled cash management account. Upon the occurrence and during the continuance of an Amazon Industrial Portfolio Trigger Period, all funds in the cash management account are to be applied and disbursed for payment of taxes, insurance premiums, operating expenses, debt service, reserves, and other amounts payable in accordance with the Amazon Industrial Portfolio Loan Combination documents, in each case, as and to the extent required by the terms of the Amazon Industrial Portfolio Loan Combination documents, and all excess cash flow funds remaining in the cash management account after the application of such funds in accordance with the Amazon Industrial Portfolio Loan Combination documents are required to be held by the lender in an excess cash flow reserve account as additional collateral for the Amazon Industrial Portfolio Loan Combination but may be subject to certain disbursements to the borrowers for tenant improvements and leasing commissions in accordance with the terms of the Amazon Industrial Portfolio Loan Combination documents. Upon the occurrence and during the continuance of an event of default under the Amazon Industrial Portfolio Loan Combination documents, the lender may apply funds to the debt in such priority as it may determine. |
An “Amazon Industrial Portfolio Trigger Period” means any period during which (i) the debt yield for the Amazon Industrial Portfolio Properties falls below 6.22% as of the end of any fiscal quarter, until the debt yield exceeds 6.22% as of the end of two consecutive fiscal quarters thereafter; or (ii) an Amazon Industrial Portfolio Lease Sweep Period (as defined below) is continuing or (iii) a default is continuing under any new mezzanine loan. The borrowers will be permitted to avoid an Amazon Industrial Portfolio Trigger Period by releasing an Amazon Industrial Portfolio Property in connection with a partial defeasance of the Amazon Industrial Portfolio Loan Combination, in accordance with the conditions described in “—Release of Collateral” herein.
An “Amazon Industrial Portfolio Lease Sweep Period” means any period (x) commencing on the date (i) Amazon Services surrenders, cancels, terminates or materially modifies an applicable lease (other than pursuant to a unilateral right granted to it under such lease as of the origination date or an amendment to such lease in accordance with the Amazon Industrial Portfolio Loan Combination documents after the origination date); (ii) Amazon Services defaults in the payment of rent, property taxes or insurance premiums (after the expiration of any notice and cure periods) under an applicable lease; (iii) Amazon Services or its lease guarantor files or is the subject of, any bankruptcy or similar insolvency proceeding or has its assets made subject to the jurisdiction of a bankruptcy court; (iv) Amazon Services is no longer rated at least “BBB+” (or the equivalent) by at least one of S&P, Moody’s or Fitch; or (v) the borrowers receive a written notice of default under the PILOT Leases or any documents relating to the IRB that is also a PILOT document under the Amazon Industrial Portfolio Loan Combination documents, which default is not cured or waived within 30 days of such receipt, at any time during which Amazon Services has gone dark in all or substantially all of the space demised by the lease at the 6925 Riverview Avenue Property. An Amazon Industrial Portfolio Lease Sweep Period will not occur if Amazon Services continues to pay unabated rent, while vacant or dark in its leased premises, not operating in all or some of its leased premises, or subleasing or licensing any of the space demised within the applicable lease. An Amazon Industrial Portfolio Lease Sweep Period will end on the date (a) in the case of clause (i) above, the borrowers enter into one or more Qualified Replacement Leases (as defined below) for at least 90% of the applicable premises or for at least 90% of the net effective rent attributable to such premises; (b) in the case of clause (ii) above, either (x) such default has been cured and accepted by the borrowers or (y) the conditions described under clause (a) above are satisfied; (c) in the case of clause (iii) above, either (x) Amazon Services assumes the applicable lease or (y) the conditions described under clause (a) above are satisfied; (d) in the case of clause (iv) above, Amazon Services has a rating of at least “BBB+” or the equivalent from at least one of S&P, Moody’s or Fitch; and (e) in the case of clause (v) above, the default under the applicable PILOT lease or document relating to the IRB has been waived by the Municipality or cured by the borrowers or Amazon Services, or the borrowers or Amazon Services have paid all penalties and/or damages relating to such default.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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“Qualified Replacement Lease” means a lease that (i) has a term of no less than 10 years; (ii) is entered into on an arms-length basis with a tenant unaffiliated with the borrowers that is either (x) rated at least “BBB-” by S&P or Fitch (or is guaranteed by an entity with such ratings), or (y) otherwise reasonably acceptable to the lender; (iii) contains economic terms that are not less favorable than market terms prevailing at the time such lease is entered into; (iv) does not contain an option or preferential right to purchase all or any portion of the applicable Amazon Industrial Portfolio Property, unless such option is subordinate to the mortgage as defined within the Amazon Industrial Portfolio Loan Combination documents. Provided that no event of default under the Amazon Industrial Portfolio Loan Combination documents is ongoing, any lease that does not cover more than 10% of the net rentable area at an Amazon Industrial Portfolio Property will not require the lender’s consent or approval so long as it complies with the requirements above (other than clause (ii)). Any lease that does not require the lender’s approval is required to be with a tenant whose identity and creditworthiness is appropriate for tenancy in a property of comparable quality as the applicable Amazon Industrial Portfolio Property (as reasonably determined by the borrowers).
■ | Property Management. The Amazon Industrial Portfolio Properties are managed on behalf of the borrowers by CBRE, Inc. |
■ | Release of Collateral. At any time (x) on or after the first payment date following the earlier to occur of (i) July 30, 2023 and (ii) the second anniversary of the date on which the last note of the Amazon Industrial Portfolio Loan Combination is to be securitized and (y) prior to August 1, 2027, the borrowers are permitted to obtain the release of the 6925 Riverview Avenue Property from the lien of the mortgage upon, among other conditions, (a) payment of the applicable Release Price (as defined below), (b) no event of default under the Amazon Industrial Portfolio Loan Combination documents is continuing, (c) after giving effect to the release, the debt yield is no less than the greater of (x) the debt yield immediately prior to such release and (y) 7.44%, and (d) delivery of a customary REMIC opinion as and to the extent that the same is required pursuant to the terms of the Amazon Industrial Portfolio Loan Combination documents. |
“Release Price” means an amount equal to the greater of (x) 110% of the allocated loan amount for the applicable Amazon Industrial Portfolio Property or (y) the portion of the net proceeds received by the applicable borrower in connection with the sale of such Amazon Industrial Portfolio Property that, when applied to the repayment of the Amazon Industrial Portfolio Loan Combination, would result in a loan-to-value ratio of no greater than 65% (based on a new appraisal).
■ | Current Mezzanine or Secured Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. None. |
■ | Terrorism Insurance. The borrowers are required to maintain terrorism insurance in an amount equal to the full replacement cost of the Amazon Industrial Portfolio Properties, as well as 18 months of rental loss and/or business interruption coverage, together with a 12-month extended period of indemnity following restoration. If TRIPRA is no longer in effect, then the borrowers’ requirement will be capped at insurance premiums equal to two times the amount of insurance premiums payable in respect of the property and business interruption/rental loss insurance required under the related Amazon Industrial Portfolio Loan Combination documents. See “Risk Factors—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
34
LOAN #4: MGM GRAND & MANDALAY BAY
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
35
LOAN #4: MGM GRAND & MANDALAY BAY
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
36
LOAN #4: MGM GRAND & MANDALAY BAY
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
37
LOAN #4: MGM GRAND & MANDALAY BAY
Mortgaged Property Information | Mortgage Loan Information | ||||||||||||||||||||
Number of Mortgaged Properties(1) | 2 | Loan Seller(7) | CREFI/GACC | ||||||||||||||||||
Location (City/State) | Las Vegas, Nevada | Cut-off Date Balance(8) | $80,000,000 | ||||||||||||||||||
Property Type | Hospitality | Cut-off Date Balance per Room(8) | $8,207.81 | ||||||||||||||||||
Size (Rooms)(2) | 9,748 | Percentage of Initial Pool Balance | 7.2% | ||||||||||||||||||
Total TTM Occupancy as of 6/30/2020(2) | 87.5% | Number of Related Mortgage Loans(6) | 2 | ||||||||||||||||||
Owned TTM Occupancy as of 6/30/2020(2) | 87.5% | Type of Security | Fee Simple | ||||||||||||||||||
Year Built / Latest Renovation(3) | Various / NAP | Mortgage Rate | 3.55800% | ||||||||||||||||||
Appraised Value(4) | $4,600,000,000 | Original Term to Maturity (Months)(6) | 120 | ||||||||||||||||||
Appraisal Date(4) | 1/10/2020 | Original Amortization Term (Months) | NAP | ||||||||||||||||||
Borrower Sponsor(5) | BREIT Operating Partnership L.P.; MGM Growth Properties Operating Partnership LP | Original Interest Only Period (Months) | 120 | ||||||||||||||||||
Property Management | Self-Managed | First Payment Date | 4/5/2020 | ||||||||||||||||||
Anticipated Repayment Date(6) | 3/5/2030 | ||||||||||||||||||||
Final Maturity Date(6) | 3/5/2032 | ||||||||||||||||||||
Underwritten Revenues | $2,106,295,488 | ||||||||||||||||||||
Underwritten Expenses | $1,586,215,135 | ||||||||||||||||||||
Underwritten Net Operating Income (NOI) | $520,080,353 | Escrows(9) | |||||||||||||||||||
Underwritten Net Cash Flow (NCF) | $487,305,761 | Upfront | Monthly | ||||||||||||||||||
Cut-off Date LTV Ratio(4)(8) | 35.5% | Taxes | $0 | $0 | |||||||||||||||||
Maturity Date LTV Ratio(4)(6)(8) | 35.5% | Insurance | $0 | $0 | |||||||||||||||||
DSCR Based on Master Lease Rent(1)(8) | 4.95x | Replacement Reserve | $0 | $0 | |||||||||||||||||
Debt Yield Based on Master Lease Rent(1)(8) | 17.9% | Other | $0 | $0 | |||||||||||||||||
Sources and Uses | |||||||||||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||||||||||
Senior Loan Amount | $1,634,200,000 | 35.4% | Purchase Price | $4,600,000,000 | 99.6% | ||||||||||||||||
Subordinate Loan Amount | 1,365,800,000 | 29.6 | Closing Costs | 17,792,163 | 0.4 | ||||||||||||||||
Principal’s New Cash Contribution(10) | 1,617,792,163 | 35.0 | |||||||||||||||||||
Total Sources | $4,617,792,163 | 100.0% | Total Uses | $4,617,792,163 | 100.0% | ||||||||||||||||
(1) | On January 14, 2020, MGM Growth Properties Operating Partnership LP (“MGP OP”), an affiliate of BREIT Operating Partnership L.P. (“BREIT OP”; and together with MGP OP, the “Sponsors”, or the “Borrower Sponsors”) and certain other parties entered into an agreement to, among other things, form a joint venture (50.1% indirectly owned by MGP OP and 49.9% indirectly owned by BREIT OP) (the “Joint Venture”) to acquire the MGM Grand & Mandalay Bay Properties (as defined below) for a purchase price of $4.60 billion ($471,892 per room). Contemporaneously with the acquisition, the MGM Grand & Mandalay Bay Borrowers (as defined below), as landlord entered into a 30-year triple-net master/operating lease (the “MGM/Mandalay Lease” or “Master Lease”) with two, 10-year renewal options with MGM Lessee II, LLC (“MGM Tenant”), a wholly owned subsidiary of MGM Resorts International (“MGM”). Financial and other information presented in this Term Sheet is presented on a “look through” basis, based on the rents and receipts of the MGM Grand & Mandalay Bay Properties. For so long as the MGM/Mandalay Lease is in effect, the MGM Grand & Mandalay Bay Borrowers will be entitled only to the rent due under the MGM/Mandalay Lease and not to the underlying rent and other income from the MGM Grand & Mandalay Bay Properties. The Cut-off Date LTV Ratio, Maturity Date LTV Ratio, DSCR Based on Master Lease Rent, and Debt Yield Based on Master Lease Rent presented in the chart above are based on the initial MGM/Mandalay Lease annual rent of $292,000,000. The DSCR Based on NCF, and the Debt Yield based on NCF for the MGM Grand & Mandalay Bay A Notes (based on the U/W NCF of $487.3 million) are 8.27x and 29.8%, respectively. On May 1, 2020, MGM Resorts International reported that, as a result of the temporary closure of its domestic properties (which includes the MGM Grand & Mandalay Bay Properties) following the outbreak of COVID-19, its domestic properties (which includes the MGM Grand & Mandalay Bay Properties) were effectively generating no revenue, there were high levels of room and convention cancellation through the third quarter of 2020, and that, following the re-opening of its domestic properties (which includes the MGM Grand & Mandalay Bay Properties), it expected weakened demand in light of consumer fears and general economic uncertainty, among other things. The June 2020 TTM financials presented above reflect the suspension of operations at the MGM Grand & Mandalay Bay Properties from March 17, 2020 through the end of the first calendar quarter of 2020 (although operations at the MGM Grand Property remained suspended until June 4, 2020 and operations at The Shoppes at Mandalay Bay Place and the Mandalay Bay resort remained suspended through June 24, 2020 and June 30, 2020, respectively). The adjusted June 2020 TTM EBITDAR of $381.2 million takes into account an adjustment for a combined net extraordinary loss add-back of approximately $82.4 million during the June 2020 TTM period (primarily comprised of employee payroll expenses and corporate allocations and net of a combined extraordinary gain of approximately $0.7 million related to a reversal of certain accrued benefit expenses) related to the temporary closure of the MGM Grand & Mandalay Bay Properties following the outbreak of COVID-19. The Lender UW presented above is based on 2019 financials, which reflects a full year of uninterrupted operations at the MGM Grand & Mandalay Bay Properties. Please see the “Cash Flow Analysis” and “Historical Performance” tables herein, and the footnotes thereto, for more detailed underwritten cash flow information. |
(2) | Size and Occupancy are based solely on the hotel at the MGM Grand & Mandalay Bay Properties. As of the trailing 12 months ending June 30, 2020, approximately 29.5% of revenues were generated by rooms, 19.7% of revenues were from gaming, 28.4% from food & beverage and 22.4% from other sources. |
(3) | The MGM Grand Property (as defined below) was built in 1993 and the Mandalay Bay Property (as defined below) was built in 1999. The MGM Grand Property has benefited from capital investment of approximately $480.0 million (approximately $96,000 per room) since 2010, $144.0 million of which was spent on a full rooms’ renovation from 2010 to 2013. Additionally, approximately $118.9 million was recently spent on an expansion and renovation of the convention center completed in December 2018, which is expected to expand the group business at the MGM Grand Property. The Mandalay Bay Property (including the Delano) underwent a substantial rooms’ renovation for approximately $159.7 million from 2012 to 2016 and, inclusive of the Four Seasons, has received a total of approximately $510.6 million (approximately $107,500 per room) of capital investment since 2010. |
(4) | The Appraised Value of $4,600,000,000 as of January 10, 2020, set forth above is the appraised value solely with respect to real property at the MGM Grand & Mandalay Bay Properties, excluding personal property and intangible property attributable to the MGM Grand & Mandalay Bay Properties (the “Aggregate Real Property Appraised Value”). The appraisal also includes an “As Leased-Sale-Leaseback Appraised Value,” which is equal to the Aggregate Real Property Appraised Value. The appraised value of $7,352,600,000 (“Aggregate As-Is Appraised Value”) as of January 10, 2020, includes personal property and intangible property attributable to the MGM Grand & Mandalay Bay Properties. The personal property and intangible property relating to the MGM Grand & Mandalay Bay Properties is owned by the MGM Tenant or certain sublessees at the MGM Grand & Mandalay Bay Properties that are wholly owned subsidiaries of MGM (the “MGM/Mandalay Operating Subtenants”) (as more particularly provided in the Master Lease), which granted a security interest in certain property of the MGM Tenant and the MGM/Mandalay Operating Subtenants (with certain exclusions, including an exclusion for the intellectual property of MGM Tenant as more particularly described in the Master Lease); and provided that the FF&E is only transferred to the MGM Grand & Mandalay Bay Borrowers at no cost in the event of a termination of the Master Lease due to an event of default by the MGM Tenant thereunder) in favor of the MGM Grand & Mandalay Bay Borrowers, and such security interest was collaterally assigned by the MGM Grand & Mandalay Bay Borrowers to the mortgage lender. The Cut-off Date LTV Ratio and Maturity Date LTV Ratio based on the Aggregate As-Is Appraised Value are 22.2% and 22.2%, respectively, based on the MGM Grand & Mandalay Bay Senior Loan (as defined below). The Cut-off Date LTV Ratio and Maturity Date LTV Ratio based on the Aggregate As-Is Appraised Value are 40.8% and 40.8%, respectively, based on the MGM Grand & Mandalay Bay Loan Combination (as defined below). |
(5) | The Borrower Sponsors are affiliated with the borrowers of the mortgage loan identified on Annex A to the Preliminary Prospectus as BX Industrial Portfolio, which has a Cut-off Date Balance of $85.0 million. |
(6) | The MGM Grand & Mandalay Bay Loan (as defined below) is part of the MGM Grand & Mandalay Bay Loan Combination (as defined below), which is comprised of (i) 24 pari passu senior promissory notes with an aggregate Cut-off Date balance of $1,634,200,000 (the “MGM Grand & Mandalay Bay Senior Notes,” and collectively, the “MGM Grand & Mandalay Bay Senior Loan”) and (ii) 24 promissory notes with an aggregate Cut-off Date balance of $1,365,800,000 consisting of multiple subordination levels, which are subordinate to the MGM Grand & Mandalay Bay Senior Notes (the “MGM Grand & Mandalay Bay Junior Notes”). The MGM Grand Property has an allocated mortgage loan amount (“ALA”) of $1,635,000,000 and the Mandalay Bay Property has an ALA equal to $1,365,000,000. |
(7) | The MGM Grand & Mandalay Bay Loan Combination is structured with an Anticipated Repayment Date (“ARD”) of March 5, 2030 and a final maturity date of March 5, 2032. After the ARD, the following structure will apply: (i) the interest rate will increase by 200 basis points over the greater of (x) 3.55800%, and (y) (1) the ARD Treasury Note Rate (as defined below) in effect on the ARD plus (2) 1.77000%, (ii) amounts in the Excess Cash Flow Reserve (as defined below) will be applied first to pay monthly additional interest amounts which, to the extent not paid (such amount not paid, together with accrued interest thereon at the Adjusted Interest Rate (as defined below), the “Accrued Interest”), will be deferred and added to the principal balance of the MGM Grand & Mandalay Bay Loan Combination, and (iii) a full cash flow sweep to the extent of remaining amounts in the Excess Cash Flow Reserve will be applied to the principal of the MGM Grand & Mandalay Bay Loan Combination. The metrics presented above are calculated based on the ARD. |
(8) | The MGM Grand & Mandalay Bay Loan Combination was co-originated by Citi Real Estate Funding Inc. (“CREFI”), Barclays Capital Real Estate Inc. (“BCREI”), Deutsche Bank AG, New York Branch (“DBNY”) and Société Générale Financial Corporation (“SGFC”). CREFI will be contributing Note A-13-2 with an outstanding principal balance of $53,333,333 and GACC will be contributing Note A-15-3 with an outstanding principal balance of $26,666,667 to the Benchmark 2020-B19 securitization trust. |
(9) | See “—Escrows” below. |
(10) | Includes MGM’s approximately $80.0 million of retained equity interest in the MGM Grand & Mandalay Bay Properties after the sale-leaseback, by virtue of operating partnership units in MGP OP issued to MGM on the origination date of the MGM Grand & Mandalay Bay Loan Combination. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
38
LOAN #4: MGM GRAND & MANDALAY BAY
■ | The Mortgage Loan. The mortgage loan (the “The MGM Grand & Mandalay Bay Loan”) is part of a loan combination (the “The MGM Grand & Mandalay Bay Loan Combination”) in the aggregate original principal balance of $3,000,000,000. The MGM Grand & Mandalay Bay Loan Combination is secured by a first mortgage encumbering the borrowers’ fee simple interest in two full service luxury resort and casinos located in Las Vegas, Nevada (the “MGM Grand Property,” and the “Mandalay Bay Property,” and collectively “The MGM Grand & Mandalay Bay Properties”). The MGM Grand & Mandalay Bay Loan Combination was co-originated by CREFI, DBNY, BCREI, and SGFC on February 14, 2020. The MGM Grand & Mandalay Bay Loan Combination is comprised of (i) the MGM Grand & Mandalay Bay Senior Loan, comprised of 24 MGM Grand & Mandalay Bay Senior Notes with an aggregate principal balance of $1,634,200,000, and (ii) the MGM Grand & Mandalay Bay Junior Notes comprised of 24 notes of multiple subordination levels, which are subordinate to the MGM Grand & Mandalay Bay Senior Loan with an aggregate principal balance of $1,365,800,000, each as described in the table below. The MGM Grand & Mandalay Bay Junior Notes are subordinate to the MGM Grand & Mandalay Bay Senior Notes to the extent described in “Description of the Mortgage Pool–The Loan Combinations–The MGM Grand & Mandalay Bay Pari Passu-AB Loan Combination” in the Preliminary Prospectus. The MGM Grand & Mandalay Bay Loan, which is evidenced by the non-controlling notes A-13-2 and A-15-3, has an outstanding principal balance as of the Cut-off Date of $80,000,000 and represents approximately 7.2% of the Initial Pool Balance. Each note evidenced in the MGM Grand & Mandalay Bay Loan Combination has an interest rate of 3.55800% per annum. The borrowers utilized the proceeds of the MGM Grand & Mandalay Bay Loan Combination to acquire the MGM Grand & Mandalay Bay Properties and pay closing costs. The MGM Grand & Mandalay Bay Loan received a credit assessment of BBB+sf by Fitch and AA- by KBRA. |
The MGM Grand & Mandalay Bay Loan Combination has a 10-year interest-only term through the ARD of March 5, 2030. After the ARD, through and including March 5, 2032 (the “Maturity Date”), the following structure would apply: (i) the interest rate will increase by 200 basis points over the greater of (x) 3.55800%, and (y)(1) the ARD Treasury Note Rate in effect on the ARD (such new rate, the “Adjusted Interest Rate”) plus (2) 1.77000%, (ii) amounts in the Excess Cash Flow Reserve (as defined below) will be applied first to pay monthly additional interest amounts which, to the extent not paid, will be deferred (together with interest accrued thereon at the Adjusted Interest Rate) and added to the principal balance of the MGM Grand & Mandalay Bay Loan Combination, and (iii) a full cash flow sweep to the extent of remaining amounts in the Excess Cash Flow Reserve will be applied to principal of the MGM Grand & Mandalay Bay Loan Combination. For the period from the origination date through the ARD, the MGM Grand & Mandalay Bay Senior Notes and Junior Notes accrue at the rate of 3.55800% per annum. The MGM Grand & Mandalay Bay Loan Combination proceeds along with borrower sponsor equity were used to purchase the MGM Grand & Mandalay Bay Properties for $4.6 billion.
“ARD Treasury Note Rate” means the rate of interest per annum calculated by the linear interpolation of the yields, as reported in Federal Reserve Statistical Release H.15 Selected Interest Rates under the heading “U.S. Government Securities/Treasury Constant Maturities” for the business day ending immediately prior to the ARD, of “U.S. Government Securities/Treasury Constant Maturities” with maturity dates (one longer and one shorter) most nearly approximating the Maturity Date. In the event Federal Reserve Statistical Release H.15 Selected Interest Rates is no longer published or in the event Federal Reserve Statistical Release H.15 Selected Interest Rates no longer publishes “U.S. Government Securities/Treasury Constant Maturities”, the mortgage lender will select a comparable publication to determine such “U.S. Government Securities/Treasury Constant Maturities” and the applicable ARD Treasury Note Rate. The mortgage lender’s determination of the ARD Treasury Note Rate will be final absent manifest error.
The MGM Grand & Mandalay Bay Loan Combination had an initial term of 120 months and has a remaining term of 114 months as of the Cut-off Date. The MGM Grand & Mandalay Bay Loan Combination requires payments of interest only until the ARD in March 2030 or the final maturity date in March 2032. Voluntary prepayment of The MGM Grand & Mandalay Bay Loan Combination without payment of a yield maintenance premium is permitted on or after the due date in September 2029. Defeasance of the MGM Grand & Mandalay Bay Loan Combination with certain direct full faith and credit obligations of the United States of America is permitted under the MGM Grand & Mandalay Bay Loan Combination documents at any time after the earlier of (i) February 14, 2023 or (ii) the second anniversary of the securitization of the last note of the MGM Grand & Mandalay Bay Loan Combination.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
39
LOAN #4: MGM GRAND & MANDALAY BAY
Loan Combination Summary | |||||
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece | |
A-13-2, A-15-3 | $80,000,000 | $80,000,000 | Benchmark 2020-B19(1) | No | |
A-13-1, A-15-1 | $65,000,000 | $65,000,000 | Benchmark 2020-B18 | No | |
A-15-2 | $50,000,000 | $50,000,000 | DBJPM 2020-C9 | No | |
A-1, A-2, A-3, A-4 | $670,139 | $670,139 | BX 2020-VIVA | No | |
A-5, A-6, A-7, A-8 | $794,861 | $794,861 | BX 2020-VIV2 | No | |
A-9, A-13-3 | $556,427,334 | $556,027,334 | CREFI(2) | No | |
A-10, A-14-1, A-14-2, A-14-3 | $326,547,000 | $246,547,000 | Barclays Bank PLC(2) | No | |
A-11, A-15-4 | $228,213,666 | $228,213,666 | DBRI(2) | No | |
A-12, A-16-1, A-16-2 | $326,547,000 | $301,547,000 | SGFC(2) | No | |
Total Senior Notes | $1,634,200,000 | $1,634,200,000 | |||
B-1-A, B-2-A, B-3-A, B-4-A, B-1-B, B-2-B, B-3-B, B-4-B(4) | $329,861 | $329,861 | BX 2020-VIVA | No | |
B-5-A, B-6-A, B-7-A, B-8-A, B-5-B, B-6-B, B-7-B, B-8-B(4) | $374,355,139 | $374,355,139 | BX 2020-VIV2 | No | |
B-9-A(4) | $171,886,000 | $171,886,000 | CREFI(2) | No | |
B-10-A(4) | $85,943,000 | $85,943,000 | Barclays Bank PLC(2) | No | |
B-11-A(4) | $85,943,000 | $85,943,000 | DBRI(2) | No | |
B-12-A(4) | $85,943,000 | $85,943,000 | SGFC(2) | No | |
C-1, C-2, C-3, C-4(4) | $561,400,000 | $561,400,000 | BX 2020-VIVA | Yes(3) | |
Total | $3,000,000,000 | $3,000,000,000 |
(1) | CREFI will be contributing Note A-13-2, which has an outstanding principal balance of $53,333,333 to the Benchmark 2020-B19 securitization trust. GACC will be contributing Note A-15-3, which has an outstanding principal balance of $26,666,667 to the Benchmark 2020-B19 securitization trust. |
(2) | Expected to be contributed to one or more future securitization transactions. |
(3) | The initial controlling note is Note C-1, so long as no related control appraisal period with respect to Note C-1 and the related pari passu C notes has occurred and is continuing. If and for so long as a control appraisal period has occurred and is continuing, then the controlling note will be as described under “Description of the Mortgage Pool—The Loan Combinations—The MGM Grand & Mandalay Bay Pari Passu-AB Loan Combination” in the Preliminary Prospectus. |
(4) | The MGM Grand & Mandalay Bay Junior Notes are subordinate to the MGM Grand & Mandalay Bay Senior Notes. |
■ | The Mortgaged Properties. |
MGM Grand (54.5% of Mortgage ALA and Master Lease Rent)
Built in 1993, the MGM Grand Property is a full-service luxury resort and casino property located on the Las Vegas Strip, situated between Tropicana Boulevard and Harmon Avenue. According to World Atlas, the MGM Grand Property is the third largest hotel in the world by room count. The MGM Grand Property is also a recipient of the AAA Four Diamond award. The MGM Grand Property covers approximately 101.9 acres and consists of 4,998 hotel rooms: 4,270 standard rooms, 554 suites, 88 luxury suites, 51 SKYLOFTS suites (excluding one additional office unit), 30 mansion villas (Mediterranean-themed villas targeted for high-end gamblers, celebrities and casino-invited guests on the strip) (the “Mansion Villas”) and four entourage rooms associated with the Mansion Villas. The MGM Grand Property contains approximately 177,268 square feet (“SF”) of casino space, featuring 1,553 slot machines and 128 gaming tables, over 748,000 SF of meeting space, 18 restaurants, an approximately 22,858 SF spa, four swimming pools and approximately 41,800 SF of rentable retail space (featuring 31 retailers). The MGM Grand Property is home to Cirque du Soleil’s “Kà”, an acrobatic theater production that has been in residence at the MGM Grand Property since October 2004. The MGM Grand Property also includes the David Copperfield Theatre, Hakkasan Nightclub and the MGM Grand Garden Arena, which has a seating capacity of over 16,000 and hosts premier concerts, award shows, sporting events including championship boxing, and other special events.
Room sizes range from 346 SF to 11,517 SF and the MGM Grand Property offers one to four bedroom rooms. Standard room amenities include air conditioning, in-room dining service, minibar, telephone, hair dryer, in-room safe, and high-speed internet. SKYLOFTS at MGM Grand, a AAA Four-Diamond, Forbes Five Star hotel, occupies the top two floors of the main building. The hotel has 51 lofts ranging from 1,401 to 6,040 SF per loft. SKYLOFTS is also a member of The Leading Hotels of the World. The Mansion at the MGM Grand Property contains 30 Mansion Villas ranging from 2,358 to 11,517 SF per villa and $5,000 to $35,000 per night.
Since 2010, the MGM Grand Property has benefited from total capital investment of approximately $480.0 million (approximately $96,036 per room). Notable capital expenditures from this time period include an approximately $144.0 million full rooms renovation from 2010 to 2013 and a recent $118.9 million expansion and renovation of the conference center, which was completed in December 2018.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
Mandalay Bay (45.5% of Mortgage ALA and Master Lease Rent)
Built in 1999, the Mandalay Bay Property is a full-service luxury resort and casino property located as the first major resort on the strip to greet visitors arriving by automobile from Southern California. The AAA Four Diamond award winning resort is a premier conference hotel in Las Vegas with approximately 2.2 million SF of convention, ballroom and meeting space, making it the fifth single largest event space in the United States. The Mandalay Bay Property is immediately across Interstate 15 from Allegiant Stadium, the new home stadium of the National Football League’s (“NFL”) Raiders, which was substantially completed on July 31, 2020 and is expected to start being utilized in September 2020. The Mandalay Bay Property covers approximately 124.1 acres and consists of 4,750 hotel rooms. Also included within the Mandalay Bay Property are: (i) the Delano, which is an all-suite hotel tower within the complex and (ii) a Four Seasons hotel, each of which has its own lobby, restaurants and pool and spa. In addition to the significant meeting space, the Mandalay Bay Property contains approximately 152,159 SF of casino space, featuring approximately 1,232 slot machines and 71 gaming tables, 27 total restaurants, an approximately 30,000 SF spa, ten swimming pools and approximately 54,000 SF of rentable retail space featuring 41 retailers. The Mandalay Bay Property is also the home to Cirque du Soleil’s Michael Jackson “ONE”, which has been in residence at the Mandalay Bay Property in an approximately 1,805-seat showroom since 2013, an approximately 12,000-seat special events arena, the House of Blues (which features an arena seating up to 2,500 people) and the Shark Reef Aquarium. Additionally, the Mandalay Bay Property’s expansive pool and beach area plays host to an array of evening open air concerts during the pool season, a large wave pool, and Moorea, a European-style “ultra” beach and Daylight Beach Club.
Room sizes range from 400 to 5,605 SF and the Mandalay Bay Property offers one- to four-bedroom rooms. Standard room amenities include air conditioning, in-room dining service, minibar, telephone, hair dryer, in-room safe, and high-speed internet. Floors 60–62 are designed as penthouse suites, with a penthouse lounge on level 62 for guests staying in the penthouses. Floors numbered 35–39 of the main hotel building are occupied by the five-star and AAA Four-Diamond Four Seasons Hotel Las Vegas. Located at the resort's 43-story second tower, the Delano Las Vegas is comprised of 45 rooms and 1,072 suites. Each suite at the Delano is at least 725 SF.
The Mandalay Bay Property (including the Delano) underwent a substantial rooms’ renovation of approximately $159.7 million (approximately $35,150 per room) from 2012 to 2016 and has received a total of approximately $510.6 million (approximately $107,485 per room) of capital investment since 2010.
Cirque du Soleil performances at the MGM Grand & Mandalay Bay Properties scheduled through September 30, 2020 have been cancelled. On June 29, 2020, Cirque du Soleil Entertainment Group (“Cirque”) announced that it and certain of its affiliated companies filed for protection from creditors under the Companies’ Creditors Arrangement Act in order to restructure its capital structure, which application was granted by the court. On July 16, 2020, Cirque announced that it entered into a new “stalking horse” purchase agreement with a group of existing first lien and second lien secured lenders pursuant to which such lenders would acquire substantially all of Cirque’s assets in settlement of Cirque’s first and second lien debt. Such purchase agreement was approved by the court on July 17, 2020, and served as the new “stalking horse” bid in a SISP supervised by the court and the court-appointed monitor. As of August 18, 2020, it was reported that the lenders’ bid was the highest bid, which requires court approval to take effect.
COVID-19 Update. According to a press release issued on March 15, 2020, MGM announced that it would suspend operations at all of its Las Vegas properties, including the MGM Grand & Mandalay Bay Properties, until further notice, effective as of March 17, 2020, and that casino operations would close on March 16, 2020, followed by hotel operations on March 17, 2020. MGM cited COVID-19 as a pandemic that had intensified in the United States, requiring major collective action to slow its progression. MGM stated that it cancelled all reservations at its Las Vegas properties prior to May 21, 2020. MGM further reported that it incurred substantial operating losses in March 2020 and did not expect to see a material improvement until more is known regarding the duration and severity of the pandemic, including when MGM’s properties can reopen to the public. On May 1, 2020, MGM reported that as a result of the government-mandated closure, its domestic properties (which includes the MGM Grand & Mandalay Bay Properties and several properties which are not part of the collateral for the MGM Grand & Mandalay Bay Loan Combination) were effectively generating no revenue. In addition, MGM Resorts International reported high levels of room and convention cancellation across its domestic properties through the third quarter of 2020 with some tentative re-bookings in the fourth quarter and into 2021, and it indicated that when it is able to re-open its domestic properties, it expects weakened demand in light of continued domestic and international travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty. As of June 4, 2020, the MGM Grand Property was reopened, with limited amenities and certain COVID-19 mitigation procedures. MGM reopened The Shoppes at Mandalay Bay Place on June 25, 2020 and the Mandalay Bay resort on July 1, 2020, both with limited amenities and certain COVID-
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
19 mitigation procedures. On August 28, 2020, several news outlets reported that MGM is expected to lay off approximately 18,000 furloughed workers in the United States, more than one-quarter of its pre-COVID-19 pandemic U.S. workforce, due to the continued impact of the COVID-19 pandemic on MGM’s business.
Revenue Streams. The MGM Grand & Mandalay Bay Properties benefit from a diverse set of revenue streams with a substantial contribution from non-gaming sources (only 18.0% of combined year-end (“YE”) December 2019 revenues derived from casino) and offer nearly 2.8 million SF of combined meeting and convention space.
As of YE December 2019, the MGM Grand Property generated 77.8% of net revenues from rooms, food and beverage, retail, entertainment and other operations. The gaming segment contributed 22.2% of net revenue (approximately $257.9 million), representing a decline from the 2018 level of 29.8% of net revenue (of approximately $365.7 million). A portion of the decline can be attributed to a renovation of the Mansion Villas in 2019, which serve as the MGM Grand Property’s main attractant to high-end gamblers. Nearly all departments at the MGM Grand Property (including rooms, F&B, retail and entertainment) experienced continued growth in the YE December 2019 period despite the decline in casino revenue.
The Mandalay Bay Property has a much smaller casino department as a percentage of total net revenue (12.9% as of YE December 2019) than most casinos on the Las Vegas strip. The Mandalay Bay Property revenues are primarily driven by (i) the focus on group and convention business (according to the appraisal, the Mandalay Bay Property had a 2019 penetration factor of 134.8% for group business) and (ii) the fact that two of the three room types are operated as non-casino focused third party franchises (the Delano and Four Seasons). As of YE December 2019, 64.1% of total revenues at the Mandalay Bay Property were derived from rooms’ revenue (34.1%) and food & beverage revenue (30.0%).
As of YE December 2019, the MGM Grand Property achieved occupancy, ADR and RevPAR of 91.4%, $190.29 and $173.85, respectively. As of YE December 2019, the Mandalay Bay Property achieved occupancy, ADR and RevPAR of 92.8%, $202.98 and $188.40, respectively.
Historical Performance | ||||||||||||||||||
EBITDAR ($ Millions)(1) | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | March 2020 TTM(1) | June 2020 TTM(1) | UW | |
MGM Grand | $329 | $396 | $271 | $214 | $163 | $149 | $181 | $236 | $255 | $281 | $332 | $345 | $372 | $283 | $263 | $220 | $283 | |
Mandalay Bay | $282 | $291 | $251 | $160 | $125 | $169 | $147 | $167 | $176 | $204 | $237 | $260 | $246 | $237 | $224 | $161 | $237 | |
Total Collateral | $611 | $688 | $522 | $374 | $288 | $318 | $327 | $403 | $431 | $485 | $569 | $605 | $617 | $520 | $487 | $381 | $520 | |
Debt Yield(2) | 20.4% | 22.9% | 17.4% | 12.5% | 9.6% | 10.6% | 10.9% | 13.4% | 14.4% | 16.2% | 19.0% | 20.2% | 20.6% | 17.3% | 16.2% | 12.7% | 17.3% | |
Rent Coverage(3) | 2.1x | 2.4x | 1.8x | 1.3x | 1.0x | 1.1x | 1.1x | 1.4x | 1.5x | 1.7x | 1.9x | 2.1x | 2.1x | 1.8x | 1.7x | 1.3x | 1.8x | |
(1) | On May 1, 2020, MGM Resorts International reported in its first quarter Form 10-Q filing that, as a result of the temporary closure of its domestic properties (which includes the MGM Grand & Mandalay Bay Properties) following the outbreak of COVID-19, its domestic properties (which includes the MGM Grand & Mandalay Bay Properties) were effectively generating no revenue, and there were high levels of room and convention cancellation through the third quarter of 2020. The March 2020 TTM financials presented above reflect the suspension of operations at the MGM Grand & Mandalay Bay Properties from March 17, 2020 through the end of the first calendar quarter of 2020. On August 3, 2020, MGM reported in its second quarter Form 10-Q filing that, while throughout May, June and July 2020, it re-opened most of its properties with limited amenities and certain measures to mitigate the spread of COVID-19, such properties (which include the MGM Grand & Mandalay Bay Properties) may be subject to temporary, complete or partial shutdowns in the future, and that it has seen and expects to continue to see weakened demand in light of consumer fears and general economic uncertainty, among other things. The June 2020 TTM financials presented above reflect the operations at the MGM Grand Property, which remained suspended until June 4, 2020 and operations at The Shoppes at Mandalay Bay Place and the Mandalay Bay resort, which remained suspended through June 24, 2020 and June 30, 2020, respectively. The $487 million presented above represents the adjusted March 2020 TTM EBITDAR, which takes into account an adjustment for a combined net extraordinary loss of approximately $20.6 million during the March 2020 TTM period (reflecting primarily operating losses during closure comprised mainly of employee payroll expenses and corporate allocations and net of a combined extraordinary gain of approximately $0.7 million related to a reversal of certain accrued benefit expenses) related to the temporary closure of the MGM Grand & Mandalay Bay Properties following the outbreak of COVID-19. The $381 million presented above represents the adjusted June 2020 TTM EBITDAR, which takes into account an adjustment for a combined net extraordinary loss of approximately $82.4 million during the June 2020 TTM period (reflecting primarily operating losses during closure comprised mainly of employee payroll expenses and corporate allocations and net of a combined extraordinary gain of approximately $0.7 million related to a reversal of certain accrued benefit expenses) related to the temporary closure of the MGM Grand & Mandalay Bay Properties following the outbreak of COVID-19. The Lender UW presented above is based on 2019 financials, which reflects a full year of uninterrupted operations at the MGM Grand & Mandalay Bay Properties. Please see “Cash Flow Analysis” herein, and the footnotes thereto, for more detailed underwritten cash flow information. |
(2) | Debt Yield metrics presented above are based on the MGM Grand & Mandalay Bay Loan Combination Cut-off Date balance of $3.0 billion and the EBITDAR of each respective time period. |
(3) | Rent Coverage ratios presented above are based on the initial Master Lease Rent of $292.0 million and the EBITDAR of each respective time period. |
Historical Performance – MGM Grand(1) | ||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | March 2020 TTM(2) | June 2020 TTM(2) | |
RevPAR | $154 | $162 | $145 | $112 | $112 | $128 | $136 | $138 | $151 | $155 | $162 | $167 | $169 | $174 | $172 | $161 |
Net Revenue ($ bns) | $1.19 | $1.32 | $1.22 | $1.09 | $1.03 | $1.05 | $1.07 | $1.15 | $1.21 | $1.16 | $1.15 | $1.18 | $1.23 | $1.16 | $1.10 | $0.87 |
EBITDAR Margin | 28% | 30% | 22% | 20% | 16% | 14% | 17% | 21% | 21% | 24% | 29% | 29% | 30% | 24% | 24% | 25% |
(1) | Any financial information contained in this Term Sheet for the MGM Grand Property which relates to any period prior to 2015 has not been recast to reflect the adoption of ASC 606 revenue recognition under GAAP and thus, any financial information provided for periods prior to 2015 may not be comparable to periods on or after 2015 with respect to which recasting has been applied. |
(2) | The March 2020 TTM financials presented above reflect the suspension of operations at the MGM Grand & Mandalay Bay Properties from March 17, 2020 through the end of the first calendar quarter of 2020. On August 3, 2020, MGM reported in its second quarter Form 10-Q filing that, while throughout May, June and July 2020, it re-opened most of its properties with limited amenities and certain measures to mitigate the spread of COVID-19, such properties (which include the MGM Grand and Mandalay Bay Properties) may be subject to temporary, complete or partial shutdowns in the future, and that it has seen and expects to continue to see weakened demand in light of consumer fears and general economic uncertainty, among other things. The June 2020 TTM financials presented above reflect the operations at the MGM Grand Property, which remained suspended until June 4, 2020 and operations at The Shoppes at Mandalay Bay Place and the Mandalay Bay resort, which remained suspended through June 24, 2020 and June 30, 2020, respectively. The lender UW presented above is based on 2019 financials, which reflects a full-year of uninterrupted operations at the MGM Grand & Mandalay Bay Properties. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
Historical Performance – Mandalay Bay(1) | ||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | March 2020 TTM(2) | June 2020 TTM(2) | |
RevPAR | $199 | $213 | $193 | $142 | $142 | $160 | $162 | $164 | $176 | $177 | $185 | $186 | $184 | $188 | $188 | $186 |
Net Revenue ($ bns) | $0.99 | $1.02 | $0.95 | $0.79 | $0.78 | $0.84 | $0.78 | $0.86 | $0.95 | $0.94 | $0.97 | $0.98 | $0.97 | $0.94 | $0.90 | $0.67 |
EBITDAR Margin | 29% | 28% | 26% | 20% | 16% | 20% | 19% | 19% | 19% | 22% | 24% | 27% | 25% | 25% | 25% | 24% |
(1) | Any financial information contained in this Term Sheet for the Mandalay Bay Property which relates to any period prior to 2015 has not been recast to reflect the adoption of ASC 606 revenue recognition under GAAP and thus, any financial information provided for periods prior to 2015 may not be comparable to periods on or after 2015 with respect to which recasting has been applied. |
(2) | The March 2020 TTM financials presented above reflect the suspension of operations at the Properties from March 17, 2020 through the end of the first calendar quarter of 2020. On August 3, 2020, MGM reported in its second quarter Form 10-Q filing that, while throughout May, June and July 2020, it re-opened most of its properties with limited amenities and certain measures to mitigate the spread of COVID-19, such properties (which include the MGM Grand and Mandalay Bay Properties) may be subject to temporary, complete or partial shutdowns in the future, and that it has seen and expects to continue to see weakened demand in light of consumer fears and general economic uncertainty, among other things. The June 2020 TTM financials presented above reflect the operations at the MGM Grand Property, which remained suspended until June 4, 2020 and operations at The Shoppes at Mandalay Bay Place and the Mandalay Bay resort, which remained suspended through June 24, 2020 and June 30, 2020, respectively. The lender UW presented above is based on 2019 financials, which reflects a full-year of uninterrupted operations at the MGM Grand & Mandalay Bay Properties. |
Master Lease. The MGM Grand & Mandalay Bay Properties are master leased to MGM Lessee II, LLC (“MGM Tenant”), a wholly-owned subsidiary of MGM under a 30-year, triple-net master and operating lease with two, ten-year renewal options. In turn, the MGM Tenant has subleased a portion of the MGM Grand & Mandalay Bay Properties to each of MGM Grand Hotel, LLC, a Nevada limited liability company (“Grand Operating Subtenant”), Mandalay Bay, LLC, a Nevada limited liability company (“Mandalay Bay Subtenant”) and Mandalay Place, LLC, a Nevada limited liability company (“Mandalay Place Subtenant”; and, together with Grand Operating Subtenant and Mandalay Bay Subtenant, individually or collectively as the context may require, together with any person to whom all or any portion of a Property is sublet by MGM Tenant pursuant to a MGM/Mandalay Operating sublease pursuant to the express terms and conditions of the MGM/Mandalay Lease, each a “MGM/Mandalay Operating Subtenant”). Each MGM/Mandalay Operating Subtenant executed a joinder to the MGM/Mandalay Lease for the purpose of (x) agreeing to be bound by the terms and provisions of the MGM/Mandalay Lease regarding the disposition of any portion of the MGM Tenant’s Property owned by such MGM/Mandalay Operating Subtenant and (y) granting a security interest to the Borrowers in the portion of the MGM Tenant’s pledged property owned by such MGM/Mandalay Operating Subtenant and certain reserve funds under the MGM/Mandalay Lease. The MGM Tenant and each MGM/Mandalay Operating Subtenant is not a borrower or an obligor under the MGM Grand & Mandalay Bay Loan documents.
Under the Master Lease, the MGM Tenant is required to pay to the Borrowers an initial lease rent of $292.0 million per annum ($159.0 million allocated to the MGM Grand Property and $133.0 million allocated to the Mandalay Bay Property, the “Master Lease Rent”), subject to annual increases of (i) 2.0% in years 2 through 15 of the initial lease term, and (ii) thereafter, the greater of 2.0% or CPI (CPI capped at 3.0%) for the remainder of the initial lease term. Additionally, MGM will be required to continue to invest in the MGM Grand & Mandalay Bay Properties, with (x) a minimum aggregate capital investment requirement of 3.5% of actual net revenues every five years (the first such period beginning January 1, 2020 and expiring December 31, 2024, and the second such period beginning January 1, 2021 and expiring December 31, 2025, and each five-year period thereafter on a rolling basis) in the aggregate for the MGM Grand & Mandalay Bay Properties (such amount not to be less than 2.5% of the actual net revenue of any individual Property) (collectively, the “Required CapEx”) and (y) a monthly reserve equal to 1.5% of actual net revenues which may be used for FF&E and on qualifying capital expenditures in satisfaction of the Required CapEx spend. Upon early termination of the Master Lease due to an event of default by MGM Tenant thereunder, the FF&E will be transferred to the Borrowers at no cost.
Beginning with the first full calendar quarter after the origination date for the MGM Grand & Mandalay Bay Loan Combination and continuing thereafter, if either (a) (x) EBITDAR to Rent Ratio (as defined in the Master Lease) for the prior four fiscal quarters is less than 1.60x and (y) MGM’s market cap is less than $6.0 billion or (b) (x) MGM is no longer publicly traded and listed on NYSE, AMEX or NASDAQ and (y) the EBITDAR to Rent Ratio for the prior four fiscal quarters is less than 2.0x, then MGM Tenant will be required to provide one or more letters of credit or fund a cash escrow in an aggregate amount equal to the following year’s rent (taking into account the applicable escalations).
No intellectual property is licensed to the Borrowers and the Borrowers have no option to purchase upon expiration of the Master Lease. Upon the expiration of the Master Lease term or earlier termination of Master Lease, MGM Tenant will be obligated to provide up to 18 months of transition services to permit the continuous and uninterrupted operation of the Property.
MGM (NYSE: MGM, rated Ba3/BB-/BB- by Moody’s, Fitch and S&P) guarantees to the Borrowers the payment and performance of all monetary obligations and certain other obligations of the MGM Tenant under the Master Lease. In addition to the lease guaranty, MGM (in such capacity, “Shortfall Collection Guarantor”) has executed a shortfall guaranty for the benefit of the mortgage lenders for the MGM Grand & Mandalay Bay Loan, pursuant to which MGM has guaranteed to the mortgage lenders the unpaid portion of the initial principal amount of the MGM Grand & Mandalay Bay Loan (without giving effect to any future amendments that may increase the principal balance) and all interest accrued and unpaid thereon.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
For the avoidance of doubt, the Shortfall Collection Guarantor does not guarantee any Accrued Interest or any additional principal as a result of an unpaid Accrued Interest after the ARD. Transfers of interests in MGM are not restricted under the MGM Grand & Mandalay Bay Loan documents and any bankruptcy or other adverse event with respect to the Shortfall Collection Guarantor does not constitute a default under the MGM Grand & Mandalay Bay Loan documents. Neither MGM nor its affiliates (including, without limitation, MGM Tenant) are considered an affiliate of the Borrowers for any purpose under the MGM Grand & Mandalay Bay Loan documents so long as such person does not control the Borrowers. There is no continuing net worth requirement with respect to MGM in connection with the shortfall guaranty. As of the origination of the MGM Grand & Mandalay Bay Loan, neither MGM nor MGM Tenant controlled the Borrowers.
As of December 31, 2019, MGM had a market capitalization of approximately $16.7 billion, full-year 2019 revenue of approximately $12.9 billion and consolidated, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of approximately $3.0 billion. As of March 31, 2020, MGM reported revenue of approximately $2.3 billion for the first quarter of 2020. This represents a 29% decrease to the first quarter of 2019, which was primarily driven by MGM’s temporary suspension of its domestic and Macau casino operations related to the COVID-19 pandemic. MGM had $6.0 billion of cash and cash equivalents as of March 31, 2020, which included $1.8 billion at MGP and $381 million at MGM China. In addition, on April 23, 2020, MGM commenced a private offering of $750 million in aggregate principal amount of 6.75% coupon senior notes due in 2025, which further added to MGM’s cash position. As of June 30, 2020, MGM reported (i) revenue of approximately $290.0 million for the second quarter of 2020 (of which approximately $151.0 million was derived from MGM’s Las Vegas Strip resorts(1)), (ii) a total consolidated liquidity position of $8.1 billion (which includes MGM Resorts, MGM China and MGP and is comprised of cash and cash equivalents of approximately $4.8 billion and approximately $3.3 billion available under certain revolving credit facilities) and (iii) a market capitalization of approximately $8.3 billion. According to MGM’s second quarter 2020 earnings presentation, the Adjusted Property EBITDAR margin across all reopened MGM properties on the Las Vegas Strip (during the period the properties were operating through June 30, 2020) increased by approximately 450 basis points compared to the second quarter of 2019 (calculation methodology presented below)(2).
MGM Tenant is a casino owner-operator for 29 unique hotel offerings totaling over 44,000 rooms across Las Vegas, United States regional markets and Macau. MGM Tenant has managed the MGM Grand & Mandalay Bay Properties for more than 27 and 18 years, respectively.
(1) | Second quarter 2020 revenue of approximately $151.0 million for MGM’s Las Vegas Strip resorts reflects revenue from certain resorts which reopened during the second quarter of 2020 with limited amenities and certain COVID-19 mitigation procedures: the Bellagio (reopened on June 4, 2020), the MGM Grand (reopened on June 4, 2020), New York, New York (reopened on June 4, 2020), Excalibur (reopened on June 11, 2020) and Luxor (reopened on June 25, 2020). The Mandalay Bay, ARIA, Vdara, Mirage and Park MGM resorts were not open during the second quarter of 2020. |
(2) | Second quarter 2020 Adjusted Property EBITDAR calculation methodology: Reflects MGM management's estimates of operating trends for the periods in which the properties were operating (commencing on each respective properties reopening date and calculated through June 30, 2020), compared to the same periods in 2019 using monthly property level financials and internally generated daily operating reports to calculate activity for partial monthly periods, based on the days in the second quarter of 2020 that such properties were opened prior to June 30, 2020, including activity for invitation only customer events prior to reopening to the general public. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
■ | Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow, on an aggregate basis and per room, at The MGM Grand & Mandalay Bay Properties: |
Cash Flow Analysis(1)
2015 | 2016 | 2017 | 2018 | 2019 | TTM June 2020 | Underwritten | Underwritten | |
Hotel Revenue | $576,193,751 | $611,611,719 | $621,671,255 | $619,356,266 | $635,408,160 | $454,847,334 | $635,408,160 | $65,183 |
Casino Revenue | 461,726,103 | 438,253,825 | 459,676,698 | 492,001,712 | 379,532,959 | 304,523,632 | 379,532,959 | $38,934 |
F&B Revenue | 578,021,518 | 598,992,505 | 608,876,978 | 604,859,218 | 629,566,379 | 438,092,332 | 629,566,379 | $64,584 |
Other Revenue | 480,778,051 | 465,818,022 | 471,735,234 | 475,323,334 | 461,787,990 | 345,071,444 | 461,787,990(3) | $47,373 |
Total Revenue | $2,096,719,423 | $2,114,676,071 | $2,161,960,165 | $2,191,540,530 | $2,106,295,488 | $1,542,534,742 | $2,106,295,488 | $216,075 |
Hotel Expense | 230,915,708 | 235,477,994 | 249,304,637 | 255,303,612 | 265,201,312 | 205,510,281 | 265,201,312 | $27,206 |
Casino Expense | 253,918,628 | 213,245,938 | 229,109,011 | 226,996,812 | 223,320,361 | 189,641,029 | 223,320,361 | $22,909 |
F&B Expense | 428,952,166 | 429,128,035 | 433,970,578 | 437,033,184 | 449,487,794 | 329,402,047 | 449,487,794 | $46,111 |
Other Expense | 349,547,741 | 323,328,025 | 322,504,168 | 316,078,620 | 304,747,043 | 225,847,118 | 304,747,043 | $31,263 |
Total Departmental Expense | $1,263,334,243 | $1,201,179,992 | $1,234,888,394 | $1,235,412,228 | $1,242,756,510 | $950,400,475 | $1,242,756,510 | $127,488 |
Total Undistributed Expense(4) | 278,305,919 | 261,847,999 | 247,318,999 | 257,487,307 | 258,119,417 | 215,257,835 | 258,119,417 | $26,479 |
Fixed Charges | 69,781,283 | 82,874,666 | 74,715,564 | 81,271,729 | 85,339,208 | 160,474,389(5) | 85,339,208 | $8,755 |
Total Operating Expenses | $348,087,202 | $344,722,665 | $322,034,563 | $338,759,036 | $343,458,625 | $375,732,224 | $343,458,625 | $35,234 |
EBITDAR | $485,297,978 | $568,773,414 | $605,037,208 | $617,369,266 | $520,080,353 | $381,156,903(7) | $520,080,353 | $53,353 |
FF&E(6) | 0 | 0 | 0 | 0 | 0 | 0 | 32,774,592 | 3,362 |
Net Cash Flow | $485,297,978 | $568,773,414 | $605,037,208 | $617,369,266 | $520,080,353 | $381,156,903(7) | $487,305,761 | $49,990 |
Occupancy | 92.5% | 92.4% | 91.0% | 91.5% | 92.1% | 87.5% | 92.1% | |
EBITDAR Debt Yield | 16.2% | 19.0% | 20.2% | 20.6% | 17.3% | 12.7% | 17.3% | |
EBITDAR DSCR | 1.66x | 1.95x | 2.07x | 2.11x | 1.78x | 1.31x | 1.78x |
(1) | Certain items such as interest expense, interest income, depreciation, amortization, debt service payments and any other non-recurring or non-operating items were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | Based on 9,748 guest rooms. |
(3) | The most recent available breakout of the Signature Condo-Hotel revenue as a component of Other Revenue was from the November 2019 trailing 12-month period. |
(4) | 2018 property administration expense was adjusted for the Mandalay Bay Property to exclude $21.8 million of one-time business interruption proceeds related to the October 1, 2017 shooting at a country concert in Las Vegas. |
(5) | Fixed Charges includes a net extraordinary loss add-back represents a net combined extraordinary loss from the MGM Grand & Mandalay Bay Properties of approximately $82.4 million during the TTM June 2020 period (primarily comprised of employee payroll expenses and corporate allocations and net of a combined extraordinary gain of approximately $0.7 million related to a reversal of certain accrued benefit expenses) related to the temporary closure of the MGM Grand & Mandalay Bay Properties following the outbreak of COVID-19. The TTM June 2020 EBITDAR of approximately $381.2 million represents the combined adjusted EBITDAR as calculated per the Master Lease (after taking into account the extraordinary loss add-back for the TTM June 2020 period). |
(6) | Underwritten FF&E is based on the 1.5% contractual FF&E reserve based on total net revenues (excluding net revenues associated with the Signature Condo-Hotel development at the MGM Grand Property for which FF&E is not reserved under the Master Lease). With respect to the Mandalay Bay Property, 5.0% FF&E Reserve was underwritten for the revenues associated with the closing date Four Seasons Management Agreement. |
(7) | The TTM June 2020 financials presented above reflect the suspension of operations at the Properties from March 17, 2020 through the end of the first calendar quarter of 2020. On August 3, 2020, MGM reported in its second quarter Form 10-Q filing that, while throughout May, June and July 2020, it re-opened most of its properties with limited amenities and certain measures to mitigate the spread of COVID-19, such properties (which include the MGM Grand and Mandalay Bay Properties) may be subject to temporary, complete or partial shutdowns in the future, and that it has seen and expects to continue to see weakened demand in light of consumer fears and general economic uncertainty, among other things. The TTM June 2020 financials presented above reflect the operations at the MGM Grand Property, which remained suspended until June 4, 2020 and operations at The Shoppes at Mandalay Bay Place and the Mandalay Bay resort, which remained suspended through June 24, 2020 and June 30, 2020, respectively. The lender UW presented above is based on 2019 financials, which reflects a full-year of uninterrupted operations at the MGM Grand & Mandalay Bay Properties. |
■ | Appraisal. The Appraised Value of $4,600,000,000 as of January 10, 2020, is the Aggregate Real Property Appraised Value solely with respect to real property at the MGM Grand & Mandalay Bay Properties, excluding personal property and intangible property attributable to the MGM Grand & Mandalay Bay Properties. The appraisal also includes an As Leased-Sale-Leaseback Appraised Value, which is equal to the Aggregate Real Property Appraised Value. The Aggregate As-Is Appraised Value of $7,352,600,000 as of January 10, 2020, includes personal property and intangible property attributable to the MGM Grand & Mandalay Bay Properties. The personal property and intangible property relating to the MGM Grand & Mandalay Bay Properties is owned by the MGM Tenant or the MGM/Mandalay Operating Subtenants (as more particularly provided in the Master Lease), which granted a security interest in certain property of the MGM Tenant and the MGM/Mandalay Operating Subtenants (with certain exclusions, including an exclusion for the intellectual property of MGM Tenant as more particularly described in the Master Lease) in favor of the MGM Grand & Mandalay Bay Borrowers and provided that the FF&E will be transferred to the MGM Grand & Mandalay Bay Borrowers at no cost in the event of a termination of the Master Lease due to an event of default by the MGM Tenant thereunder. Such security interest was collaterally assigned by the MGM Grand & Mandalay Bay Borrowers to the mortgage lenders. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
■ | Environmental. According to a Phase I environmental report, dated February 11, 2020, the environmental consultant identified underground storage tanks at the MGM Grand & Mandalay Bay Properties. Due to the presence of underground storage tanks, the MGM Grand & Mandalay Bay Borrowers purchased, and are required to maintain under the MGM Grand & Mandalay Bay Loan agreement, an environmental insurance policy. |
■ | Market Overview and Competition. The MGM Grand & Mandalay Bay Properties are located on the Las Vegas Strip in the heart of Las Vegas, Nevada. Visitor volume and airport passenger traffic into the Las Vegas region have more than doubled from 1990 to 2019. In connection with the financial downturn in 2008 and 2009, the Las Vegas market generally experienced a contraction. During 2010, the market began to rebound and visitation has returned to or near peak levels. McCarran International Airport welcomed 51.5 million passengers in 2019 (surpassing the 2018 passenger count of approximately 49.6 million). |
Since 2010, annual convention attendance in Las Vegas has grown by over 2 million people (4.0% CAGR). With an estimated local population of 2.3 million people as of 2019, an additional approximately 42.5 million tourists visiting the metropolitan Las Vegas area annually and recent investment in Las Vegas by major sports leagues, the amount of existing gaming activity has increased steadily since the 2009 trough. In Clark County, gaming revenue has increased approximately 17.2% through 2019 since the gaming revenue trough in 2009.
Market Overview(1) | ||||||||||||
Category | 1990 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Visitor Volume (thousands) | 20,954 | 36,351 | 37,335 | 38,929 | 39,727 | 39,668 | 41,127 | 42,312 | 42,936 | 42,214 | 42,117 | 42,524 |
YoY % Change | NAP | -3.0% | 2.7% | 4.3% | 2.1% | -0.1% | 3.7% | 2.9% | 1.5% | -1.7% | -0.2% | 1.0% |
Clark County Gaming Revenues ($mm) | $4,104 | $8,838 | $8,909 | $9,223 | $9,400 | $9,674 | $9,554 | $9,618 | $9,714 | $9,979 | $10,250 | $10,355 |
YoY % Change | NAP | -9.8% | 0.8% | 3.5% | 1.9% | 2.9% | -1.2% | 0.7% | 1.0% | 2.7% | 2.7% | 1.0% |
Hotel / Motel Rooms Inventory | 73,730 | 148,941 | 148,935 | 150,161 | 150,481 | 150,593 | 150,544 | 149,213 | 149,339 | 148,896 | 149,158 | 149,422 |
YoY % Change | NAP | 6.0% | 0.0% | 0.8% | 0.2% | 0.1% | 0.0% | -0.9% | 0.1% | -0.3% | 0.2% | 0.2% |
Airport Passenger Traffic (thousands) | 19,090 | 40,469 | 39,757 | 41,481 | 41,668 | 41,857 | 42,885 | 45,319 | 47,368 | 48,430 | 49,645 | 51,538 |
YoY % Change | NAP | -8.2% | -1.8% | 4.3% | 0.4% | 0.5% | 2.5% | 5.7% | 4.5% | 2.2% | 2.5% | 3.8% |
Convention Attendance (thousands) | 1,742 | 4,492 | 4,473 | 4,865 | 4,944 | 5,107 | 5,195 | 5,891 | 6,311 | 6,646 | 6,502 | 6,649 |
YoY % Change | NAP | -23.9% | -0.4% | 8.8% | 1.6% | 3.3% | 1.7% | 13.4% | 7.1% | 5.3% | -2.2% | 2.3% |
(1) | Source: Las Vegas Convention and Visitors Authority. |
The Las Vegas Strip hotel average occupancy has been approximately 90% over the last three years. The Las Vegas Strip average 2019 occupancy was 90.4% and average 2018 occupancy was 89.5%. The Las Vegas Strip average 2019 ADR of $143.31 increased 3.3% relative to the average 2018 ADR of $138.71.
Historical Occupancy, ADR, RevPAR – Competitive Set | |||||||||
MGM Grand Resort(1) | Competitive Set(2)(3) | MGM Grand Penetration Factor(2) | |||||||
Year | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR |
December 31, 2017 | 92.1% | $181.76 | $167.36 | 92.0% | $181.95 | $167.10 | 100.2% | 100.0% | 100.3% |
December 31, 2018 | 92.7% | $182.10 | $168.76 | 93.0% | $187.63 | $173.66 | 100.1% | 97.4% | 97.6% |
December 31, 2019 | 91.4% | $190.29 | $173.85 | 94.0% | $193.23 | $181.41 | 98.7% | 98.6% | 97.3% |
(1) | Source: Historical operating statements. |
(2) | Source: Appraisal. |
(3) | Includes: The Mirage, New York New York, Luxor, Caesars, Planet Hollywood, and Venetian/Palazzo. |
Historical Occupancy, ADR, RevPAR – Competitive Set | |||||||||
Mandalay Bay Resort(1) | Competitive Set(2)(3) | Mandalay Bay Penetration Factor(2) | |||||||
Year | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR |
December 31, 2017 | 90.0% | $206.28 | $185.57 | 92.0% | $177.98 | $164.06 | 98.0% | 113.2% | 110.9% |
December 31, 2018 | 90.2% | $203.96 | $183.96 | 93.0% | $183.94 | $171.13 | 97.4% | 109.2% | 106.4% |
December 31, 2019 | 92.8% | $202.98 | $188.40 | 94.0% | $190.09 | $178.15 | 96.6% | 108.8% | 105.1% |
(1) | Source: Historical operating statements. |
(2) | Source: Appraisal. |
(3) | Includes: The Mirage, New York New York, Luxor, Caesars, Planet Hollywood, and Venetian/Palazzo. |
Additional group business is expected to enter the market as a result of the delivery of Allegiant Stadium in August 2020 (across the street from the Mandalay Bay Property) which will serve as the home stadium for the Raiders NFL team. Non-gaming revenue in the Las Vegas market was approximately 65% of total revenue in 2019 compared to pre-recession levels of approximately 59% in 2007.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
46
LOAN #4: MGM GRAND & MANDALAY BAY
Each of the MGM Grand & Mandalay Bay Properties share the same competitive set. The primary competitive set for the MGM Grand & Mandalay Bay Properties consists of six hotels, which range in size from 2,024 to 7,117 rooms and collectively contain an aggregate 23,058 rooms. According to the appraisal, there are two mega resorts in the construction phase with planned delivery between 2021 and 2022. Resorts World Las Vegas is a 59-story Chinese-themed mega resort under construction at the former Stardust Resort and Casino site on the northern Las Vegas Strip with scheduled delivery by summer of 2021 according to the appraisal. The Drew is a 735-foot tall, 75% completed mega casino resort scheduled to be delivered by 2022.
Comparable Properties(1) | |||||||
Property Name | No. of Rooms | Year Opened | Meeting Space (sq. ft.) | Casino Space (sq. ft.) | Estimated 2019 Occ. | Estimated 2019 ADR | Estimated 2019 RevPAR |
MGM Grand(2) | 4,998 | 1993 | 748,325 | 177,268 | 91.4% | $190.29 | $173.85 |
Mandalay Bay(2) | 4,750 | 1999 | 2,100,000 | 152,159 | 92.8% | $202.98 | $188.40 |
The Mirage | 3,044 | 1989 | 170,000 | 94,000 | 94.6% | $178.00 | $168.39 |
New York New York | 2,024 | 1997 | 30,500 | 81,000 | 95.5% | $151.00 | $144.21 |
Luxor | 4,397 | 1993 | 20,000 | 120,000 | 95.0% | $119.00 | $113.05 |
Caesar’s Palace | 3,976 | 1966 | 300,000 | 124,200 | 93.0% | $221.00 | $205.53 |
Planet Hollywood | 2,500 | 2000 | 20,000 | 64,500 | 90.0% | $185.00 | $166.50 |
Venetian/Palazzo | 7,117 | 1999 | 450,000 | 335,878 | 94.6% | $237.00 | $224.20 |
(1) | Source: Appraisal, unless otherwise indicated. |
(2) | Source: Underwriting and Borrower Sponsor provided information. |
■ | The Borrowers. On January 14, 2020, MGM Growth Properties Operating Partnership LP (“MGP OP”), an affiliate of BREIT Operating Partnership L.P. (“BREIT OP” and together with MGP OP, the “Sponsors”, as more particularly referred to as the “Borrower Sponsors”), and certain other parties entered into an agreement to, among other things, form a joint venture (50.1% indirectly owned by MGP OP and 49.9% indirectly owned by BREIT OP) (the “Joint Venture”) to acquire the MGM Grand & Mandalay Bay Properties in Las Vegas for a purchase price of $4.60 billion ($471,892 per room). The borrowers under the MGM Grand & Mandalay Bay Loan Combination are MGM Grand PropCo, LLC and Mandalay PropCo, LLC (individually, a “MGM Grand & Mandalay Bay Borrower” and, collectively, the “MGM Grand & Mandalay Bay Borrowers” or the “Borrowers”), which are subsidiaries of the Joint Venture. The MGM Grand & Mandalay Bay Borrowers are Delaware limited liability companies and single purpose entities with two independent directors. Blackstone Real Estate Income Trust, Inc. (“BREIT”) is a non-traded real estate investment trust focused on investing in commercial real estate properties diversified by sector with an emphasis on providing investors with access to Blackstone’s institutional real estate investment platform. BREIT seeks to directly own stabilized income-generating United States commercial real estate across the key property types, including multifamily, industrial, retail, hotel, healthcare and office. BREIT is managed by an external advisor, BX REIT Advisors L.L.C., which is an affiliate of The Blackstone Group Inc. (“Blackstone”). Blackstone’s real estate investor capital under management totals approximately $161.0 billion as of March 31, 2020 and includes prime assets such as the Bellagio, Cosmopolitan Las Vegas, Hotel Del Coronado, Grand Wailea, Arizona Biltmore, Ritz Carlton Kapalua, and Turtle Bay Resort. |
MGM Growth Properties LLC (“MGP”) is one of the leading publicly traded real estate investment trusts engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts. MGP currently owns a portfolio of properties, consisting of 12 premier destination resorts in Las Vegas and elsewhere across the United States, with over 27,400 rooms, as well as MGM Northfield Park in Northfield, OH, Empire Resort Casino in Yonkers, NY, and a retail and entertainment district, The Park, in Las Vegas.
MGP OP and BREIT OP (together, individually or collectively as the context may require, the “Guarantor”), are the non-recourse carveout guarantors on a several basis in proportion to each Guarantor’s Liability Percentage (as defined below). The Liability Percentage of each Guarantor will be automatically increased or decreased from time to time, as applicable, to the extent any direct and/or indirect equity interest in the Borrowers is transferred by one Guarantor (or its affiliates) to the other Guarantor (or its affiliates) with the transferring Guarantor’s Liability Percentage increasing by the amount of such transferred interests and the transferee Guarantor’s Liability Percentage decreasing by such amount. In no event will the Liability Percentage of the Guarantors in the aggregate be less than or greater than one hundred percent (100%). For the avoidance of doubt, transfers by a Guarantor (or its affiliates) to a third party that is not an affiliate of the other Guarantor will not result in an adjustment to the Liability Percentage of either Guarantor. For illustrative purposes, if BREIT OP transfers a twenty-five percent (25%) indirect equity interest in Borrower to a third party that is not an Affiliate of MGP OP and subsequently transfers a ten percent (10%) indirect equity interest in Borrower to MGP OP, the adjustments required to be made as a result of such transfers will be: (i) a decrease of ten percentage points to BREIT OP's Liability Percentage and (ii) an increase of ten percentage points to MGP OP's Liability Percentage.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
47
LOAN #4: MGM GRAND & MANDALAY BAY
The Guarantor’s liability for full recourse events is capped at an amount equal to 10% of the aggregate outstanding principal balance of the MGM Grand & Mandalay Bay Loan Combination as of the date of the event. In addition, only the Borrowers are liable for breaches of environmental covenants; provided, however, that if the Borrowers fail to maintain an environmental insurance policy required under the MGM Grand & Mandalay Bay Loan Combination documents, the Guarantor is liable for losses other than (x) for any amounts in excess of the applicable coverage amounts under the environmental policy had the same been renewed, replaced or extended as required under the loan agreement and (y) for any amounts recovered under the environmental policy. In addition, recourse for transfers of the MGM Grand & Mandalay Bay Properties or controlling equity interests in the MGM Grand & Mandalay Bay Borrowers is loss recourse, rather than full recourse.
“Liability Percentage” means, initially, (x) with respect to BREIT OP, 49.9% and (y) with respect to MGP OP, 50.1%.
■ | Escrows. |
Under the Master Lease, the MGM Tenant is obligated to make monthly deposits of 1.50% of net revenues at an eligible institution to be used for FF&E and qualifying capital expenditures (the “OpCo FF&E Reserve Account”). MGM Tenant granted the Borrowers a security interest in the OpCo FF&E Reserve Account, and the Borrowers collaterally assigned the Borrowers’ security interest in the OpCo FF&E Reserve Account to the mortgage lender.
Real Estate Taxes Reserve: For so long as the MGM Grand & Mandalay Bay Properties are subject to the Master Lease, no reserves for real estate taxes are required under the loan documents. If the MGM Grand & Mandalay Bay Properties are not subject to the Master Lease, solely if a MGM Grand & Mandalay Bay Trigger Period is in effect, the loan documents provide for ongoing monthly reserves for real estate taxes in an amount equal to 1/12 of the real estate taxes that the lender estimates will be payable during the next 12 months at least 30 days prior to their respective due dates. Notwithstanding the foregoing, the requirement for such monthly reserves will be reduced dollar for dollar by any taxes paid or reserved for by a brand manager or casino operator pursuant to a brand management or casino management agreement relating to the MGM Grand & Mandalay Bay Properties.
Insurance Reserve: For so long as the MGM Grand & Mandalay Bay Properties are subject to the Master Lease, no reserves for insurance premiums are required under the loan documents. If the MGM Grand & Mandalay Bay Properties are not subject to the Master Lease, solely if a MGM Grand & Mandalay Bay Trigger Period is in effect, the loan documents provide for ongoing monthly reserves for insurance premiums in an amount equal to 1/12 of the insurance premiums that the lender estimates will be payable for the renewal of the insurance policies at least 30 days prior to the expiration thereof. Notwithstanding the foregoing, the requirement for such monthly reserves will be reduced dollar for dollar by any insurance premiums paid or reserved for by a brand manager or casino operator pursuant to a brand management or casino management agreement relating to the MGM Grand & Mandalay Bay Properties. In addition, such monthly reserves will not be required so long as (i) no event of default is continuing, and (ii) the insurance coverage for the MGM Grand & Mandalay Bay Properties are included in a blanket policy reasonably acceptable to the lender.
Replacement Reserve: For so long as the MGM Grand & Mandalay Bay Properties are not subject to the Master Lease, (i) on each Payment Date during a MGM Grand & Mandalay Bay Trigger Period, the Borrowers will be required to make a deposit equal to (a) 4.0% of net revenue from guest rooms and Borrower-managed food and beverage operations and (b) 0.5% of all other net revenue (other than non-recurring items), in each case for the calendar month that is two months prior to the calendar month in which the applicable deposit to the replacement reserve fund is to be made (the sum of (a) and (b), the “Replacement Reserve Monthly Deposit”), and (ii) if a MGM Grand & Mandalay Bay Trigger Period does not exist, on the first Payment Date of each calendar quarter, an amount equal to the lesser of (x) the Replacement Reserve Current Year Lookback Deficiency (as defined below) and (y) the Replacement Reserve Five Year Lookback Deficiency (as defined below) (the lesser of (x) and (y), the “Replacement Reserve Quarterly Deposit”), provided that for so long as any individual MGM Grand & Mandalay Bay Property is managed by (x) a brand manager pursuant to a brand management agreement and/or (y) a casino operator pursuant to a casino management agreement, the amounts required to be funded as a Replacement Reserve Monthly Deposit or a Replacement Reserve Quarterly Deposit will be reduced on a dollar-for-dollar basis by any amounts deposited into a manager account for replacements, PIP work or brand mandated work for the applicable calendar months as set forth in the annual budget and required pursuant to the terms of the brand management agreement and/or casino management agreement if the Borrowers deliver evidence reasonably satisfactory to the mortgage lender that such deposit has been made.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
48
LOAN #4: MGM GRAND & MANDALAY BAY
A “Replacement Reserve Current Year Lookback Deficiency” means an amount equal to (x) the aggregate amount of Replacement Reserve Monthly Deposits which would have been funded from the beginning of the then calendar year to the date of determination had a MGM Grand & Mandalay Bay Trigger Period been in effect for the entirety of such period less (y) the sum of (1) the aggregate amount expended on replacements, PIP work and brand mandated work during such calendar year to date and (2) the aggregate amount funded into the Replacement Reserve during such calendar year to date; provided, if the foregoing calculation results in a negative number, the Replacement Reserve Current Year Lookback Deficiency will be deemed to be zero.
A “Replacement Reserve Five Year Lookback Deficiency” means (i) zero, with respect to any period before December 31, 2024, and (ii) from and after January 1, 2025, an amount equal to (x) 4.0% of net revenue from guest rooms and Borrower-managed food and beverage operations and 0.5% of all other net revenues (other than non-recurring items) during the Replacement Reserve Five Year Lookback Period (as defined below) less (y) the sum of (1) the aggregate amount expended on replacements, PIP Work and brand mandated work during the Replacement Reserve Five Year Lookback Period (including amounts expended by MGM Tenant pursuant to the express terms and conditions of the Master Lease) and (2) the aggregate amounts funded into the Replacement Reserve during such Replacement Reserve Five Year Lookback Period; provided, if the foregoing calculation results in a negative number, the Replacement Reserve Five Year Lookback Deficiency will be deemed to be zero.
A “Replacement Reserve Five Year Lookback Period” means each five (5) year period (on a rolling basis) with the first period commencing on January 1, 2020 and expiring on December 31, 2024 and the second period commencing on January 1, 2021 and expiring on December 31, 2025.
■ | Lockbox and Cash Management. The MGM Grand & Mandalay Bay Loan Combination is subject to a hard lockbox with springing cash management. Amounts on deposit in the lockbox account will be disbursed to the Borrower’s operating account in accordance with the clearing account agreement. After the occurrence and during the continuation of a MGM Grand & Mandalay Bay Trigger Period (as defined below), the Borrowers will establish a cash management account and, at least two times per week, the clearing account bank will sweep funds from the lockbox accounts into the cash management account in accordance with the clearing account agreement and the cash management bank will apply funds on deposit in the order of priority described in the MGM Grand & Mandalay Bay Loan Combination documents, with the remaining excess cash flow (“Excess Cash Flow Reserve”) to be held as additional collateral for the MGM Grand & Mandalay Bay Loan Combination (and, after the ARD, all amounts in the Excess Cash Flow Reserve account will be used to pay the monthly additional interest amount and applied to the principal of the MGM Grand & Mandalay Bay Loan Combination). |
A “MGM Grand & Mandalay Bay Trigger Period” means a period (A) commencing upon the occurrence of any of the following: (i) the Debt Service Coverage Ratio (“DSCR”) falling below 2.50x (“DSCR Threshold”) for two consecutive quarters (“DSCR Trigger”), (ii) the MGM Tenant is subject to a bankruptcy action (“OpCo Bankruptcy”), (iii) an event of default under the MGM Grand & Mandalay Bay Loan Combination has occurred and is continuing (“EOD Trigger”), (iv) an OpCo Trigger Event (as defined below) or (v) the Borrowers fail to repay the MGM Grand & Mandalay Bay Loan Combination in full on or before the ARD and (B) terminating upon (i) in the event of a DSCR Trigger, either such time that the DSCR exceeds the DSCR Threshold for two consecutive quarters or the Borrowers make voluntary prepayments of the MGM Grand & Mandalay Bay Loan Combination in accordance with the terms of the MGM Grand & Mandalay Bay Loan Combination documents in amounts necessary to achieve a DSCR greater than or equal to the DSCR Threshold (without any obligation to wait two consecutive quarters), (ii) in the event of an OpCo Bankruptcy, the assumption of the Master Lease in such bankruptcy proceeding or the replacement of the MGM Tenant as provided in the MGM Grand & Mandalay Bay Loan Combination documents (or in the event the Master Lease is terminated and not replaced, the DSCR is equal to or greater than the DSCR Threshold or the Borrowers make voluntary prepayments of the MGM Grand & Mandalay Bay Loan Combination in accordance with the terms of the MGM Grand & Mandalay Bay Loan Combination documents in amounts necessary to achieve a DSCR greater than or equal to the DSCR Threshold (without any obligation to wait two consecutive quarters)), (iii) in the event of an OpCo Trigger Period, any OpCo Trigger Event Cure (as defined below) and (iv) in the event of an EOD Trigger, no other events of default exist and are continuing and the mortgage lender will have accepted a cure by the Borrowers of such event of default. For the avoidance of doubt, in no instance will a MGM Grand & Mandalay Bay Trigger Period caused by the failure of the Borrowers to repay the MGM Grand & Mandalay Bay Loan Combination in full on or before the ARD be capable of being cured or deemed to expire.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
An “OpCo Trigger Event” means the occurrence and continuance of all of the following conditions simultaneously: (i) an event of default under the Master Lease has occurred and is continuing; (ii) (x) the managing member of the Joint Venture is an affiliate of the Borrowers other than MGP or MGP OP that is controlled by MGP or MGP OP and (y) MGP OP is controlled by MGM and (iii) such managing member is permitted under the terms of the Joint Venture agreement to take any of the following actions without the consent of (x) BCORE Windmill Parent LLC (the member of the Joint Venture that is affiliated with BREIT OP) (a) granting any consent, approval or wavier or making any election under the Master Lease, Lease Guaranty or other related lease documents, (b) entering into any amendment, supplement or modification to the Master Lease, Lease Guaranty or other related lease documents, or (c) declaring an event of default under the Master Lease, Lease Guaranty or other related lease documents or (y) if applicable, a Qualified Transferee (as defined in the MGM Grand & Mandalay Bay Loan Combination documents) that is not an affiliate of MGM Tenant which owns a 15% or greater direct and/or indirect interest in the Borrowers.
A “Lease Guaranty” means that certain Guaranty of Lease Documents dated as of February 14, 2020, made by MGM in favor of the Borrowers.
An “OpCo Trigger Event Cure” means, as applicable, (i) the Borrowers have provided evidence to the mortgage lender of the cure of the event of default under the Master Lease, (ii) the Borrowers have waived the event of default under the Master Lease, provided that such waiver was approved by the mortgage lender, or (iii) in the event that the event of default results in the termination of the Master Lease, either (a) (I) the Borrowers and MGM Tenant have entered into a new lease on terms and conditions substantially similar to those contained in the Master Lease as of the origination of the MGM Grand & Mandalay Bay Loan Combination and (II) the Master Lease opinion delivery requirements have been satisfied, or (b) after giving effect to the termination of the Master Lease the DSCR is equal to or greater than 2.50x for two consecutive quarters or the Borrowers make voluntary prepayments in accordance with the terms of the MGM Grand & Mandalay Bay Loan Combination documents in an amount necessary to achieve a DSCR equal to or greater than 2.50x.
■ | Property Management. The MGM Grand & Mandalay Bay Properties are currently managed by the MGM Tenant and/or the applicable MGM/Mandalay Operating Subtenant, and there are no management agreements currently in effect with the Borrowers and, other than the management agreement with respect to the Four Seasons hotel and the management agreement with respect to certain signature hotel units (which, for the avoidance of doubt, are not part of the MGM Grand & Mandalay Bay Properties), for which management fees related thereto are included as part of the collateral, there are no management agreements currently in effect with respect to the MGM Grand & Mandalay Bay Properties. |
■ | Current Mezzanine or Subordinate Indebtedness. In addition to the MGM Grand & Mandalay Bay Loan, the MGM Grand & Mandalay Bay Properties also secure the MGM Grand & Mandalay Bay Senior Notes not included in the Benchmark 2020-B19 securitization trust, which have an aggregate Cut-off Date principal balance of $1,549,200,000, and the MGM Grand & Mandalay Bay Junior Notes (which have an aggregate Cut-off Date principal balance of $1,365,800,000). The MGM Grand & Mandalay Bay Senior Notes not included in the Benchmark 2020-B19 trust and the MGM Grand & Mandalay Bay Junior Notes accrue interest at the same rate as the MGM Grand & Mandalay Bay Loan. The MGM Grand & Mandalay Bay Loan is entitled to payments of interest and principal on a pro rata and pari passu basis with the MGM Grand & Mandalay Bay Senior Notes not included in the Benchmark 2020-B19 securitization trust. The MGM Grand & Mandalay Bay Loan and the MGM Grand & Mandalay Bay Senior Notes not included in the Benchmark 2020-B19 securitization trust are generally senior to the MGM Grand & Mandalay Bay Junior Notes. |
■ | Permitted Future Mezzanine or Secured Subordinate Indebtedness. The MGM Grand & Mandalay Bay Borrowers have a one-time right to borrow a mezzanine loan subordinate to the MGM Grand & Mandalay Bay Loan Combination (“Mezzanine Loan”), subject to credit and legal criteria specified in the MGM Grand & Mandalay Bay Loan Combination documents, including, without limitation: (i) a combined maximum loan to value ratio (based on appraisals ordered by the lender in connection with the closing of the Mezzanine Loan and calculated based on the outstanding principal balance of the MGM Grand & Mandalay Bay Loan Combination and the initial principal amount of the Mezzanine Loan) of 67.0%, (ii) a debt service coverage ratio at the closing of the Mezzanine Loan at least equal to 4.81x, in each case, inclusive of the additional mezzanine debt and (iii) an intercreditor agreement reasonably satisfactory to the lender. The lender’s receipt of a rating agency confirmation will not be required in connection with the Mezzanine Loan. |
Notwithstanding the foregoing, (1) during a MGM Grand & Mandalay Bay Trigger Period (and for so long as no event of default has occurred and is continuing), in the event that the Mezzanine Loan (or any portion thereof) is directly or indirectly or beneficially owned by the MGM Grand & Mandalay Bay Borrowers, mezzanine borrower or a “broad affiliate” (as defined in the MGM Grand & Mandalay Loan Combination documents) of the Borrowers or mezzanine borrower
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
(“Affiliated Mezzanine Lender”), in no instance will the Affiliated Mezzanine Lender be permitted to receive late charges, principal (other than the pro rata prepayment of the Mezzanine Loan upon the release of an individual Property or prepayment of the MGM Grand & Mandalay Bay Loan Combination in accordance with the terms and conditions of the MGM Grand & Mandalay Bay Loan Combination documents and the Mezzanine Loan documents) or interest at the default rate, even if an event of default has occurred and is continuing under the Mezzanine Loan and such Affiliated Mezzanine Lender will only be permitted to receive interest at the non-default rate on a monthly basis, (2) during a MGM Grand & Mandalay Bay Trigger Period (and for so long as no event of default has occurred and is continuing under the MGM Grand & Mandalay Bay Loan Combination documents), for so long as the whole Mezzanine Loan is not directly or indirectly or beneficially owned by an Affiliated Mezzanine Lender, the mezzanine lender will receive on a monthly basis interest at the non-default rate and, if an event of default has occurred and is continuing under the Mezzanine Loan, funds sufficient to pay any other amounts then due under the Mezzanine Loan and the Mezzanine Loan documents (other than the payment of the outstanding principal amount of the Mezzanine Loan on the maturity date of the Mezzanine Loan whether on the scheduled date for such payment or earlier due to an acceleration of the Mezzanine Loan) and (3) after the ARD, in no instance will any mezzanine lender be permitted to receive any payments whatsoever.
■ | Release of Collateral. So long as no event of default has occurred and is continuing (other than as set forth below), the Borrowers may at any time release an individual Property from the MGM Grand & Mandalay Bay Loan Combination by prepaying the applicable Release Percentage (as defined below) of the ALA of the subject individual Property (including any yield maintenance premium, if required), and subject to the terms and conditions in the MGM Grand & Mandalay Bay Loan Combination documents, including, without limitation: (i) the DSCR after giving effect to such release is at least equal to 4.81x; (ii) continued compliance with the single purpose entity requirements contained in the MGM Grand & Mandalay Bay Loan Combination documents; (iii) payment to an agent or servicer of the then current and customary fee by such persons for such releases in an amount not to exceed $2,000.00 and any reasonable legal fees or other out-of-pocket costs incurred by the lender to effect the release and any applicable prepayment premiums (provided the legal fees may not exceed $10,000.00); (iv) payment of all recording charges, filing fees, taxes or other similar expenses payable in connection therewith; (v) compliance with applicable REMIC requirements relating to the REMIC 125% LTV test for release which may be satisfied by delivery of any of the following if permitted by REMIC requirements: an existing or updated appraisal, a broker’s price opinion or other written determination of value using a commercially reasonable valuation method, in each case satisfactory to the lender, but will be based solely on the value of real property and will exclude personal property and going-concern value; and (vi) if the Property is subject to the Master Lease, the Borrowers removing the released individual Property from the Master Lease and entering into a new triple-net lease with respect to the remaining individual Property on substantially the same terms as the Master Lease (collectively, the “Release Conditions”). |
A “Release Percentage” means, with respect to any individual Property, 105.0% until such time as the outstanding principal balance of the MGM Grand & Mandalay Bay Loan Combination is reduced to $2,250,000,000 (the “Release Percentage Threshold”), and 110.0% thereafter. In calculating the Release Amount for an individual Property, the Release Percentage may initially be one hundred and five percent (105%) until the application of a portion of such prepayment would reach the Release Percentage Threshold and with respect to any remaining prepayment for such individual Property, the Release Percentage would be one hundred and ten percent (110%).
Notwithstanding the foregoing, in the event that the DSCR following the release would not satisfy the DSCR requirement in clause (i) of the Release Conditions, and such release is in connection with an arms’ length transaction with an unrelated third party, the Borrowers will be permitted to release the subject Property and the amount that will be required to be prepaid (or defeased) in connection with such Release will equal the greater of (I) the Release Percentage of the ALA for such individual Property, together with, to the extent the release does not occur in connection with a partial defeasance, any yield maintenance premium required (if any) and (II) the lesser of (x) one hundred percent (100.0%) of the net sales proceeds for the sale of such individual Property (net of reasonable and customary closing costs associated with the sale of such individual Property) and (y) an amount necessary to, after giving effect to such release of the individual Property, achieve the DSCR requirement in the preceding paragraph.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #4: MGM GRAND & MANDALAY BAY
The Borrowers may release any defaulting individual Property, without the payment of any yield maintenance premium, in order to cure a default or an event of default related to such individual Property, subject to the satisfaction of other terms and conditions in the MGM Grand & Mandalay Bay Loan Combination documents (including, without limitation, Release Conditions (other than clause (i)) (“Default Release”). In addition, the Borrowers may release an individual Property (including to an affiliate) if the estimated net proceeds following any casualty or condemnation at such individual Property will be equal to or greater than (x) 25.0% of its ALA, or (y) 5.0% of its ALA (subject to the satisfaction of other terms and conditions in the MGM Grand & Mandalay Bay Loan Combination documents) upon satisfaction of clauses (iii), (iv) and (v) of the Release Conditions above and prepayment of the MGM Grand & Mandalay Bay Loan Combination in an amount equal to the net proceeds (up to an amount equal to the Release Percentage) for such individual Property (“Special Release”).
■ | Terrorism Insurance. The MGM Grand & Mandalay Bay Loan Combination documents require that the “all risk” insurance policy required to be maintained by the MGM Grand & Mandalay Bay Borrowers provide coverage for terrorism in an amount equal to the full replacement cost of the MGM Grand & Mandalay Bay Properties, and business interruption insurance covering no less than the 24-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity. So long as the MGM Grand & Mandalay Bay Properties is subject to the Master Lease, the MGM Grand & Mandalay Bay Borrowers are permitted to rely on terrorism insurance provided by the MGM Tenant. The permitted deductible for terrorism insurance for the MGM Grand & Mandalay Bay Borrowers under the MGM Grand & Mandalay Bay Loan Combination documents is $500,000 (provided, however, the MGM Grand & Mandalay Bay Borrowers are not required to maintain the coverages on the MGM Grand & Mandalay Bay Properties as required in the MGM Grand & Mandalay Bay Loan Combination documents for long as (A) the Master Lease is in full force and effect, (B) no default by MGM Tenant beyond any applicable notice and cure period has occurred and is continuing under the Master Lease and (C) MGM Tenant maintains insurance policies on each Property that satisfies the requirements set forth in the MGM Grand & Mandalay Bay Loan Combination documents (the “MGM/Mandalay Policies”) (except the lender acknowledged and agreed in the MGM Grand & Mandalay Bay Loan Combination documents that the MGM/Mandalay Policies are permitted to vary from MGM Grand & Mandalay Bay Loan Combination documents with respect to (x) the named storm sublimit which shall be no less than $700,000,000 per occurrence and (y) any property or terrorism deductible, which shall be no greater than $5,000,000) including without limitation, naming the lender as mortgagee/loss payee and additional insured, as applicable (collectively, conditions (A) through (C) are the “MGM/Mandalay Tenant Insurance Conditions”). If the MGM/Mandalay Tenant Insurance Conditions are not met and TRIPRA is no longer in effect, but terrorism insurance is commercially available, then the MGM Grand & Mandalay Bay Borrowers will be required to maintain terrorism insurance but will not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium payable in respect of the MGM Grand & Mandalay Bay Properties and business interruption/rental loss insurance required under the related loan documents (without giving effect to the cost of the terrorism, flood, earthquake and windstorm components of such casualty and business interruption/rental loss insurance) and if the cost of terrorism insurance exceeds such amount, Borrower shall purchase the maximum amount of terrorism insurance available with funds equal to such amount. |
In addition, so long as the MGM/Mandalay Tenant Insurance Conditions are satisfied, terrorism insurance for the MGM Grand & Mandalay Bay Properties may be written by a non-rated captive insurer subject to certain conditions set forth in the Master Lease, including, among other things: (i) TRIPRA shall be in full force and effect; (ii) the terrorism policy issued by such captive insurer, together with any other qualified terrorism policies in-place, provide per occurrence limit in an amount not less than replacement cost and rent loss coverage as otherwise required; (iii) except with respect to deductibles permitted under the Master Lease, covered losses that are not reinsured by the federal government under TRIPRA and paid to the captive insurer shall be reinsured with a cut-through endorsement by an insurance company rated “A” by S&P and “A2” by Moody’s (to the extent Moody’s rates securities which represent an interest in the MGM Grand & Mandalay Bay Loan Combination and rates the applicable insurance company); (iv) all reinsurance agreements between the captive insurer and other reinsurance providers shall be subject to the reasonable approval of the lender; and (v) such captive insurer shall be licensed in the State of Nevada or other jurisdiction to the extent reasonably approved by the lender and qualified to issue the terrorism policy in accordance with applicable legal requirements. See “Risk Factors—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #5: AGELLAN PORTFOLIO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
53
LOAN #5: AGELLAN PORTFOLIO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #5: AGELLAN PORTFOLIO
Mortgaged Property Information | Mortgage Loan Information | ||||||||||
Number of Mortgaged Properties | 46 | Loan Seller | JPMCB | ||||||||
Location (City/State) | Various, Various | Cut-off Date Balance(7) | $60,000,000 | ||||||||
Property Type | Various | Cut-off Date Balance per SF(7) | $37.91 | ||||||||
Size (SF)(1) | 6,094,177 | Percentage of Initial Pool Balance | 5.4% | ||||||||
Total Occupancy as of 6/1/2020(2) | 90.4% | Number of Related Mortgage Loans | None | ||||||||
Owned Occupancy as of 6/1/2020(2) | 90.4% | Type of Security | Fee Simple | ||||||||
Year Built / Latest Renovation | Various / Various | Mortgage Rate | 4.62820% | ||||||||
Appraised Value(3) | $551,000,000 | Original Term to Maturity (Months) | 60 | ||||||||
Appraisal Date | Various | Original Amortization Term (Months) | NAP | ||||||||
Borrower Sponsor(4) | Elad Canada Realty Inc. | Original Interest Only Period (Months) | 60 | ||||||||
Property Management(5) | Various | First Payment Date | 9/7/2020 | ||||||||
Maturity Date | 8/7/2025 | ||||||||||
Underwritten Revenues | $60,350,250 | ||||||||||
Underwritten Expenses | $24,159,826 | Escrows(8) | |||||||||
Underwritten Net Operating Income (NOI)(6) | $36,190,424 | Upfront | Monthly | ||||||||
Underwritten Net Cash Flow (NCF)(6) | $32,872,429 | Taxes | $0 | $0 | |||||||
Cut-off Date LTV Ratio(6) | 41.9% | Insurance | $0 | $0 | |||||||
Maturity Date LTV Ratio(6) | 41.9% | Replacement Reserves | $0 | $101,570 | |||||||
DSCR Based on Underwritten NOI / NCF(6) | 3.34x / 3.03x | TI/LC | $6,410,963 | $431,671 | |||||||
Debt Yield Based on Underwritten NOI / NCF(6) | 15.7% / 14.2% | Other(9) | $5,157,316 | $0 | |||||||
Sources and Uses | |||||||||||
Sources | $ | % | Uses | $ | % | ||||||
Loan Combination Amount | $403,000,000 | 92.4% | Loan Payoff(10) | $418,924,922 | 96.0% | ||||||
Mezzanine Loan | 31,000,000 | 7.1 | Upfront Reserves | 11,568,279 | 2.7% | ||||||
Sponsor Equity | 2,163,638 | 0.5 | Closing Costs | 5,670,436 | 1.3% | ||||||
Total Sources | $436,163,638 | 100.0% | Total Uses | $436,163,638 | 100.0% | ||||||
(1) | Size (SF) is exclusive of 344 SF associated with re-measurements. |
(2) | Total Occupancy as of 6/1/2020 and Owned Occupancy as of 6/1/2020 are reflective of the exclusion of known vacancies and tenants that have gone dark at the Agellan Properties (as defined below). Occupancy inclusive of such tenant spaces is approximately 93.4%. |
(3) | The Appraised Value is based on an aggregate “as is” value of the Agellan Properties and is inclusive of excess land value that is defined in each individual Agellan Property appraisal and serves as collateral for the Agellan Portfolio Loan Combination (as defined below). The excess vacant land parcels are associated with the Sarasota Distribution Hub and Supervalu properties may be released pursuant to satisfying conditions set forth in “—Partial Releases” below. |
(4) | For a description of the Borrowers (as defined below) and the borrower sponsor, see “—The Borrowers” below. |
(5) | For a description of Property Management (as defined below) see “—Property Management” below. |
(6) | Underwritten Net Operating Income (NOI) and Underwritten Net Cash Flow (NCF) are inclusive of contractual rent steps taken through June 1, 2021 and includes the ALDI, Inc. expansion of approximately 24,597 SF and HCSC (as defined below) relocation at the Naperville Woods Office Center property. Underwritten Base Rent has been further adjusted to account for a 10.0% stress to tenants who missed full or partial rent payments in April, May and/or June or have requested rent relief during the COVID-19 pandemic. The total stress to Underwritten Base Rent is $223,074. An additional stress loss adjustment of 10.0% was applied to total reimbursements for any tenants that missed full rent payments in April, May and/or June. The total stress to reimbursements is $79,032. All Underwritten Base Rent figures herein are exclusive of rent attributable to vacant space. |
(7) | The Cut-off Date Balance of $60,000,000 represents the non-controlling note A-3 and note A-4, and is part of the Agellan Portfolio Loan Combination, which is evidenced by seven pari passu Senior Notes (as defined below) and one Subordinate Note (as defined below), and has an aggregate outstanding principal balance as of the Cut-off Date of $403,000,000. See “—The Mortgage Loan” below. |
(8) | For a full description of Escrows, please refer to “—Escrows” below. |
(9) | The Upfront Other reserve consists of $2,985,266 for deferred maintenance, $2,000,000 for a working capital reserve and $172,050 for a gap rent reserve. |
(10) | Represents the refinance of 42 of the Agellan Properties that were previously securitized in the MSC 2019-AGLN transaction and the balance sheet financing associated with the borrower sponsors’ recent acquisition of four of the Agellan Properties. |
■ | The Mortgage Loan. The mortgage loan (the “Agellan Portfolio Loan”) is part of a loan combination (the “Agellan Portfolio Loan Combination”) evidenced by seven pari passu notes with an aggregate outstanding principal balance as of the Cut-off Date of $231,000,000 (the “Agellan Portfolio Senior Notes”) and a controlling subordinate fixed rate note with an aggregate outstanding principal balance as of the Cut-off Date of $172,000,000 (the “Agellan Portfolio Subordinate Note”). The aggregate outstanding principal balance as of the Cut-off Date of all notes evidencing the Agellan Portfolio Loan Combination is $403,000,000. The Agellan Portfolio Loan Combination encumbers the Borrowers’ fee simple interests in a 46-property portfolio of industrial and office properties in the aggregate comprising approximately 6,094,177 SF located throughout nine states (the “Agellan Portfolio” or the “Agellan Properties”). The Agellan Portfolio Loan, which is evidenced by non-controlling notes A-3 and A-4, has an aggregate outstanding principal balance as of the Cut-off Date of $60,000,000 and represents approximately 5.4% of the Initial Pool Balance. The “Loan Combination Summary” table below summarizes the remaining promissory notes. The Agellan Portfolio Loan Combination has a 60-month interest-only term. The Agellan Portfolio Senior Notes accrue interest at a fixed rate of approximately 4.62820% per annum and the Agellan Portfolio Subordinate Note accrues interest at a fixed rate of approximately 4.40000% per annum. The proceeds of the Agellan Portfolio Loan Combination were used to pay off existing debt encumbering 46 of the Agellan Properties of approximately $418.9 million, pay origination costs of approximately $5.7 million and fund escrows of approximately $11.6 million. As of year-end 2019, the borrower sponsor had a cost basis of approximately $507.8 million. The borrower sponsor’s total cash equity in the Agellan Portfolio is approximately $185.5 million. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #5: AGELLAN PORTFOLIO
The lockout period of the Agellan Portfolio Loan Combination will be at least 25 payments beginning with and including the first payment date of September 7, 2020. The Borrowers have the option to defease the full $403.0 million Agellan Portfolio Loan Combination after the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized and (ii) the third anniversary of the first payment date occurring in September 2023. The lockout period of 25 payments is based on the expected Benchmark 2020-B19 transaction closing date occurring in September 2020. The actual lockout period may be longer.
Loan Combination Summary
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
Note A-1 | $75,000,000 | $75,000,000 | Benchmark 2020-B18 | No |
Note A-2, A-6 | 61,000,000 | 61,000,000 | DBJPM 2020-C9 | No |
Note A-3, A-4 | 60,000,000 | 60,000,000 | Benchmark 2020-B19 | No |
Note A-5 | 25,000,000 | 25,000,000 | JPMCB(1) | No |
Note A-7 | 10,000,000 | 10,000,000 | JPMCB(1) | No |
Total Senior Notes | $231,000,000 | $231,000,000 | ||
Note B(2) | 172,000,000 | 172,000,000 | Benchmark 2020-B18 | Yes(3) |
Loan Combination | $403,000,000 | $403,000,000 | ||
Mezzanine Loan | $31,000,000 | $31,000,000 | Third Party | No |
Total Debt | $434,000,000 | $434,000,000 |
(1) | Expected to be contributed to one or more future securitizations. |
(2) | The Agellan Portfolio Subordinate Note will be subordinate in right of payment to the Agellan Portfolio Senior Notes. |
(3) | The initial controlling note is Note B, for so long as no control appraisal period with respect to Note B is continuing. See “Description of the Mortgage Pool—The Loan Combinations—The Agellan Portfolio Pari Passu-AB Loan Combination” in the Preliminary Prospectus. The Agellan Portfolio Loan Combination will be serviced under the pooling and servicing agreement for the Benchmark 2020-B18 transaction. |
■ | COVID-19 Update. As of August 26, 2020, the Agellan Properties have remained open; however, many office tenants have chosen to work remotely. Based on the underwritten rent rolls as of June 1, 2020, the Agellan Properties were approximately 93.4% occupied (inclusive of dark tenants and known vacates). For May, June, July and August of 2020, the borrower sponsor collected approximately 98.9%, 98.5%, 98.3% and 98.0% of underwritten base rent, respectively. The top ten tenants, representing 38.6% of NRA and 41.0% of underwritten rent, had no issues with rent payment. 32 tenants representing approximately 5.5% of the underwritten base rent and 5.4% of the Agellan Properties net rentable have requested rent relief or have partial or no collections for the months of May, June, July and August. The five largest tenants that have put in formal requests for relief in aggregate represent approximately 2.0% of NRA and approximately 1.8% of Underwritten Base Rent. As of August 2020, one of the tenants representing 0.1% of NRA and 0.1% of Underwritten Base Rent has been granted a two month rent deferral agreement to be paid back in six installments from September 2020 to February 2021. 24 tenants (totaling 5.3% of NRA) are in discussions with the Borrowers for rent relief. |
■ | The Mortgaged Properties. The Agellan Portfolio consists of the fee simple interests in a 46 property portfolio of industrial and office properties comprising approximately 6,094,177 SF in the aggregate located throughout nine states and 12 different markets. The Agellan Portfolio is comprised of 42 industrial properties (5,248,373 SF; 86.1% of NRA; 71.3% of Underwritten Base Rent) and four office properties (845,804 SF; 13.9% of NRA; 28.7% of Underwritten Base Rent). The tenancy spans a variety of industries including health care, food services, automotive parts, insurance, and technology. |
As of June 1, 2020, the Agellan Portfolio is 93.4% leased (90.4% leased excluding dark tenants and known vacates) to 250 unique tenants with no single tenant accounting for more than 6.9% of Underwritten Base Rent. Four of the top ten tenants (Health Care Service Corp., General Motors LLC, Life Technologies Corporation and Allstate Insurance Co.) have investment grade credit ratings by one or more of Moody’s, Fitch or S&P and account for approximately 12.4% and 18.2% of the Agellan Portfolio’s Total NRA and Underwritten Base Rent, respectively. The Agellan Properties have a weighted average remaining lease term of approximately 2.8 years.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
56
LOAN #5: AGELLAN PORTFOLIO
Portfolio Summary
No. | Property Name | City, State | Property Type | Net Rentable Area | Allocated Loan Amount | % Allocated Loan Amount | Underwritten Base Rent(1) | % of Underwritten Base Rent | Appraised Value | % of Appraised Value | |
1 | Sarasota Distribution Hub | Sarasota, FL | Industrial | 906,449 | $7,561,787 | 12.6% | $4,804,386 | 11.7% | $70,200,000 | 12.7% | |
2 | Naperville Woods Office Center | Naperville, IL | Office | 482,497 | 7,509,677 | 12.5% | $7,480,569 | 18.2% | 68,800,000 | 12.5% | |
3 | Southpark Business Park FOP | Austin, TX | Industrial | 187,075 | 3,809,926 | 6.3% | $2,478,202 | 6.0% | 34,900,000 | 6.3% | |
4 | Supervalu | Fort Worth, TX | Industrial | 253,800 | 2,874,938 | 4.8% | $1,573,560 | 3.8% | 26,720,000 | 4.8% | |
5 | Plainfield Business Center IV | Plainfield, IN | Industrial | 434,354 | 2,630,769 | 4.4% | $1,385,853 | 3.4% | 24,100,000 | 4.4% | |
6 | Beltway III | Houston, TX | Office | 130,566 | 2,194,541 | 3.7% | $2,347,444 | 5.7% | 20,100,000 | 3.6% | |
7 | 4405 Continental Dr | Flint, MI | Industrial | 400,000 | 2,047,146 | 3.4% | $2,097,244 | 5.1% | 18,750,000 | 3.4% | |
8 | Beltway IV | Houston, TX | Office | 131,702 | 1,877,419 | 3.1% | $1,714,514 | 4.2% | 17,200,000 | 3.1% | |
9 | Sandy Plains Business Park | Marietta, GA | Industrial | 167,329 | 1,735,980 | 2.9% | $1,141,184 | 2.8% | 15,700,000 | 2.8% | |
10 | Silber Industrial Park | Houston, TX | Industrial | 198,970 | 1,539,454 | 2.6% | $882,818 | 2.2% | 14,100,000 | 2.6% | |
11 | Southpark Business Park M | Austin, TX | Industrial | 72,550 | 1,429,280 | 2.4% | $958,626 | 2.3% | 13,100,000 | 2.4% | |
12 | Coliseum Distribution Center #1 | San Antonio, TX | Industrial | 208,000 | 1,713,648 | 2.9% | $942,656 | 2.3% | 15,900,000 | 2.9% | |
13 | West by Northwest Business Blvd | Houston, TX | Industrial | 122,750 | 1,396,526 | 2.3% | $835,905 | 2.0% | 12,800,000 | 2.3% | |
14 | Norcross Center | Norcross, GA | Industrial | 169,951 | 1,342,928 | 2.2% | $942,051 | 2.3% | 12,300,000 | 2.2% | |
15 | Goshen Springs | Norcross, GA | Industrial | 152,319 | 1,167,246 | 1.9% | $718,035 | 1.7% | 10,700,000 | 1.9% | |
16 | Long Point Center | Houston, TX | Industrial | 189,680 | 1,134,491 | 1.9% | $741,097 | 1.8% | 10,400,000 | 1.9% | |
17 | Corridor Park D | Austin, TX | Industrial | 56,100 | 1,124,069 | 1.9% | $674,322 | 1.6% | 10,300,000 | 1.9% | |
18 | Southport 1-4 | Houston, TX | Industrial | 149,401 | 1,091,315 | 1.8% | $684,408 | 1.7% | 10,000,000 | 1.8% | |
19 | Jameel | Houston, TX | Industrial | 94,900 | 1,091,315 | 1.8% | $664,060 | 1.6% | 10,000,000 | 1.8% | |
20 | Beltway II | Houston, TX | Office | 101,039 | 1,058,561 | 1.8% | $214,432 | 0.5% | 9,700,000 | 1.8% | |
21 | Braker Center 4 | Austin, TX | Industrial | 45,913 | 1,025,806 | 1.7% | $579,872 | 1.4% | 9,400,000 | 1.7% | |
22 | Northgreen 1-4 | Houston, TX | Industrial | 118,736 | 937,965 | 1.6% | $474,118 | 1.2% | 8,600,000 | 1.6% | |
23 | Minimax | Houston, TX | Industrial | 119,821 | 884,367 | 1.5% | $568,098 | 1.4% | 8,100,000 | 1.5% | |
24 | Southpark Business Park E | Austin, TX | Industrial | 49,966 | 818,859 | 1.4% | $587,600 | 1.4% | 7,500,000 | 1.4% | |
25 | 9385 Washington Blvd | Laurel, MD | Industrial | 57,590 | 796,526 | 1.3% | $426,784 | 1.0% | 7,300,000 | 1.3% | |
26 | Rothway | Houston, TX | Industrial | 75,460 | 786,104 | 1.3% | $297,597 | 0.7% | 7,200,000 | 1.3% | |
27 | 2730 Pinnacle | Elgin, IL | Industrial | 44,990 | 665,509 | 1.1% | $454,404 | 1.1% | 6,100,000 | 1.1% | |
28 | Columbus West - Interchange Rd | Columbus, OH | Industrial | 91,200 | 616,377 | 1.0% | $404,218 | 1.0% | 5,650,000 | 1.0% | |
29 | 1346 Oakbrook Drive | Norcross, GA | Industrial | 71,591 | 589,578 | 1.0% | $441,662 | 1.1% | 5,400,000 | 1.0% | |
30 | 1230-1236 Hardt Circle | Bartlett, IL | Industrial | 60,080 | 567,246 | 0.9% | $287,187 | 0.7% | 5,200,000 | 0.9% | |
31 | Pine Forest Business Park | Houston, TX | Industrial | 80,091 | 534,491 | 0.9% | $106,122 | 0.3% | 4,900,000 | 0.9% | |
32 | 1351 Oakbrook Drive | Norcross, GA | Industrial | 36,489 | 419,851 | 0.7% | $188,866 | 0.5% | 3,850,000 | 0.7% | |
33 | 1325 Oakbrook Drive | Norcross, GA | Industrial | 53,120 | 415,385 | 0.7% | $299,472 | 0.7% | 3,800,000 | 0.7% | |
34 | 490 Heartland Drive | Sugar Grove, IL | Industrial | 39,520 | 409,429 | 0.7% | $304,704 | 0.7% | 3,750,000 | 0.7% | |
35 | 1265 Oakbrook Drive | Norcross, GA | Industrial | 51,200 | 399,007 | 0.7% | $287,275 | 0.7% | 3,650,000 | 0.7% | |
36 | Columbus West - Business Park(2) | Columbus, OH | Industrial | 92,618 | 382,630 | 0.6% | $0 | 0.0% | 3,500,000 | 0.6% | |
37 | 1155 Bowes Road(3) | Elgin, IL | Industrial | 34,400 | 376,675 | 0.6% | $0 | 0.0% | 3,450,000 | 0.6% | |
38 | 1280 Oakbrook Drive | Norcross, GA | Industrial | 46,400 | 370,720 | 0.6% | $261,118 | 0.6% | 3,400,000 | 0.6% | |
39 | Rittiman East Industrial Park #23 & 24 | San Antonio, TX | Industrial | 50,806 | 422,829 | 0.7% | $308,606 | 0.8% | 3,870,000 | 0.7% | |
40 | 2002 Bloomingdale | Glendale Heights, IL | Industrial | 31,919 | 333,499 | 0.6% | $194,877 | 0.5% | 3,050,000 | 0.6% | |
41 | 333 Charles Court | West Chicago, IL | Industrial | 36,623 | 327,543 | 0.5% | $277,441 | 0.7% | 3,000,000 | 0.5% | |
42 | 483 Heartland Drive | Sugar Grove, IL | Industrial | 36,426 | 327,543 | 0.5% | $172,234 | 0.4% | 3,000,000 | 0.5% | |
43 | Cox Business Center | Erlanger, KY | Industrial | 52,040 | 366,253 | 0.6% | $247,686 | 0.6% | 3,350,000 | 0.6% | |
44 | 1256 Oakbrook Drive | Norcross, GA | Industrial | 40,392 | 321,588 | 0.5% | $191,411 | 0.5% | 2,950,000 | 0.5% | |
45 | 550 Heartland | Sugar Grove, IL | Industrial | 30,328 | 288,834 | 0.5% | $203,700 | 0.5% | 2,650,000 | 0.5% | |
46 | Rittiman East Industrial Park #22 | San Antonio, TX | Industrial | 37,026 | 284,367 | 0.5% | $184,961 | 0.5% | 2,610,000 | 0.5% | |
Total | 6,094,177 | $60,000,000 | 100.0% | $41,031,381 | 100.0% | $551,000,000 | 100.0% | ||||
(1) | Underwritten Base Rent has been further adjusted to account for a 10.0% stress to tenants who missed full or partial rent payments in April, May and/or June or have requested rent relief during the COVID-19 pandemic. The total stress to Underwritten Base Rent is $223,074. An additional stress loss adjustment of 10.0% was applied to reimbursements for any tenants that missed full rent payments in April, May and/or June. The total stress to reimbursements is $79,032. |
(2) | The Columbus West – Business Park property is currently 100.0% vacant and has been underwritten as such. |
(3) | The 1155 Bowes Road property is leased to a single tenant that is currently dark. The tenant is underwritten as vacant. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
57
LOAN #5: AGELLAN PORTFOLIO
Portfolio Summary (continued)
No. | Property Name | Market | Property Type | Property Sub-Type | Net Rentable Area | Property Occupancy | Year Built | Year Renovated | Ceiling Height | Percent Office | Appraisal Cap Rate(1) | |||||||||||
1 | Sarasota Distribution Hub | Tampa | Industrial | Warehouse/Distribution | 906,449 | 100.0% | 1981 | 2007 | 28' | 5.0% | 6.75% | |||||||||||
2 | Naperville Woods Office Center | Chicago | Office | Suburban | 482,497 | 95.4% | 1981, 1988 | 2007 | NAP | 100.0% | 8.25% | |||||||||||
3 | Southpark Business Park FOP | Austin | Industrial | Flex | 187,075 | 100.0% | 1982 | NAP | 16' | 96.0% | 6.25% | |||||||||||
4 | Supervalu | Dallas | Industrial | Warehouse/Distribution | 253,800 | 100.0% | 1996 | NAP | 32' | 7.0% | 6.50% | |||||||||||
5 | Plainfield Business Center IV | Indianapolis | Industrial | Warehouse/Distribution | 434,354 | 100.0% | 1999 | NAP | 30' | 3.5% | 5.75% | |||||||||||
6 | Beltway III | Houston | Office | CBD | 130,566 | 100.0% | 2005 | NAP | NAP | 100.0% | 8.00% | |||||||||||
7 | 4405 Continental Dr | Flint | Industrial | Warehouse/Distribution | 400,000 | 100.0% | 1999 | 2006 | 30' | 2.0% | 9.50% | |||||||||||
8 | Beltway IV | Houston | Office | CBD | 131,702 | 72.6% | 2006 | NAP | NAP | 100.0% | 8.50% | |||||||||||
9 | Sandy Plains Business Park | Atlanta | Industrial | Flex | 167,329 | 94.3% | 1986 | NAP | 20' | 40.0% - 95.0% | 7.00% | |||||||||||
10 | Silber Industrial Park | Houston | Industrial | Warehouse/Distribution | 198,970 | 90.4% | 1978 | NAP | 21' - 24' | 13.0% | 6.50% | |||||||||||
11 | Southpark Business Park M | Austin | Industrial | Flex | 72,550 | 100.0% | 1983 | NAP | 16' | 96.0% | 6.75% | |||||||||||
12 | Coliseum Distribution Center #1 | San Antonio | Industrial | Warehouse/Distribution | 208,000 | 100.0% | 1978 | NAP | 26.5' | 5.0% | 6.00% | |||||||||||
13 | West by Northwest Business Blvd | Houston | Industrial | Flex | 122,750 | 91.5% | 1983 | NAP | 19' | 34.0% | 7.00% | |||||||||||
14 | Norcross Center | Atlanta | Industrial | Flex | 169,951 | 100.0% | 1988 | NAP | 20' | 33.0% | 7.00% | |||||||||||
15 | Goshen Springs | Atlanta | Industrial | Flex | 152,319 | 95.3% | 1986 | NAP | 26' | 33.0% | 6.25% / 6.75% | |||||||||||
16 | Long Point Center | Houston | Industrial | Warehouse/Distribution | 189,680 | 94.3% | 1979 | NAP | 24' | 11.0% | 7.50% / 7.25% | |||||||||||
17 | Corridor Park D | Austin | Industrial | Flex | 56,100 | 100.0% | 1999 | 2016 | 24' | 100.0% | 6.50% | |||||||||||
18 | Southport 1-4 | Houston | Industrial | Flex | 149,401 | 77.7% | 1980 | NAP | 16' | 33.0% | 8.00% | |||||||||||
19 | Jameel | Houston | Industrial | Flex | 94,900 | 87.5% | 1983 | NAP | 19' | 50.0% | 6.75% | |||||||||||
20 | Beltway II | Houston | Office | CBD | 101,039 | 13.3% | 2003 | NAP | NAP | 100.0% | 9.00% | |||||||||||
21 | Braker Center 4 | Austin | Industrial | Flex | 45,913 | 90.3% | 1984 | 1999 | 16' | 95.0% | 6.50% | |||||||||||
22 | Northgreen 1-4 | Houston | Industrial | Flex | 118,736 | 61.7% | 1982 | NAP | 12’ - 18’ | 35.0% | 8.00% | |||||||||||
23 | Minimax | Houston | Industrial | Warehouse/Distribution | 119,821 | 100.0% | 1967 | NAP | 20' | 13.0% | 6.50% | |||||||||||
24 | Southpark Business Park E | Austin | Industrial | Flex | 49,966 | 100.0% | 1982 | 1992 | 16' | 100.0% | 6.75% | |||||||||||
25 | 9385 Washington Blvd | Baltimore | Industrial | Flex | 57,590 | 92.2% | 1988 | 2007 | 18' | 20.0% | 6.00% | |||||||||||
26 | Rothway | Houston | Industrial | Flex | 75,460 | 43.8% | 1983 | NAP | 14' | 90.0% | 7.00% | |||||||||||
27 | 2730 Pinnacle | Chicago | Industrial | Warehouse/Distribution | 44,990 | 100.0% | 2005 | 2007 | 20' | 45.0% | 7.50% | |||||||||||
28 | Columbus West - Interchange Rd | Columbus | Industrial | Flex | 91,200 | 89.5% | 1974 | NAP | 22' | 20.0% | 8.00% | |||||||||||
29 | 1346 Oakbrook Drive | Atlanta | Industrial | Flex | 71,591 | 100.0% | 1985 | NAP | 14' | 85.0% | 7.25% | |||||||||||
30 | 1230-1236 Hardt Circle | Chicago | Industrial | Warehouse/Distribution | 60,080 | 75.1% | 2008 | NAP | 24' | 10.0% | 6.25% | |||||||||||
31 | Pine Forest Business Park | Houston | Industrial | Warehouse/Distribution | 80,091 | 30.9% | 1980 | NAP | 20' - 22' | 14.0% | 7.00% | |||||||||||
32 | 1351 Oakbrook Drive | Atlanta | Industrial | Flex | 36,489 | 68.5% | 1985 | NAP | 12' | 72.0% | 7.00% | |||||||||||
33 | 1325 Oakbrook Drive | Atlanta | Industrial | Flex | 53,120 | 100.0% | 1986 | NAP | 20' | 21.0% | 7.00% | |||||||||||
34 | 490 Heartland Drive | Chicago | Industrial | Warehouse/Distribution | 39,520 | 100.0% | 2002 | NAP | 20' | 20.0% | 7.50% | |||||||||||
35 | 1265 Oakbrook Drive | Atlanta | Industrial | Flex | 51,200 | 100.0% | 1985 | NAP | 18' | 21.0% | 7.00% | |||||||||||
36 | Columbus West - Business Park | Columbus | Industrial | Flex | 92,618 | 0.0% | 1996 | 2005 | 25' | 20.0% | 8.00% | |||||||||||
37 | 1155 Bowes Road | Chicago | Industrial | Warehouse/Distribution | 34,400 | 0.0% | 2006 | NAP | 26' | 20.0% | 6.50% | |||||||||||
38 | 1280 Oakbrook Drive | Atlanta | Industrial | Flex | 46,400 | 100.0% | 1986 | NAP | 19' | 27.0% | 7.25% | |||||||||||
39 | Rittiman East Industrial Park #23 & 24 | San Antonio | Industrial | Flex | 50,806 | 90.6% | 1983 | NAP | 16’ - 18' | 19.0% | 7.50% | |||||||||||
40 | 2002 Bloomingdale | Chicago | Industrial | Warehouse/Distribution | 31,919 | 100.0% | 1998 | NAP | 23' | 15.0% | 6.00% | |||||||||||
41 | 333 Charles Court | Chicago | Industrial | Warehouse/Distribution | 36,623 | 100.0% | 2007 | NAP | 20' | 20.0% | 7.25% | |||||||||||
42 | 483 Heartland Drive | Chicago | Industrial | Warehouse/Distribution | 36,426 | 84.1% | 2010 | NAP | 24' | 10.0% | 6.50% | |||||||||||
43 | Cox Business Center | Cincinnati | Industrial | Warehouse/Distribution | 52,040 | 100.0% | 1987 | NAP | 15' - 19' | 10.0% | 7.25% | |||||||||||
44 | 1256 Oakbrook Drive | Atlanta | Industrial | Flex | 40,392 | 87.5% | 1985 | NAP | 20' | 28.0% | 7.00% | |||||||||||
45 | 550 Heartland | Chicago | Industrial | Warehouse | 30,328 | 100.0% | 2000 | 2007 | 20' | 15.0% | 6.50% | |||||||||||
46 | Rittiman East Industrial Park #22 | San Antonio | Industrial | Warehouse/Distribution | 37,026 | 83.8% | 1983 | NAP | 18' | 14.0% | 7.50% |
(1) | The Naperville Woods Office Center, Goshen Springs and Long Point Center properties have multiple buildings that were appraised separately. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
58
LOAN #5: AGELLAN PORTFOLIO
Property Distribution
Property Type | No. of Properties | Total SF | % of Total SF | Allocated Loan Amount | % Allocated Loan Amount | Underwritten Base Rent | % of Underwritten Base Rent | Appraised Value | % of Appraised Value | |
Industrial | 42 | 5,248,373 | 86.1% | $47,359,801 | 78.9% | $29,274,423 | 71.3% | $435,200,000 | 79.0% | |
Warehouse / Distribution | 18 | 3,164,189 | 51.9% | 24,579,156 | 41.0% | 15,225,330 | 37.1% | 226,680,000 | 41.1% | |
Flex | 23 | 2,053,856 | 33.7% | 22,491,811 | 37.5% | 13,845,394 | 33.7% | 205,870,000 | 37.4% | |
Warehouse | 1 | 30,328 | 0.5% | 288,834 | 0.5% | 203,700 | 0.5% | 2,650,000 | 0.5% | |
Office | 4 | 845,804 | 13.9% | $12,640,199 | 21.1% | $11,756,958 | 28.7% | 115,800,000 | 21.0% | |
Suburban | 1 | 482,497 | 7.9% | 7,509,677 | 12.5% | 7,480,569 | 18.2% | $68,800,000 | 12.5% | |
CBD | 3 | 363,307 | 6.0% | 5,130,521 | 8.6% | 4,276,389 | 10.4% | $47,000,000 | 8.5% | |
Portfolio Total | 46 | 6,094,177 | 100.0% | $60,000,000 | 100.0% | $41,031,381 | 100.0% | $551,000,000 | 100.0% | |
Since May 2019, the borrower sponsor has executed 38 new, renewal and expansion leases for approximately 470,218 SF Renewal leases totaled approximately 342,447 SF and had weighted average rent increases of approximately 8.7%. Renewal and expansion leases totaled approximately 43,983 SF and had weighted average rent increases of 16.1%. New leases accounted for approximately 78,344 SF and had weighted average rent increases of 8.3%.
Portfolio Leasing Spreads(1)
Lease Type | Expiring SF | Expiring Rent per SF | New SF | Rent per SF | Leasing Spread $ | Leasing Spread % |
Renew | 342,447 | $8.58 | 342,447 | $9.32(2) | $0.75 | 8.7% |
Renew & Expansion | 28,284 | $6.23 | 43,983 | $7.24 | $1.01 | 16.1% |
Expansion | 11,252 | $6.00 | 5,444 | $5.84 | ($0.16)(3) | (2.7%)(3) |
New | 109,848 | $6.71 | 78,344 | $7.27 | $0.56 | 8.3% |
(1) | Since May 2019. |
(2) | The leasing spread for Dish Network Service LLC is calculated based a gross renewal rent of $8.70 PSF. |
(3) | International Valve at the 483 Heartland Drive property expanded and took 5,444 SF of the 11,252 SF of vacated space. The expansion increased the tenant’s footprint to 11,032 SF and the rent for the NRA occupied prior to the expansion (5,588 SF) also increased $0.16 PSF or 2.4%. |
Historical and Current Portfolio Occupancy(1)(2)(3)
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Current(4) | Current With Dark Tenants(5) | Current With Dark Tenants and Known Vacates(6) | |
# of Assets(7) | 21 | 21 | 28 | 31 | 40 | 42 | 42 | 46 | 46 | 46 |
Portfolio NRA SF (mns) | 3,224 | 3,224 | 3,689 | 4,917 | 5,631 | 5,745 | 5,745 | 6,094 | 6,094 | 6,094 |
% Occupancy | 91.8% | 91.0% | 94.4% | 93.3% | 94.7% | 96.1% | 96.2% | 90.4% | 92.1% | 93.4% |
(1) | Historical occupancy data for the four recent acquisitions is not available. |
(2) | Historical occupancy for 2013 – 2019 is reflective of quarterly averages for each respective year. |
(3) | Historical occupancy for 2013 – 2019 includes any applicable leased dark space. |
(4) | Current occupancy is based on the underwritten rent roll and excludes dark, known vacate, and bankrupt tenants. |
(5) | Current With Dark Tenants occupancy is inclusive of dark tenants. |
(6) | Current With Dark Tenants and Known Vacates occupancy is inclusive of dark and known vacate tenants. |
(7) | # of Assets may vary from the “Portfolio Operating History” below as certain properties have not provided occupancy history. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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Ten Largest Owned Tenants Based on Underwritten Base Rent(1)
Tenant | Property Type | Credit Rating (Fitch/MIS/S&P)(2) | Tenant GLA | % of GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent PSF(3) | Lease Expiration | Renewal / Extension Options |
Health Care Service Corp.(4) | Office | A-/A3/AA- | 177,114 | 2.9% | $2,833,824 | 6.9% | $16.00 | 11/30/2025 | 1, 5-year option |
United Natural Foods Inc. | Industrial | NR/B2/B | 463,172 | 7.6% | 2,621,553 | 6.4% | $5.66 | 7/31/2022 | 1, 5-year option |
ALDI, Inc.(4) | Office | NR/NR/NR | 137,986 | 2.3% | 2,220,074 | 5.4% | $16.09 | 12/31/2028 | 1, 5-year option |
General Motors LLC | Industrial | BBB-/Baa3/BBB | 400,000 | 6.6% | 2,097,244 | 5.1% | $5.24 | 8/31/2021 | 2, 5-year options |
Moran Foods LLC | Industrial | NR/NR/B- | 253,800 | 4.2% | 1,573,560 | 3.8% | $6.20 | 9/30/2025 | 2, 7-year options |
Life Technologies Corporation | Industrial | BBB/Baa1/BBB+ | 103,645 | 1.7% | 1,347,385 | 3.3% | $13.00 | 6/30/2025 | 1, 5-year option |
Allstate Insurance Co. | Office | A+/Aa3/AA- | 75,623 | 1.2% | 1,209,968 | 2.9% | $16.00 | 5/31/2024 | 2, 5-year options |
Ceva Freight LLC | Industrial | NR/B1/B+ | 333,397 | 5.5% | 1,028,844 | 2.5% | $3.09 | 8/31/2022 | 2, 5-year options |
Beall's, Inc. (5) | Industrial | NR/NR/NR | 200,000 | 3.3% | 960,000 | 2.3% | $4.80 | 9/30/2021 | 1, 3-year option |
VTech Communications, Inc. | Industrial | NR/NR/NR | 208,000 | 3.4% | 942,656 | 2.3% | $4.53 | 7/31/2022 | 1, 5-year option |
Ten Largest Owned Tenants | 2,352,737 | 38.6% | $16,835,110 | 41.0% | $7.16 | ||||
Remaining Owned Tenants | 3,156,625 | 51.8% | 24,196,272 | 59.0% | $7.67 | ||||
Vacant | 584,815 | 9.6% | 0 | 0.0% | $0.00 | ||||
Total / Wtd. Avg. | 6,094,177 | 100.0% | $41,031,381 | 100.0% | $7.45 |
(1) | Based on the underwritten rent roll. |
(2) | In certain instances, ratings provided are those of the parent company of the entity shown, whether or not the parent company guarantees the lease. |
(3) | UW Base Rent PSF is inclusive of contractual rent steps taken through June 1, 2021. |
(4) | ALDI, Inc. reflects an expansion option for 24,597 SF that was exercised in February 2020. The expansion space is currently occupied by Health Care Services Corp. (“HCSC”). HCSC will be relocated within the Naperville Wood Office Center property as part of the ALDI, Inc. expansion, which will allow HCSC to have all of its office space in one building. Additionally, HCSC’s overall footprint will increase slightly with the relocation space from 175,080 SF to 177,114 SF. The expansion and relocation are estimated to occur in June/July 2021. |
(5) | In May 2018 Beall’s Inc. vacated and subleased its space to United Natural Foods Inc. |
Lease Expiration Schedule(1)(2)
Year Ending December 31 | # of Leases Expiring | Expiring Owned GLA | % of Owned GLA | Cumulative % of Owned GLA | UW Base Rent(3) | % Total UW Base Rent | UW Base Rent $ per SF(3) |
2020 & MTM | 43 | 460,033 | 7.5% | 7.5% | $2,699,461 | 6.6% | $5.87 |
2021(4) | 61 | 1,264,748 | 20.8% | 28.3% | 7,900,783 | 19.3% | $6.25 |
2022(5) | 45 | 1,523,829 | 25.0% | 53.3% | 8,589,113 | 20.9% | $5.64 |
2023 | 38 | 470,932 | 7.7% | 61.0% | 4,123,559 | 10.0% | $8.76 |
2024 | 33 | 633,520 | 10.4% | 71.4% | 4,505,835 | 11.0% | $7.11 |
2025 | 18 | 786,447 | 12.9% | 84.3% | 7,935,153 | 19.3% | $10.09 |
2026 | 3 | 50,301 | 0.8% | 85.2% | 453,559 | 1.1% | $9.02 |
2027 | 5 | 112,643 | 1.8% | 87.0% | 1,750,362 | 4.3% | $15.54 |
2028 | 3 | 202,643 | 3.3% | 90.3% | 2,958,461 | 7.2% | $14.60 |
2029 | 0 | 0 | 0.0% | 90.3% | $0 | 0.0% | $0.00 |
2030 & Thereafter | 1 | 4,266 | 0.1% | 90.4% | 115,097 | 0.3% | $26.98 |
Vacant | NAP | 584,815 | 9.6% | 100.0% | NAP | NAP | NAP |
Total / Wtd. Avg. | 250 | 6,094,177 | 100.0% | $41,031,381 | 100.0% | $7.45 |
(1) | Based on the underwritten rent roll. |
(2) | Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease or leases which are not considered in the lease rollover schedule. |
(3) | UW Base Rent and UW Base Rent $ per SF are inclusive of (i) contractual rent steps taken through June 1, 2021 and includes the ALDI, Inc. expansion of approximately 24,597 SF and the HCSC relocation at the Naperville Woods Office Center property. UW Base Rent has been further adjusted to account for a 10.0% stress to tenants who missed full or partial April, May and/or June rent payments and/or have requested rent relief during the COVID-19 pandemic. The total stress to UW Base Rent is $223,074. |
(4) | General Motors, LLC leases will expire in 2021 and has two, five-year renewal options at the greater of market rent or 90% of the then-current base rent. General Motors, LLC has occupied the property since 1998. General Motors has expressed interest to renew and is expecting to receive a formal proposal with renewal terms from the borrower sponsor. |
(5) | Both United Natural Foods, Inc. and Ceva Freight LLC leases will expire in 2022. United Natural Foods, Inc. has one, five-year renewal option at market rent. Ceva Freight LLC has two, five-year renewal options at market rent. United Natural Foods Inc. and Ceva Freight have both engaged the borrower sponsor about potentially expanding at expiration if any space were to become vacant at the respective properties. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #5: AGELLAN PORTFOLIO
Major Tenants. The top five tenants occupying the Agellan Properties by Underwritten Base Rent are Health Care Service Corp. (177,114 SF; 2.9% of NRA; 6.9% of Underwritten Base Rent), United Natural Foods, Inc. (463,172 SF; 7.6% of NRA; 6.4% of Underwritten Base Rent), ALDI, Inc. (137,986 SF; 2.3% of NRA; 5.4% of Underwritten Base Rent), General Motors LLC (400,000 SF; 6.6% of NRA; 5.1% of Underwritten Base Rent) and Moran Foods LLC (253,800 SF; 4.2% of NRA; 3.8% of Underwritten Base Rent).
Health Care Service Corp. (177,114 SF; 2.9% of NRA; 6.9% of Underwritten Base Rent). Health Care Service Corp. (“HCSC”) is an independent licensee of the Blue Cross and Blue Shield Association. HCSC is the largest customer-owned health insurer in the United States and fifth largest overall. Health Care Service Corp operates through Blue Cross and Blue Shield Plans in Illinois, Montana, New Mexico, Oklahoma and Texas. HCSC affiliates and subsidiaries such as Dearborn National, Medecision and Dental Network of America offer group life, disability and dental solutions, as well as a range of other individual solutions. The company, founded in 1936, serves more than 16 million members across five states and employs more than 23,000 people in over 60 local offices. A portion of the space occupied by HCSC is expected to be relocated within the Naperville Wood Office Center property in conjunction with the ALDI, Inc. expansion, which will allow HCSC to have all of its office space in one building. Additionally, HCSC’s overall footprint will increase slightly with the relocation space from 175,080 SF to 177,114 SF. The expansion and relocation are estimated to occur in June/July 2021. Health Care Service Corp. has one, five-year renewal option at market rent.
United Natural Foods, Inc. (463,172 SF; 7.6% of NRA; 6.4% of Underwritten Base Rent). United Natural Foods, Inc. engages in the distribution of natural, organic, and specialty foods and non-food products. The company is headquartered in Providence, Rhode Island. United Natural Foods, Inc. has one, five-year renewal option at market rent.
ALDI, Inc. (137,986 SF; 2.3% of NRA; 5.4% of Underwritten Base Rent). ALDI, Inc. owns and operates grocery stores throughout the United States. ALDI, Inc. offers grocery, meat, fresh produce, wine and beer, beverages, and other home products. ALDI, Inc. is located in Batavia, Illinois. ALDI, Inc. has approximately 3,000 total employees across all of its locations and generates approximately $4.32 billion in sales annually. ALDI, Inc. operated more than 1,900 stores across 36 states. In February 2020, ALDI, Inc. exercised an expansion option for an additional 24,597 SF. ALDI, Inc. has one, five-year renewal option at market rent.
General Motors LLC (400,000 SF; 6.6% of NRA; 5.1% of Underwritten Base Rent). General Motors LLC is the fourth largest automaker globally and the largest in the United States with approximately $246.6 billion in total assets as of March 31, 2020. Headquartered in Detroit, Michigan, General Motors LLC’s brands include Chevrolet, Buick, GMC and Cadillac. General Motors LLC has two, five-year renewal options at the greater of market rent or 90% of the then-current base rent.
Moran Foods LLC (253,800 SF; 4.2% of NRA; 3.8% of Underwritten Base Rent). Moran Foods LLC is the parent company of Save-A-Lot Holdings, LLC (“Save-A-Lot”). Save-A-Lot is an American discount grocery store chain with approximately 1,300 stores across 36 states with over $4.0 billion in annual sales. Headquartered in St. Louis, Missouri, Save-A-Lot’s stores carry most grocery products, including an assortment of fresh, canned and frozen produce as well as meat, meal products, household items and everyday groceries. Moran Foods LLC has two, seven-year renewal options at $6.75 PSF and market rent, respectively.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #5: AGELLAN PORTFOLIO
■ | Operating History and Underwritten Net Cash Flow. |
Portfolio Operating History
2015 | 2016 | 2017 | 2018 | 2019 | 2020 Budget | |||||
2015 Reporting Assets | ||||||||||
Number of Properties | 27 | 27 | 27 | 27 | 27 | 27 | ||||
Effective Gross Revenue | $40,377,590 | $41,938,945 | $40,607,440 | $42,687,111 | $43,265,751 | $44,216,063 | ||||
Operating Expenses | $15,493,935 | $15,426,605 | $15,832,843 | $16,065,442 | $16,124,634 | $16,800,898 | ||||
Net Operating Income | $24,883,655 | $26,512,341 | $24,774,596 | $26,621,670 | $27,141,118 | $27,415,165 | ||||
Year-over-Year Change | - | 6.5% | -6.6% | 7.5% | 2.0% | 1.0% | ||||
2016 Reporting Assets | ||||||||||
Number of Properties | 31 | 31 | 31 | 31 | 31 | |||||
Effective Gross Revenue | $43,483,706 | $50,440,354 | $52,850,050 | $54,478,273 | $55,355,348 | |||||
Operating Expenses | $15,881,067 | $19,253,268 | $19,685,230 | $20,636,890 | $20,967,544 | |||||
Net Operating Income | $27,602,639 | $31,187,086 | $33,164,820 | $33,841,384 | $34,387,804 | |||||
Year-over-Year Change | - | 13.0% | 6.3% | 2.0% | 1.6% | |||||
2017 Reporting Assets | ||||||||||
Number of Properties | 41 | 41 | 41 | 41 | ||||||
Effective Gross Revenue | $53,679,748 | $58,304,052 | $60,181,340 | $61,115,986 | ||||||
Operating Expenses | $19,917,149 | $20,981,732 | $22,007,429 | $22,423,094 | ||||||
Net Operating Income | $33,762,598 | $37,322,320 | $38,173,911 | $38,692,892 | ||||||
Year-over-Year Change | - | 10.5% | 2.3% | 1.4% | ||||||
2018 Reporting Assets | ||||||||||
Number of Properties | 46 | 46 | 46 | |||||||
Effective Gross Revenue | $60,700,041 | $63,486,372 | $64,626,262 | |||||||
Operating Expenses | $21,738,754 | $23,013,221 | $23,452,522 | |||||||
Net Operating Income | $38,961,287 | $40,473,151 | $41,173,740 | |||||||
Year-over-Year Change | - | 3.9% | 1.7% | |||||||
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #5: AGELLAN PORTFOLIO
Cash Flow Analysis
2016 | 2017 | 2018 | 2019(1) | Underwritten(1)(2) | Underwritten PSF | |
Agellan Properties Included | 31 | 41 | 46 | 46 | 46 | |
Base Rent | $30,444,923 | $36,778,978 | $40,209,368 | $42,047,666 | $41,031,381 | $6.73 |
Vacant Income(3) | 0 | 0 | 0 | 0 | 5,221,640 | $0.86 |
Total Reimbursements Revenue(4) | 12,782,653 | 16,793,058 | 19,551,436 | 21,118,949 | 20,640,034 | $3.39 |
Gross Revenue | $43,227,576 | $53,572,036 | $59,760,803 | $63,166,615 | $66,893,055 | $10.98 |
Vacancy & Credit Loss(5) | (53,002) | (16,561) | (50,095) | (101,504) | (7,113,805) | ($1.17) |
Other Income | 309,133 | 124,273 | 989,333 | 421,261 | 571,000 | $0.09 |
Effective Gross Income | $43,483,706 | $53,679,748 | $60,700,041 | $63,486,372 | $60,350,250 | $9.90 |
Real Estate Taxes | $6,527,446 | $7,914,494 | $9,096,417 | $9,395,160 | $10,132,966 | $1.66 |
Insurance | $804,315 | $1,067,025 | $1,051,392 | $1,083,269 | $1,517,682 | $0.25 |
Management Fee | $949,089 | $1,149,678 | $1,278,484 | $1,389,804 | $1,810,508 | $0.30 |
Other Operating Expenses | $7,600,216 | $9,785,953 | $10,312,461 | $11,144,988 | $10,698,670 | $1.76 |
Total Operating Expenses | $15,881,067 | $19,917,149 | $21,738,754 | $23,013,221 | $24,159,826 | $3.96 |
Net Operating Income | $27,602,639 | $33,762,598 | $38,961,287 | $40,473,151 | $36,190,424 | $5.94 |
TI/LC | 0 | 0 | 0 | 0 | 2,623,997 | $0.43 |
Capital Expenditures | 0 | 0 | 0 | 0 | 693,998 | $0.11 |
Net Cash Flow | $27,602,639 | $33,762,598 | $38,961,287 | $40,473,151 | $32,872,429 | $5.39 |
(1) | The change from 2019 Net Operating Income to Underwritten Net Operating Income is largely attributable to adjustments made in relation to dark and known to be vacating tenants. |
(2) | Underwritten Base Rent is inclusive of contractual rent steps taken through June 1, 2021 and includes the ALDI, Inc. expansion of approximately 24,597 SF and HCSC relocation at the Naperville Woods Office Center property. Underwritten Base Rent has been further adjusted to account for a 10.0% stress to tenants who missed full or partial rent payments in April, May and/or June or have requested rent relief during the COVID-19 pandemic. The total stress to Underwritten Base Rent is $223,074. |
(3) | Vacant Income includes all applicable dark tenants as well as known vacates. |
(4) | Total Reimbursements Revenue includes reimbursements to lease terms of each tenant. An additional stress loss adjustment of 10.0% was applied to any tenants that missed full rent payments in April, May and/or June. The total stress to reimbursements is $79,032. |
(5) | Vacancy is underwritten to 10.6%, which represents the sum of economic vacancy of the Agellan Portfolio, inclusive of a minimum vacancy of 5.0% for all Agellan Properties. |
■ | Appraisal. According to the appraisal, the appraised value is based on an aggregate “as is” value of the Agellan Properties and is inclusive of excess land value that is defined in each individual Agellan Property appraisal and serves as collateral for the Agellan Portfolio Loan Combination. The excess vacant land parcels associated with the Sarasota Distribution Hub and Supervalu properties may be released pursuant to satisfying conditions set forth in “—Partial Releases” below. |
■ | Environmental Matters. The Phase I environmental reports provided prior to loan origination identified certain environmental conditions, including, among other conditions, groundwater contamination from the release of chlorinated solvents, and recommended follow-up actions. For additional information with respect to environmental conditions, please see “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus. |
■ | Market Overview and Conditions. The Agellan Portfolio includes properties located across nine states. The top five states by UW Base Rent are Texas (46.7% of allocated loan amount (“ALA”); 43.4% of UW Base Rent), Illinois (18.0% of ALA; 22.8% of UW Base Rent), Florida (12.6% of ALA; 11.7% of UW Base Rent), Georgia (11.3% of ALA; 10.9% of UW Base Rent) and Michigan (3.4% of ALA; 5.1% of UW Base Rent). |
Geographic Distribution
State | Number of Properties | Total SF | % of Total SF | Allocated Loan Amount | (%) Allocated Loan Amount | UW Base Rent | % of UW Base Rent | Appraised Value | % of Appraised Value |
Texas | 21 | 2,474,352 | 40.6% | $28,030,273 | 46.7% | $17,819,019 | 43.4% | $257,400,000 | 46.7% |
Illinois | 9 | 796,783 | 13.1% | 10,805,955 | 18.0% | 9,375,116 | 22.8% | 99,000,000 | 18.0% |
Florida | 1 | 906,449 | 14.9% | 7,561,787 | 12.6% | 4,804,386 | 11.7% | 70,200,000 | 12.7% |
Georgia | 9 | 788,791 | 12.9% | 6,762,283 | 11.3% | 4,471,074 | 10.9% | 61,750,000 | 11.2% |
Michigan | 1 | 400,000 | 6.6% | 2,047,146 | 3.4% | 2,097,244 | 5.1% | 18,750,000 | 3.4% |
Indiana | 1 | 434,354 | 7.1% | 2,630,769 | 4.4% | 1,385,853 | 3.4% | 24,100,000 | 4.4% |
Ohio | 2 | 183,818 | 3.0% | 999,007 | 1.7% | 404,218 | 1.0% | 9,150,000 | 1.7% |
Maryland | 1 | 57,590 | 0.9% | 796,526 | 1.3% | 426,784 | 1.0% | 7,300,000 | 1.3% |
Kentucky | 1 | 52,040 | 0.9% | 366,253 | 0.6% | 247,686 | 0.6% | 3,350,000 | 0.6% |
Portfolio Total | 46 | 6,094,177 | 100.0% | $60,000,000 | 100.0% | $41,031,381 | 100.0% | $551,000,000 | 100.0% |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #5: AGELLAN PORTFOLIO
The Agellan Portfolio is located across 12 U.S. markets. The top five markets by UW Base Rent are Houston (24.2% of ALA; 23.2% of UW Base Rent), Chicago (18.0% of; 22.8% of UW Base Rent), Austin (13.7% of ALA; 12.9% of UW Base Rent), Tampa (12.6% of ALA; 11.7% of UW Base Rent) and Atlanta (11.3% of ALA; 10.9% of UW Base Rent).
Market Overview
Market | Number of Properties | Total SF | % of Total SF | Allocated Loan Amount | % Allocated Loan Amount | UW Base Rent | % of UW Base Rent | Appraised Value | % of Appraised Value |
Houston | 12 | 1,513,116 | 24.8% | $14,526,551 | 24.2% | $9,530,614 | 23.2% | $133,100,000 | 24.2% |
Chicago | 9 | 796,783 | 13.1% | 10,805,955 | 18.0% | 9,375,116 | 22.8% | 99,000,000 | 18.0% |
Austin | 5 | 411,604 | 6.8% | 8,207,940 | 13.7% | 5,278,622 | 12.9% | 75,200,000 | 13.6% |
Tampa | 1 | 906,449 | 14.9% | 7,561,787 | 12.6% | 4,804,386 | 11.7% | 70,200,000 | 12.7% |
Atlanta | 9 | 788,791 | 12.9% | 6,762,283 | 11.3% | 4,471,074 | 10.9% | 61,750,000 | 11.2% |
Flint | 1 | 400,000 | 6.6% | 2,047,146 | 3.4% | 2,097,244 | 5.1% | 18,750,000 | 3.4% |
Dallas | 1 | 253,800 | 4.2% | 2,874,938 | 4.8% | 1,573,560 | 3.8% | 26,720,000 | 4.8% |
San Antonio | 3 | 295,832 | 4.9% | 2,420,844 | 4.0% | 1,436,224 | 3.5% | 22,380,000 | 4.1% |
Indianapolis | 1 | 434,354 | 7.1% | 2,630,769 | 4.4% | 1,385,853 | 3.4% | 24,100,000 | 4.4% |
Baltimore | 1 | 57,590 | 0.9% | 796,526 | 1.3% | 426,784 | 1.0% | 7,300,000 | 1.3% |
Columbus | 2 | 183,818 | 3.0% | 999,007 | 1.7% | 404,218 | 1.0% | 9,150,000 | 1.7% |
Cincinnati | 1 | 52,040 | 0.9% | 366,253 | 0.6% | 247,686 | 0.6% | 3,350,000 | 0.6% |
Portfolio Total | 46 | 6,094,177 | 100.0% | $60,000,000 | 100.0% | $41,031,381 | 100.0% | $551,000,000 | 100.0% |
Major Markets.
Houston. According to a third party report, the Houston Industrial market ended the first quarter 2020 with a vacancy rate of 7.6%. The reported market vacancy rates for logistics and flex properties were 8.4% and 10.0%, respectively. The existing market inventory is made up of 74.6% logistics properties and 8.1% flex properties based on total SF. Rental rates ended the first quarter of 2020 at $7.42 PSF The average quoted rates for logistics and flex properties were $6.91 PSF and $10.61 PSF, respectively. The 12-month net absorption ending in the first quarter 2020 was 8,621,259 SF for logistics properties and -49,931 SF for flex properties.
According to a third party report, the Houston Office market ended the first quarter 2020 with a vacancy rate of 16.8%. The reported vacancy rates for Class A and Class B buildings were 19.6% and 17.1%, respectively. The existing market inventory is comprised of 44.5% Class A, 42.8% Class B, and 12.6% Class C based on total SF. The average quoted rental rate in the first quarter 2020 for all classes was $28.36 PSF. The average quoted rental rate for Class A and B was $34.07 PSF and $24.25 PSF, respectively. The 12-month net absorption ending in the first quarter 2020 for Class A & B in the market was 1,251,779 SF and -1,448,622 SF, respectively.
Historical Market Occupancy – Industrial(1)
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
93.9% | 93.1% | 93.7% | 94.3% | 95.0% | 94.5% | 95.1% | 94.9% | 94.6% | 94.8% | 94.3% | 93.3% |
(1) | Source: Third party report. |
Historical Market Occupancy – Office(1)
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
88.4% | 86.7% | 86.9% | 87.2% | 88.4% | 88.6% | 89.4% | 87.1% | 85.5% | 84.0% | 83.8% | 83.4% |
(1) | Source: Third party report. |
Chicago. According to a third party report, the Chicago Industrial market ended the first quarter 2020 with a vacancy rate of 6.2%. The reported market vacancy rates for logistics and flex properties were 7.1% and 7.6%, respectively. The existing market inventory is made up of 66.1% logistics properties and 5.8% flex properties based on total SF. Rental rates ended the first quarter of 2020 at $7.36 PSF. The average quoted rates for logistics and flex properties were $6.87 PSF and $12.24 PSF, respectively. The 12-month net absorption ending in the first quarter 2020 was 535,853 SF for flex properties and 14,631,591 SF for logistics properties.
According to a third party report, the Chicago Office market ended the first quarter 2020 with a vacancy rate of 12.2%. The reported vacancy rates for Class A and Class B buildings were 15.2% and 11.7%, respectively. The existing market inventory is comprised of 39.0% Class A, 44.2% Class B, and 16.7% Class C based on total SF. The average quoted rental rate in the first quarter 2020 for all classes was $29.44 PSF. The average quoted rental rate for Class A and B
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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was $37.39 PSF and $25.20 PSF, respectively. The 12-month net absorption ending in the first quarter 2020 for Class A and B in the market was 3,566,358 SF and -457,122 SF, respectively.
Historical Market Occupancy – Industrial(1)
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
89.8% | 88.1% | 88.2% | 89.1% | 90.6% | 91.3% | 92.6% | 93.2% | 93.8% | 93.7% | 94.2% | 94.1% |
(1) | Source: Third party report. |
Historical Market Occupancy – Office(1)
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
87.4% | 85.0% | 85.2% | 85.6% | 86.1% | 86.6% | 87.3% | 88.0% | 87.7% | 88.0% | 88.4% | 87.9% |
(1) | Source: Third party report. |
Austin. According to a third party report, the market vacancy rates for logistics and flex properties were 9.8% and 7.3%, respectively. The existing market inventory is made up of 60.5% logistics properties and 20.9% flex properties based on total SF. Rental rates ended the first quarter of 2020 at $11.30 PSF. The average quoted rates for logistics and flex properties were $9.93 PSF and $14.31 PSF, respectively. The 12-month net absorption ending in the first quarter 2020 was 1,113,224 SF for logistics properties and 744,867 SF for flex properties. According to a third party report, Austin is expected to outperform the state of Texas and nation in 2020, with a high number of technology companies and housing at the forefront. Long term, Austin is viewed as a market with a well-educated labor force, high concentration of technology businesses and a relatively low cost of living compared to other high technology based industries which is anticipated to fuel a high population growth for the market.
Historical Market Occupancy – Industrial(1)
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
90.2% | 87.8% | 88.5% | 89.6% | 91.3% | 93.5% | 93.5% | 95.6% | 95.6% | 93.6% | 93.6% | 92.8% |
(1) | Source: Third party report. |
Tampa. According to a third party report, the Tampa Bay Industrial market ended the first quarter 2020 with a vacancy rate of 5.0%. The reported market vacancy rates for logistics properties was 5.4%. The existing market inventory is made up of 66.3% logistics properties based on total SF. Rental rates ended the first quarter at $7.72 PSF. The average quoted rates for logistics properties was $7.11 PSF. The 12-month net absorption ending in the first quarter 2020 for logistics properties was 2,025,279 SF. According to a third party report, as of year-end 2019, Tampa’s industrial sector outpaced the industrial sectors in the state of Florida in relation to demand grow th at approximately 2.8 million SF of absorbed space. Tampa was the only market in the state that saw improved growth from approximately 2.7 million SF of positive net absorption year over year.
Historical Market Occupancy – Industrial(1)
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
92.3% | 89.4% | 89.3% | 89.8% | 90.2% | 91.6% | 92.3% | 93.8% | 95.0% | 95.1% | 95.3% | 95.1% |
(1) | Source: Third party report. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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Atlanta. According to a third party report, the Atlanta Industrial market ended the first quarter 2020 with a vacancy rate of 6.1%. The reported market vacancy rates for logistics and flex properties were 6.7% and 5.5%, respectively. The existing market inventory is made up of 77.4% logistics properties and 9.1% flex properties based on total SF. Rental rates ended the first quarter at $6.17 PSF. The average quoted rates for logistics and flex properties were $5.52 PSF and $11.03 PSF, respectively. The 12-month net absorption ending in the first quarter 2020 was 11,337,139 SF for logistics properties and -202,543 SF for flex properties. According to a third party report, the Atlanta market is seen as Georgia’s main growth engine and one of the strongest economies in the nation. Job growth, in the Atlanta market outsize business services and has averaged approximately 2.0% as of year-end 2019, which has been one of the best in the nation for nine consecutive years.
Historical Market Occupancy – Industrial(1)
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
87.5% | 86.4% | 85.6% | 86.9% | 87.5% | 88.7% | 91.5% | 93.1% | 93.0% | 94.1% | 94.6% | 94.4% |
(1) | Source: Third party report. |
■ | The Borrowers. The borrowers are Chicago Industrial Properties 1 LP, a Delaware limited partnership, Corridor Park LP, a Delaware limited partnership, Norcross Springs LP, a Delaware limited partnership, 6100 McIntosh LP, a Delaware limited partnership, 6100 McIntosh Vacant LP, a Delaware limited partnership, Agellan Commercial REIT U.S. L.P., a Delaware limited partnership, Continental Drive LP, a Delaware limited partnership, 9385 Washington Blvd. L.P., a Delaware limited partnership, Agellan Warrenville L.P., a Delaware limited partnership, 1300 Cox Avenue LP, a Delaware limited partnership, and San Antonio Industrial One LP, a Delaware limited partnership each structured to be a bankruptcy-remote entity with two independent directors in its organizational structure (collectively, the “Borrowers”). Legal counsel to the Borrowers delivered a non-consolidation opinion in connection with the origination of the Agellan Portfolio Loan Combination. The Borrowers are owned and controlled by Elad Canada Realty Inc., a privately held, commercial real estate company specializing in the acquisition and development of commercial and residential properties. ELAD Canada was founded in 1997 and is based in Toronto, Canada. The firm operates as a subsidiary of Elad US Holding, Inc. ELAD Canada has focused its business in central Canada, acquiring income producing properties, as well as development sites. As of 2020, ELAD Canada has 7.4 million SF of income producing space, as well as 4.4 million SF of construction in the pipeline and over 6,000 residential units under development. Under the terms of the Agellan Loan Combination documents, Elad Genesis Limited Partnership, a subsidiary of the borrower sponsor, is the non-recourse carveout guarantor for the Agellan Portfolio Loan Combination and is required to maintain a minimum net worth of $100 million during the term of the loan. ELAD Canada is a part of the ELAD Group. Founded in 1992, ELAD Group is a real estate conglomerate with development projects in North America, Europe and Israel. ELAD Group has developed successful condominiums, hotels and mixed-use projects making its mark as a significant developer of ultra-luxury properties in New York City, like the Plaza Hotel. ELAD Group is focused on the acquisition, development and conversion of architecturally significant residential and commercial properties in key markets throughout North America. |
The aggregate liability of the Guarantor with respect to the matters that constitute full recourse carveouts (each, a “Full Recourse Event”) under the Agellan Portfolio Loan Combination documents may not exceed an amount equal to (x) 20% of the outstanding principal balance of the Agellan Portfolio Loan Combination as of the first occurrence of a Full Recourse Event plus (y) any and all reasonable third-party costs incurred by the lender (including reasonable and out-of-pocket attorney’s fees and costs) in connection with the enforcement of the Full Recourse Event thereunder and the collection of amounts due thereunder.
The borrower sponsor has notified JPMCB that, Yitzhak Tshuva, the controlling shareholder of the entities that own ELAD Canada, has entered into a non-binding memorandum of understanding (“MOU”) to sell certain assets, including 37% of ELAD Canada to a joint venture between Plaza Partners and Argent Ventures. The non-binding MOU includes a call option in favor of the buyers and a put option in favor of the seller for the remaining 63% of ELAD Canada. If the purchase of the 37% stake occurs, the buyers will take over day-to-day operations of ELAD Canada. In the event the transaction moves forward, the borrower sponsor anticipates the closing to occur in September 2020. Argent Ventures is a vertically-integrated, diversified real estate investment and development firm specializing in opportunistic, and value-add transactions through the United States. Founded in 1997 and headquartered in New York City, Argent Ventures pursues debt- and equity- related investments in multiple asset classes. Since its inception, Argent Ventures has purchased over $2.5 billion in real estate assets and debt instruments in major markets in the United States and Europe. Founded in 1981, Plaza Partners is a real estate developer and asset manager that focuses on rezoning and developing residential properties in strong urban locations within the greater Toronto area. Plaza Partners’ current portfolio includes approximately four million square feet of potential density. Under the terms of the loan agreement, the lender is expected to have the right to consent to the proposed sale.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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See “Risk Factors—The Performance of a Mortgage Loan and Its Related Mortgaged Property Depends in Part on Who Controls the Borrower and Mortgaged Property” in the Preliminary Prospectus.
■ | Escrows. At loan origination, the Borrowers deposited (i) $6,410,963 for outstanding TI/LC obligations and free rent, (ii) $2,985,266 into the required repair reserve for deferred maintenance, (iii) $2,000,000 into a working capital reserve for shortfalls in debt service and operating expenses and the payment of any replacements, leasing costs, taxes, other charges and/or insurance premiums and (iv) $172,050 into the gap rent reserve. |
Tax Reserve. The Borrowers are required to deposit into a tax reserve, on a monthly basis, 1/12 of the estimated (a) annual real estate taxes, and (b) during a Cash Sweep Period, annual maintenance charges, impositions and any other charges levied or assessed against the Agellan Portfolio Properties, unless the Borrowers deliver evidence reasonably acceptable to lender that such amounts required for real estate taxes and maintenance charges, impositions and any other charges have or will be paid directly by a tenant. As of the origination date, the requirement for the payment of monthly real estate taxes for tenants have been paid directly by the Borrowers, with the exception of a small portion of the Supervalu property which was paid directly by the tenant.
Insurance Reserve. The Borrowers are required to deposit into an insurance reserve, on a monthly basis, 1/12 of estimated insurance premiums. In the event the borrowers obtain and maintain a blanket insurance policy that complies with the requirements of the Agellan Portfolio Loan Combination documents, the requirement for monthly deposits into the insurance reserve will be waived. As of the origination date, an acceptable blanket policy was in place.
Replacement Reserve. The Borrowers are required to deposit into the replacement reserve, on a monthly basis, approximately $101,570 (1/12 of $0.20 PSF), subject to a cap of the amount equal to 36 times the required monthly deposit (approximately $3.7 million).
TI/LC Reserve. The Borrowers are required to deposit into the TI/LC reserve, on a monthly basis, approximately $431,671 (1/12 of $0.85 PSF), subject to a cap of the amount equal to 36 times the required monthly deposit (approximately $15.5 million).
Working Capital Reserve. Provided no event of default exists, the lender will make disbursements from the working capital reserve for (i) the payment of shortfalls in the payment of debt service of mezzanine debt service, (ii) the payment of shortfalls for any documented operating expenses, (iii) the payment of any replacements at any Agellan Portfolio Property, (iv) the payment of any leasing costs at any Agellan Portfolio Property to the extent amounts in the TI/LC reserve are insufficient to pay such amounts and (v) the payment of taxes, other charges and insurance premiums at any Agellan Portfolio Property to the extent amounts in the taxes and insurance reserves are insufficient to pay such amounts.
Common Charges Funds Reserve. During the continuance of a Cash Sweep Period, the Borrowers are required to deposit into the common charges reserve, on a monthly basis, an amount equal to 1/12 of the fees, dues, charges and assessments payable under the condominium documents (the “Common Charges”) that the lender estimates will be payable during the next ensuing 12 months in order to accumulate sufficient funds to pay all such Common Charges at least 30 days prior to their respective due dates.
■ | Lockbox and Cash Management. The Agellan Portfolio Loan Combination documents require a hard lockbox and in-place cash management. At loan origination, the Borrowers were required to deliver tenant direction letters within 30 days following the loan origination date to the existing tenants at the Agellan Portfolio Properties, directing each tenant to remit its rent checks directly to the lender-controlled lockbox. All funds in the lockbox account are required to be swept to a lender-controlled cash management account every business day. Provided no Cash Sweep Period (as defined below) is continuing, all funds in the cash management account will be transferred into the Borrowers’ operating account. During a Cash Sweep Period, all excess cash in the cash management account after payment of debt service, required reserves, operating expenses, approved extraordinary expenses and mezzanine debt service will be retained by the lender as additional collateral for the Agellan Portfolio Loan Combination and disbursed to the Borrowers for payment of certain permitted amounts, including the payment of shortfalls in debt service and mezzanine debt service and payment of capital expenditure work. |
A “Cash Sweep Period” will commence upon the occurrence of (i) an event of default under the Agellan Portfolio Loan Combination documents, (ii) a bankruptcy action of any individual Borrower or any general partner or managing member, as applicable, of an individual Borrower, (iii) the date that is 30 days following any bankruptcy action of any property manager (unless as of such date the manager has been replaced in accordance with the Agellan Portfolio
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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Loan Combination documents), (iv) the debt service coverage ratio for any calendar quarter (based upon Agellan Portfolio Loan Combination and Agellan Portfolio Mezzanine Loan (as defined below) assuming a 30-year amortization on the trailing three-month period immediately preceding the end of such calendar quarter) being less than 1.15x, or (v) an event of default under the Agellan Portfolio Mezzanine Loan documents.
A Cash Sweep Period will cease to exist upon the following events (each, a “Cash Sweep Event Cure”): with respect to (a) clause (i) or (v) above, a cure of such event of default, (b) clause (iii) above, the replacement of the property manager with a qualified manager under a replacement management agreement in accordance with the Agellan Portfolio Loan Combination documents, or (c) clause (iv) above, the achievement of a debt service coverage ratio of 1.15x or greater for any calendar quarter based upon a 30-year amortization on the trailing three-month period immediately preceding the end of such calendar quarter; provided (1) no other event of default is continuing under any Agellan Portfolio Loan Combination documents or Agellan Portfolio Mezzanine Loan documents, and (2) the Borrowers will have paid all of the lender’s reasonable and actual out-of-pocket costs and expenses and the mezzanine borrowers will have paid all of the Mezzanine Lender’s (as defined below) reasonable and actual out-of-pocket costs and expenses, in each case, incurred by the lender or Mezzanine Lender, as applicable, in connection with such Cash Sweep Event Cure including, reasonable and actual out-of-pocket attorney’s fees and expenses.
■ | Property Management. The Agellan Portfolio is managed by 11 individual managers including Agellan Management LP, Colliers International Management - Atlanta, LLC, Adena Commercial LLC d/b/a Colliers International Greater Columbus Region, PCR Property Services, LLC d/b/a NAI Partners, Jones Lang LaSalle Americas, Inc., NAI Hiffman Asset Management, LLC, Stream Realty Partners-Austin, L.P., Stream Realty Partners-Houston, L.P., Stream Realty-Illinois, L.L.C., Hiffman Asset Management, LLC d/b/a Hiffman National, LLC, and Stream Realty Partners - Central TX, L.P. |
■ | Current Mezzanine or Secured Subordinate Indebtedness. Concurrently with the funding of the Agellan Portfolio Loan Combination, the lender (in such capacity, the “Mezzanine Lender”) also funded a mezzanine loan in the amount of $31.0 million (the “Agellan Portfolio Mezzanine Loan”). The Agellan Portfolio Mezzanine Loan is secured by the pledge of the direct or indirect equity interest in the Borrowers and is coterminous with the Agellan Portfolio Loan Combination. The Agellan Portfolio Mezzanine Loan accrues interest at a rate of 9.00000% per annum. Based on the Agellan Portfolio Loan Combination and the Agellan Portfolio Mezzanine Loan, the cumulative Cut-off Date LTV is 78.8%, the cumulative UW NCF DSCR is 1.54x and the cumulative UW NOI Debt Yield is 8.3%. The rights of the Mezzanine Lender under the Agellan Portfolio Mezzanine Loan are further described under “Description of the Mortgage Pool—Additional Indebtedness—Existing Mezzanine Debt” in the Preliminary Prospectus. |
■ | Future Mezzanine or Subordinate Indebtedness Permitted. None. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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■ | Other Indebtedness. Each of Agellan Commercial REIT U.S. L.P., 9385 Washington Blvd LP, 6100 McIntosh LP, Agellan Warrenville LP, Continental Drive LP, Norcross Springs LP, Corridor Park LP and Chicago Industrial Properties 1 LP (collectively, the “Intercompany Loan Lenders”) is a lender under a intercompany loan (each, an “Intercompany Loan”) to Piper Commercial Holdings LLC, an indirect parent company of the Intercompany Loan Lenders. The Intercompany Loans are fully funded, non-interest bearing, and collectively have an aggregate outstanding amount of $152,880,751. Each Intercompany Loan is unsecured and subject and subordinate to the Agellan Portfolio Loan in all respects. The borrower under each Intercompany Loan has agreed that so long as the Agellan Portfolio Loan remains outstanding, it will not (i) commence any legal or equitable proceedings against an Intercompany Loan Lender or otherwise in connection with such Intercompany Loan or (ii) assert any claims or demands whatsoever under applicable law against the Intercompany Loan Lender. See “Description of the Mortgage Pool—Additional Indebtedness—Preferred Equity and Preferred Return Arrangements” in the Preliminary Prospectus. |
■ | Partial Releases. Under the Agellan Portfolio Loan Combination documents, the Borrowers have the right to the release an individual Agellan Portfolio Property (each, an “Individual Property”) from the lien of the mortgage, provided that the Borrowers satisfy certain terms and conditions set forth in the Agellan Portfolio Loan Combination documents, including among other things (i) no event of default under the Agellan Portfolio Loan Combination documents has occurred and is continuing (other than an event of default that would be cured by the release of such individual Agellan Portfolio Property); (ii) the applicable individual Borrower (each such Borrower, an “Individual Borrower”) will make a voluntary prepayment of the Agellan Portfolio Loan Combination in an amount equal to the Release Price (as defined below) for the Individual Property; (iii) after giving effect to the release of the applicable Individual Property (including the portion of the Agellan Portfolio Loan Combination prepaid pursuant to the terms of the Agellan Portfolio Loan Combination documents), the debt service coverage ratio for the Agellan Portfolio Properties then remaining subject to the liens of the mortgages (excluding the Individual Property requested to be released) based on the trailing 12-month period immediately preceding the release of the applicable Individual Property will be equal to or greater than the greater of (A) the Release Debt Service Coverage Ratio (as defined below), and (B) the debt service coverage ratio for all of the Agellan Portfolio Properties then remaining subject to the liens of the mortgages (including the Individual Property requested to be released) immediately preceding the release of the applicable Individual Property based on the trailing 12 month period immediately preceding the release of the applicable Individual Property (such greater amount, the “Required Release DSCR”), provided that the Borrowers will have the right to do any one or a combination of the following to achieve the Required Release DSCR in accordance with the Agellan Portfolio Loan Combination documents make a prepayment of the Agellan Portfolio Loan Combination, deliver a letter of credit or deposit cash collateral with the lender; and (iv) subsequent to such release, each Individual Borrower will continue to be a special purpose entity. The Agellan Portfolio Loan Combination documents also provide that if the loan-to-value ratio exceeds or would exceed 125% immediately after the release, no release will be permitted unless the principal balance of the Agellan Portfolio Loan Combination is prepaid by an amount set forth in the Agellan Portfolio Loan Combination documents or the borrower delivers a REMIC opinion. |
“Release Debt Service Coverage Ratio” means the debt service coverage of 1.70x.
“Release Price” means, with respect to any Individual Property being released, (i) until an amount equal to $60,450,000 has been prepaid in connection with Partial Releases in accordance with the Agellan Portfolio Loan Combination documents, 110% of the Agellan Portfolio Loan Combination amount allocated to such Individual Property and (ii) thereafter, 115% of the Agellan Portfolio Loan Combination amount allocated to such Individual Property.
■ | Outparcel Release. In addition, the Agellan Portfolio Loan Combination documents provide that the Borrowers may release certain non-income producing parcels comprising a portion of Sarasota Distribution Hub, Supervalu and Naperville Woods Office Center properties upon satisfaction of certain conditions set forth in the Agellan Portfolio Loan Combination documents, including, without limitation, the payment of a release price set forth herein. |
■ | Condominium Structure. One of the Agellan Properties, owned by Chicago Industrial Properties 1 LP (the “Chicago Industrial Borrower”), is subject to a condominium declaration. The Chicago Industrial Borrower has an approximately 81.15% ownership in common elements, and controls the condominium association’s board of directors. Please see “Description of the Mortgage Pool—Statistical Characteristics of the Mortgage Loans—Condominium Interests and Other Shared Interests” in the Preliminary Prospectus for additional information. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #6: MOFFETT PLACE - BUILDING 6
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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Mortgaged Property Information | Mortgage Loan Information | ||||||||||||
Number of Mortgaged Properties | 1 | Loan Seller | GACC/JPMCB | ||||||||||
Location (City/State) | Sunnyvale, California | Cut-off Date Balance(3) | $57,750,000 | ||||||||||
Property Type | Office | Cut-off Date Balance per SF(2) | $423.41 | ||||||||||
Size (SF) | 314,352 | Percentage of Initial Pool Balance | 5.2% | ||||||||||
Total Occupancy as of 9/6/2019 | 100.0% | Number of Related Mortgage Loans | One | ||||||||||
Owned Occupancy as of 9/6/2019 | 100.0% | Type of Security | Fee Simple | ||||||||||
Year Built / Latest Renovation | 2020 / NAP | Mortgage Rate | 3.369279% | ||||||||||
Appraised Value(1) | $359,200,000 | Original Term to Maturity (Months) | 120 | ||||||||||
Appraisal Date | May 1, 2021 | Original Amortization Term (Months) | NAP | ||||||||||
Borrower Sponsor | Jay Paul | Original Interest Only Period (Months) | 120 | ||||||||||
Property Management | Paul Holdings, Inc. | First Payment Date | 9/6/2020 | ||||||||||
Maturity Date | 8/6/2030 | ||||||||||||
Underwritten Revenues | $18,990,159 | ||||||||||||
Underwritten Expenses | $2,692,414 | Escrows(4) | |||||||||||
Underwritten Net Operating Income (NOI) | $16,297,746 | Upfront | Monthly | ||||||||||
Underwritten Net Cash Flow (NCF) | $15,910,023 | Taxes | $0 | $85,000 | |||||||||
Cut-off Date LTV Ratio(1)(2) | 37.1% | Insurance | $0 | $0 | |||||||||
Maturity Date LTV Ratio(1)(2) | 37.1% | Replacement Reserve | $0 | $0 | |||||||||
DSCR Based on Underwritten NOI / NCF(2) | 3.58x / 3.50x | TI/LC | $2,728,059 | $0 | |||||||||
Debt Yield Based on Underwritten NOI / NCF(2) | 12.2% / 12.0% | Other | $14,559,592 | $0 | |||||||||
Sources and Uses | |||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||
Senior Notes | $133,100,000 | 53.5% | Loan Payoff | $164,454,172 | 66.0% | ||||||||
Junior Notes | 66,900,000 | 26.9 | Principal Equity Distribution | 57,161,746 | 23.0 | ||||||||
Mezzanine Loan | 49,000,000 | 19.7 | Reserves | 17,287,652 | 6.9 | ||||||||
Closing Costs | 10,096,430 | 4.1 | |||||||||||
Total Sources | $249,000,000 | 100.0% | Total Uses | $249,000,000 | 100.0% | ||||||||
(1) | The appraised value represents the “Prospective Market Value Upon Stabilization” as of May 1, 2021. The appraiser also concluded an “As-Is” appraised value of $333,000,000 as of August 1, 2020, which results in a Cut-off Date LTV and Maturity Date LTV of 40.0% for the Moffett Place – Building 6 Senior Notes (as defined below), 60.1% for the Moffett Place – Building 6 Loan Combination (as defined below) and 74.8% for the Moffett Place – Building 6 Total Debt (as defined below). |
(2) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the Moffett Place - Building 6 Senior Notes and excludes the Moffett Place - Building 6 Junior Notes (as defined below). |
(3) | The Cut-off Date Balance of $57,750,000 represents the non-controlling Note A-1-C5-1 and Note A-2-C, and is part of the Moffett Place - Building 6 Loan Combination (as defined below), which is evidenced by nine pari passu senior notes and two junior notes, and has an aggregate outstanding principal balance as of the Cut-off Date of $200,000,000. See “—The Mortgage Loan” below. GACC will contribute Note A-1-C5-1 in the amount of $31,230,000 and JPMCB will contribute Note A-2-C in the amount of $26,250,000. |
(4) | See “—Escrows” below. |
■ | The Mortgage Loan. The mortgage loan (the “Moffett Place - Building 6 Loan”) is secured by a first mortgage encumbering the borrower’s fee simple interest in a newly constructed Class A office building located in Sunnyvale, California (the “Moffett Place - Building 6 Property”), and is part of a loan combination (the “Moffett Place - Building 6 Loan Combination”) evidenced by nine pari passu senior notes with an aggregate initial principal balance of $133,100,000 (collectively the “Moffett Place - Building 6 Senior Notes”) and two junior notes with an aggregate initial principal balance of $66,900,000 (collectively the “Moffett Place - Building 6 Junior Notes”). A portion of the Moffett Place - Building 6 Senior Notes, with an aggregate balance of $0.5 million and the Moffett Place - Building 6 Junior Notes were contributed to the MOFT 2020-B6 securitization trust. The Moffett Place - Building 6 Loan, which is evidenced by the non-controlling Note A-1-C5-1 and Note A-2-C, which have an aggregate outstanding principal balance as of the Cut-off Date of $57,750,000 and represents approximately 5.2% of the Initial Pool Balance. The remaining Moffett Place - Building 6 Senior Notes are currently held by DBRI and JPMCB, as presented in the chart below, and are expected to be contributed to one or more future commercial mortgage securitization transactions. |
Loan Combination Summary | |||||
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece | |
A-1-S, A-2-S | $500,000 | $500,000 | MOFT 2020-B6 | No(1) | |
A-1-C5-1, A-2-C | $57,750,000 | $57,750,000 | Benchmark 2019-B19 | No | |
A-1-C1, A-1-C2, A-1-C3, A-1-C4, A-1-C5-2 | $74,850,000 | $74,850,000 | DBRI(2) | No | |
B-1, B-2 | $66,900,000 | $66,900,000 | MOFT 2020-B6 | Yes(1) | |
Total | $200,000,000 | $200,000,000 |
(1) | The initial controlling notes are Note B-1 and B-2, so long as no Moffett Place – Building 6 control appraisal period has occurred and is continuing. If and for so long as a Moffett Place – Building 6 control appraisal period has occurred and is continuing, then the controlling note will be the Note A-1-S and A-2-S. See “Description of the Mortgage Pool—The Loan Combinations—The Moffett Place – Building 6 Pari Passu-AB Loan Combination” in the Preliminary Prospectus. The Moffett Place - Building 6 Loan Combination is being serviced pursuant to the MOFT 2020-B6 trust and servicing agreement. For so long as no Moffett Place – Building 6 control appraisal period has occurred and is continuing, the control rights of the Moffett Place - Building 6 Junior Notes will be exercisable by the controlling class under the MOFT 2020-B6 trust and servicing agreement. |
(2) | Expected to be contributed to one or more future securitization transactions. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
72
LOAN #6: MOFFETT PLACE - BUILDING 6
The Moffett Place - Building 6 Senior Notes have an interest rate of 3.369279% per annum and the Moffett Place - Building 6 Junior Notes have an interest rate of 3.369279% per annum, resulting in a weighted average interest rate of 3.369279% per annum with respect to the Moffett Place - Building 6 Loan Combination. The proceeds of the Moffett Place - Building 6 Loan Combination were primarily used to refinance the existing debt, return equity to the borrower sponsor, fund upfront reserves and pay origination costs.
The Moffett Place - Building 6 Loan Combination had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires monthly payments of interest only for the term of the Moffett Place - Building 6 Loan Combination. The scheduled maturity date of the Moffett Place - Building 6 Loan Combination is August 6, 2030. On and after the payment date in September 2022, the Moffett Place - Building 6 Loan Combination may be voluntarily prepaid in whole (but not in part) with a prepayment fee equal to the greater of the yield maintenance amount or 1% of the unpaid principal balance as of the prepayment date. The Moffett Place - Building 6 Loan Combination is voluntarily prepayable, in whole but not in part, without penalty on or after the payment date in February 2030. In addition, the Moffett Place - Building 6 Loan Combination may be defeased in whole (but not in part) on or after the earlier of (i) two years after the date on which the entire Moffett Place - Building 6 Loan Combination has been securitized or (ii) three years after the origination date of the Moffett Place - Building 6 Loan Combination.
■ | The Mortgaged Property. The Moffett Place - Building 6 Property is a newly-constructed eight-story, Class A LEED Gold Certified, office building totaling 314,352 SF located in Sunnyvale, California. The Moffett Place - Building 6 Property is part of a larger six building, 55 acre campus known as Moffett Place (the “Moffett Campus”), which in the aggregate (including the Moffett Place - Building 6 Property) includes approximately 1.9 million SF of Class A office space that is 100.0% leased to Google, an approximately 52,500 SF amenities building including a conference center, a swimming pool, an outdoor common area space, a café and three separate parking structures and surface parking. The overall parking ratio is 3.3 spaces per 1,000 SF of net rentable area. The rooftop level (level 3) on one of the parking structures is improved with the landlord's "High Garden" concept as a project amenity. The "High Garden" features walking and running trails, outdoor volleyball, bocce ball courts and other recreational features. |
To govern access to the non-collateral common areas, conference facility and parking structures (the “Common Area Spaces”), the Moffett Place - Building 6 Property is subject to a declaration of covenants, conditions and restrictions (the “Moffett Place CCR”) with Moffett Place LLC (an affiliate of the borrower sponsor and an affiliate of the owner of the non-collateral buildings at Moffett Place). The Moffett Place CCR grants the borrower non-exclusive easement rights over the Common Area Spaces. Ownership of the Common Area Spaces governed by the CCR is held by Moffett Place Association LLC (the “Association”).
The Moffett Place - Building 6 Property is 100.0% leased to Google (Google’s parent company, Alphabet Inc. (NASDAQ: GOOG) is rated Aa2/AA+ by Moody’s/S&P) pursuant to a new 8.7-year triple net lease through January 2029, with two, seven-year extension options and no early termination rights. Google has an in place base rent of $49.56 PSF with approximately 2.2% annual rent escalations. The Google lease commenced May 21, 2020 and Google has fully accepted its space with no outs or remaining landlord work. Google is in the process of building out its space with an expected occupancy date by September/October of 2021. Google was provided $55.10 PSF in tenant improvements and approximately 12 months of free rent. At loan origination, approximately $2.7 million was reserved for the remaining outstanding tenant obligations and $12.1 million for free rent.
Under the Google lease, so long as the landlord owns the Moffett Place - Building 6 Property, Google has a right of first offer to purchase all or any portion of the six building Moffett Campus which the landlord has determined in its sole discretion to sell. Such right excludes an offer to sell one or more buildings in the Moffett Campus to an affiliate of the landlord or to an entity or person that becomes the owner of the Moffett Place – Building 6 Property or the Moffett Campus through a foreclosure by trustee’s power of sale, judicially or otherwise, or as a purchaser at a foreclosure sale.
COVID-19 Update. On July 27, 2020, due to the COVID-19 pandemic, Google announced that it would extend its global voluntary work-from-home option through June of 2021 for roles of employees that are not needed in the office. Google had originally told employees to expect to return to the office in January of 2021. As of September 6, 2020, Google has not made any requests for rent relief. Google is in a free rent period through May 2021. As of September 6, 2020, the Moffett Place – Building 6 Loan Combination is not subject to any modification or forbearance requests related to the COVID-19 pandemic. The Moffett Place – Building 6 Loan Combination is current as of the September 2020 payment date.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #6: MOFFETT PLACE - BUILDING 6
The following table presents certain information relating to the sole tenant at the Moffett Place - Building 6 Property:
Sole Tenant Based on Underwritten Base Rent(1)
Tenant Name | Credit Rating | Tenant GLA | % of GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent | Lease Expiration | Renewal / Extension Options |
NR / Aa2 / AA+ | 314,352 | 100.0% | $15,579,285 | 100.0% | $49.56 | 1/31/2029 | 2, 7-year options | |
All Tenants | 314,352 | 100.0% | $15,579,285 | 100.0% | $49.56 | |||
Vacant | 0 | 0.0% | 0 | 0.0% | $0.00 | |||
Total / Wtd. Avg. All Owned Tenants | 314,352 | 100.0% | $15,579,285 | 100.0% | $49.56 |
(1) | Based on the rent roll dated September 6, 2020. |
(2) | Credit Ratings are those of the parent company. The tenant is the sole obligor with respect to the lease obligation. |
The following table presents certain information relating to the lease rollover schedule at the Moffett Place - Building 6 Property, based on initial lease expiration dates:
Lease Expiration Schedule(1)
Year Ending December 31 | Expiring Owned GLA | % of Owned GLA | Cumulative % of Owned GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent $ per SF | # of Expiring Tenants | |||||||||||||||
MTM | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2020 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2021 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2022 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2023 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2024 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2025 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2026 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2027 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2028 | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2029 | 314,352 | 100.0% | 100.0% | $15,579,285 | 100.0% | $49.56 | 1 | |||||||||||||||
2030 | 0 | 0.0% | 100.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
2031 & Thereafter | 0 | 0.0% | 100.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
Vacant | 0 | 0.0% | 100.0% | $0 | 0.0% | $0.00 | 0 | |||||||||||||||
Total / Wtd. Avg. | 314,352 | 100.0% | $15,579,285 | 100.0% | $49.56 | 1 |
(1) Based on the underwritten rent roll dated September 6, 2020.
The following table presents certain information relating to historical leasing at the Moffett Place - Building 6 Property:
Historical Leased %(1)
2016 | 2017 | 2018 | 2019 | As of 9/6/2020 | |
Owned Space | NAP | NAP | NAP | NAP | 100.0% |
(1) | Historical information is not available due the recent construction of the Moffett Place – Building 6 Property. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
74
LOAN #6: MOFFETT PLACE - BUILDING 6
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the Moffett Place - Building 6 Property: |
Cash Flow Analysis
Underwritten | Underwritten $ per SF | |
Base Rent | $15,579,285 | $49.56 |
Straight Line Rent Credit(1) | 1,297,970 | 4.13 |
Amenities Rent | 469,779 | 1.49 |
Reimbursements | 2,642,608 | 8.41 |
Vacancy & Credit Loss(2) | (999,482) | (3.18) |
Effective Gross Income | $18,990,159 | $60.41 |
Real Estate Taxes | $592,541 | $1.88 |
Insurance | 221,528 | 0.70 |
Management Fee | 168,773 | 0.54 |
Other Operating Expenses | 1,709,572 | 5.44 |
Total Operating Expenses | $2,692,414 | $8.56 |
Net Operating Income | $16,297,746 | $51.85 |
TI/LC | 323,102 | 1.03 |
Capital Expenditures | 64,620 | 0.21 |
Net Cash Flow | $15,910,023 | $50.61 |
Occupancy | 100.0% | |
NOI Debt Yield(3) | 12.2% | |
NCF DSCR(3)(4) | 3.50x |
(1) | Straight Line Rent Credit is given to Google through the lease term. |
(2) | Represents an underwritten economic vacancy of 5.0%. |
(3) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the Moffett Place - Building 6 Senior Notes and excluding the Moffett Place – Building 6 Junior Notes. |
(4) | Based on the interest only debt service payments of the Moffett Place - Building 6 Senior Notes. |
■ | Appraisal. According to the appraisal, the Moffett Place - Building 6 Property has a “Prospective Market Value Upon Stabilization” appraised value of $359,200,000 as of an effective date of May 1, 2021. The “As-Is” appraised value is $333,000,000 as of August 1, 2020. In addition, the appraisal concluded to a “Hypothetical As If Vacant” appraised value (“Go Dark” Value) equal to $289,100,000 as of August 1, 2020. |
Appraisal Approach | “Prospective Market Value Upon | Discount Rate | Capitalization Rate |
Direct Capitalization Approach | $359,200,000 | N/A | 5.00% |
Discounted Cash Flow Approach | $359,200,000 | 6.00% | 5.75%(1) |
(1) | Represents the terminal capitalization rate. |
■ | Environmental Matters. According to a Phase I environmental report, dated July 24, 2020, the environmental consultant did not identify evidence of any recognized environmental conditions. |
■ | Market Overview and Competition. The Moffett Place – Building 6 Property is located in Moffett Park, a submarket of Sunnyvale in Silicon Valley, California. Moffett Park comprises 519 acres which has undergone significant redevelopment over the past 15 years. The area has grown into one of the San Francisco Bay Area’s technology hubs, with firms such as Amazon, Google, Facebook, Comcast, and Verizon (Yahoo!) leasing significant space. Moffett Park is located adjacent to State Highway 237, Interstate 680, Interstate 280, and U.S. Highway 101 and has access from both the northern peninsula and areas in San Jose and the East Bay, making it a convenient location for corporate users. |
Regional commuter service is indirectly provided for Moffett Park. Shuttles from Downtown Sunnyvale Caltrain station and the Altamont Commuter Express Great America station provide morning and evening services to the park. Future indirect regional access may be provided by the Bay Area Rapid Transit (BART) to San Jose extension. The BART extension would provide service potential from East Bay cities to downtown San Jose where additional shuttle or VTA light rail connections would be necessary to serve Moffett Park.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
75
LOAN #6: MOFFETT PLACE - BUILDING 6
The VTA light rail Borregas Station is located within a half mile of the Moffett Place – Building 6 Property along Java Drive, while the Java / Borregas bus stop is a five minute walk away. Access to major highways 101 and 237 is within a mile of the Moffett Place – Building 6 Property and the downtown Sunnyvale Caltrain station is approximately three miles to the south. The San Jose International Airport is located about nine miles from the Moffett Place – Building 6 Property.
According to the appraisal, the Moffett Park office submarket had a vacancy rate of 0.6% with an average asking rent of $69.60 PSF.
The following chart summarizes comparable office leases that range in base rent from $50.40 to $60.00 PSF.:
Summary of Comparable Office Leases(1)
Property | Tenant Name | Lease Start Date | Term (mos.) | Lease Type | Tenant Size (SF) | Base Rent PSF | Free Rent (mos.) | TI PSF |
Moffett Place - Building 6 | May-20 | 105 | NNN | 314,352 | $49.56 | 12 | $55.10 | |
Moffett Towers II - Building III | Jan-20 | 180 | NNN | 1,087,689 | $52.20 | 7 | $60.00 | |
520 Almanor Ave | Nokia, Inc | Apr-19 | 150 | NNN | 231,000 | $50.40 | 6 | $80.00 |
Grove 221 | 23 and Me | May-19 | 144 | NNN | 154,987 | $60.00 | 9 | $83.71 |
1001 North Shoreline | Apr-18 | 144 | NNN | 132,960 | $60.00 | 3 | $50.00 | |
Pathline Park | Synopsys | Nov-19 | 144 | NNN | 360,100 | $51.00 | 0 | $70.00 |
620 National View | Dec-18 | 120 | NNN | 151,065 | $59.40 | 0 | $80.00 | |
Total / Wtd. Avg.(2) | 161 | 2,117,801 | $53.37 | 5 | $66.42 |
(1) | Source: Appraisal. |
(2) | Total / Wtd. Avg. excludes the Moffett Place - Building 6 Property. |
Summary of Comparable Office Sales (1)
Property | City, State | NRA | Year Built / Renovated | Occupancy | Transaction Date | Sales Price | Sales Price PSF | Cap Rate |
Moffett Place - Building 6 | Sunnyvale, CA | 314,352 | 2020 | 100.0% | NAP | NAP | NAP | NAP |
620 National View | Mountain View, CA | 151,065 | 2017 | 100.0% | Sep -19 | $190,000,000 | $1,258 | 4.8% |
Grove 221 | Sunnyvale, CA | 154,987 | 2018 | 100.0% | Mar-19 | $183,000,000 | $1,181 | 5.1% |
Shoreline Technology | Mountain View, CA | 795,663 | 1985 / 2000 | 92.0% | Nov-18 | $1,000,000,000 | $1,257 | 3.5% |
1001 North Shoreline | Mountain View, CA | 132,960 | 2017 | 100.0% | Mar-18 | $169,000,000 | $1,158 | 4.4% |
Menlo Gateway | Menlo Park, CA | 772,983 | 2019 | 100.0% | Nov-17 | $850,000,000 | $1,100 | 5.0% |
Total / Wtd. Avg.(2) | 2,007,658 | 96.8% | $763,194,608 | $1,184 | 4.4% |
(1) | Source: Appraisal. |
(2) | Total / Wtd. Avg. excludes the Moffett Place - Building 6 Property. |
■ | The Borrower. The borrower is MP B6 LLC, a single-purpose, single-asset entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Moffett Place - Building 6 Loan Combination. The borrower sponsor is Joseph K. Paul, also known as Jay Paul, and the non-recourse carveout guarantor is Paul Guarantor LLC. The borrower sponsor is related to the borrower sponsor under the Moffett Towers Buildings A, B & C Loan. |
Jay Paul is the founder of Jay Paul Company, which is a privately-held real estate firm based in San Francisco, California that concentrates on the acquisition, development and management of commercial properties throughout California with a specific focus on creating projects for technology firms. Jay Paul Company has developed over 13.0 million square feet of institutional quality space including projects for Apple, Amazon, Facebook, Google, Microsoft, HP, Rambus, Nokia, Tencent and DreamWorks. Jay Paul Company owns over 25 office buildings in Moffett Park, totaling nearly 7.2 million SF including Moffett Place, Moffett Gateway, Technology Corner, Moffett Towers, Moffett Towers II and Moffett Towers Buildings A, B & C.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
76
LOAN #6: MOFFETT PLACE - BUILDING 6
■ | Escrows. At loan origination, the borrower was required to deposit the following into upfront reserves: (i) $2,728,059 into a TI/LC reserve for outstanding tenant obligations, (ii) $2,496,716 into a debt service reserve (equal to three months of Moffett Place – Building 6 - Total Debt debt service payments) and (iii) $12,062,876 into a free rent reserve. |
On each due date, the borrower is required to fund the following reserves with respect to the Moffett Place – Building 6 Loan Combination: (i) a tax reserve in an amount equal to 1/12 of the amount that the lender estimates is necessary to pay taxes over the then succeeding 12-month period (initially estimated to be $85,000 per month), (ii) if an acceptable blanket policy is no longer in place, an insurance reserve in an amount equal to 1/12 of the amount of the annual insurance premiums, (iii) if a Lease Sweep Period (as defined below) has occurred and is continuing, (a) the Required Minimum Monthly Lease Sweep Deposit Amount (as defined below) and (b) all excess cash remaining after payment of debt service, required reserves and budgeted operating expenses to a lease sweep reserve until amounts on deposit equal the Lease Sweep Reserve Cap (as defined below).
A “Lease Sweep Period” will commence upon the earliest to occur of any of the following: (i) Google (or “Lease Sweep Tenant Party”) fails to give notice of its intent to renew or extend the Google lease by May 31, 2027, which is 20 months prior to the lease expiration date until Google has exercised a renewal or an extension under the Lease Sweep Lease (as defined below) or a replacement tenant acceptable to lender executes a replacement lease covering the Requisite Lease Sweep Space (as defined below) or the total amount swept into the lease sweep reserve equals the applicable Lease Sweep Reserve Cap (as defined below); (ii) the date on which (a) a Lease Sweep Tenant Party cancels or terminates its Lease Sweep Lease with respect to all or at least 41,000 SF of the Lease Sweep Space prior to the then current expiration date or (b) a Lease Sweep Tenant Party delivers to borrower or manager a notice to terminate its Lease Sweep Lease with respect to all or at least 41,000 SF of the Lease Sweep Space until either a renewal or retenanting occurs or the total amount swept into the lease sweep reserve equals the applicable Lease Sweep Reserve Cap; (iii) the Lease Sweep Tenant Party ceases operating its business in 20.0% or more of the space in a building subject to its leases (the “Dark Space”) (unless such tenant ceasing to operate (a) is Google, (b) one or more investment grade entities until a replacement tenant acceptable to lender executes a replacement lease covering the Requisite Lease Sweep Space or the total amount swept into the lease sweep reserve equals the applicable Lease Sweep Reserve Cap (clauses (i) through (iv) collectively, a “Lease Sweep Trigger”); (iv) upon the occurrence of default under the lease by the Lease Sweep Tenant Party until either such default is cured and no other default occurs for three consecutive months or the total amount swept into the lease sweep reserve equals the applicable Lease Sweep Reserve Cap; (v) a bankruptcy of Google or any parent entity under the applicable lease until the related bankruptcy proceedings have terminated and the applicable lease has been affirmed, assumed or assigned in a manner satisfactory to the lender; and (vi) with respect to the Google lease, the date on which neither Google nor its parent company is an investment grade entity (a “Google Downgrade Event”) until one of (a) such tenant (or its parent company) becomes an investment grade entity again, (b) a renewal or re-tenanting occurs or (c) the total amount swept into the lease sweep reserve equals the applicable Lease Sweep Reserve Cap.
A “Lease Sweep Tenant Party” means any tenant under a Lease Sweep Lease or its direct or indirect parent company.
A “Lease Sweep Lease” means (i) the Google lease or (ii) any lease which is entered into by the borrower in replacement of any Google lease, and that, either individually, or when taken together with any other lease with the same tenant or its affiliates, and assuming the exercise of all expansion rights and all preferential rights to lease additional space contained in such replacement lease, demises Lease Sweep Space equal to or greater than the Requisite Lease Sweep Space.
The “Lease Sweep Space” means the space demised under a Lease Sweep Lease.
The “Requisite Lease Sweep Space” means 75% or more of the rentable SF demised under the applicable Lease Sweep Lease.
A “Required Minimum Monthly Lease Sweep Deposit Amount” means on each monthly payment date during the continuance of a Lease Sweep Period, an amount equal to: (i) from the payment date in September 2020 through October 2021, $475,000, (ii) from the payment date in November 2021 through October 2022, $505,000, (iii) from the payment date in November 2022 through October 2023, $535,000, (iv) from the payment date in November 2023 through October 2024, $555,000, (v) from the payment date in November 2024 through October 2025, $585,000, (vi) from the payment date in November 2025 through October 2026, $615,000 and (vii) from the payment date in November 2026 and thereafter, $628,700; provided that with respect to a Lease Sweep Period pursuant to clause (v) of the definition of Lease Sweep Period, such amount will be $0.00 on the date that funds then on deposit in the lease sweep reserve equal or exceed $15,717,600.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #6: MOFFETT PLACE - BUILDING 6
A “Lease Sweep Reserve Cap” means:
(i) with respect to a Lease Sweep Period continuing solely pursuant to clause (i) of the defined term “Lease Sweep Period”, an amount equal to $40.00 per rentable square foot that is leased pursuant to the Lease Sweep Lease in question;
(ii) with respect to a Lease Sweep Period continuing solely pursuant to clause (iv) of the defined term “Lease Sweep Period”, $35.00 per rentable square foot that is leased pursuant to the Lease Sweep Lease in question;
(iii) with respect to a Lease Sweep Period continuing solely pursuant to clause (ii) of the defined term “Lease Sweep Period”, $40.00 per rentable square foot of the terminated space;
(iv) with respect to a Lease Sweep Period continuing pursuant to a Dark Period Event (clause (iii) of the defined term “Lease Sweep Period”), whether or not a Lease Sweep Trigger pursuant to clauses (i), (ii) and/or (iv) of the defined term “Lease Sweep Period” is concurrently continuing, $50.00 per rentable square foot of Dark Space;
(v) with respect to a Lease Sweep Period continuing pursuant to a Google Downgrade Event (clause (iv) of the defined term “Lease Sweep Period”), whether or not a Lease Sweep Trigger pursuant to clauses (i), (ii), (iii) and/or (iv) of the defined term “Lease Sweep Period” is concurrently continuing, $15,717,600 (i.e., $50.00 per rentable square foot that is leased pursuant to the Lease Sweep Lease in question)
■ | Lockbox and Cash Management. The Moffett Place – Building 6 Loan Combination is structured with a hard lockbox and in place cash management. The borrower is required to direct all existing tenants of the Moffett Place – Building 6 Property to directly deposit all rents into a deposit account controlled by the lender. Funds in the deposit account are required to be applied and disbursed in accordance with the Moffett Place – Building 6 Loan Combination documents. During a Trigger Period (as defined below), all excess cash after payment of the monthly debt service on the Moffett Place – Building 6 Loan Combination, all required reserves and budgeted operating expenses, and certain other items in the payment waterfall described in the Moffett Place – Building 6 Loan Combination documents will be reserved (i) if a Lease Sweep Period is continuing, into the lease sweep reserve until the aggregate amount of funds transferred into such reserve during the Lease Sweep Period in question equal the applicable Lease Sweep Reserve Cap, if any, (ii) if a DS Reimbursement Period is continuing, into the debt service reserve account, and (iii) if no DS Reimbursement Period (as defined below) is continuing, into a cash collateral account as additional collateral for the Moffett – Building 6 Loan Combination. |
A “Trigger Period” will commence upon (i) the occurrence of an event of default under the Moffett Place – Building 6 Loan Combination until cured, (ii) (A) the Moffett Place – Building 6 Property is not fully leased to either Google or an investment grade entity and (B) the debt service coverage ratio is less than (a) 2.19x based on the Moffett Place – Building 6 Loan Combination and (b) 1.50x based on the Moffett Place – Building 6 Total Debt (a “Low DSCR Period”) until the debt service coverage ratio based on the Moffett Place – Building 6 Loan Combination is equal to or greater than 2.19x and the debt service coverage ratio based on the Moffett Place – Building 6 Total Debt is equal to or greater than 1.50x, in each case, for one calendar quarter or (y) funds on deposit in the cash collateral account equal $15,717,600, (iii) the commencement of a Lease Sweep Period until such Lease Sweep Period is cured, (iv) the occurrence of a mezzanine loan default until the mezzanine lender notifies the lender that such mezzanine loan default has been cured or waived or (v) the commencement of a DS Reimbursement Period until such DS Reimbursement Period has ended.
A “DS Reimbursement Period” will commence upon (i) the allocation of any debt service reserve funds to any required debt service amounts pursuant to the Moffett Place – Building 6 Loan Combination documents and will end upon the earlier to occur of (a) the satisfaction of all DS Reserve Release Conditions (as defined below) and (b) all DS Reimbursement Obligations (as defined below) has been satisfied.
The “DS Reserve Release Conditions” means each of the following requirements has been satisfied: (i) no Trigger Period has occurred and is continuing (unless the Trigger Period is solely ongoing in connection with an ongoing DS Reimbursement Period) and (ii) with respect to the Google lease, the borrower has delivered evidence reasonably satisfactory to the lender that all contingencies under the Google lease have been satisfied and Google has actually commenced the payment of full contractual rent and any initial free rent period or period of partial rent abatements has expired.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #6: MOFFETT PLACE - BUILDING 6
The “DS Reimbursement Obligations” means the obligation of the borrower to reimburse to the lender all amounts disbursed from the lender-controlled debt service reserve.
■ | Property Management. The Moffett Place - Building 6 Property is managed by Paul Holdings, Inc., an affiliate of the borrower. |
■ | Current Mezzanine or Subordinate Indebtedness. The Moffett Place - Building 6 Loan Combination consists of nine pari passu senior notes with an aggregate initial principal balance of $133,100,000 and two junior notes, with an aggregate initial principal balance of $66,900,000. In conjunction with the Moffett Place – Building 6 Loan Combination, on August 6, 2020, Security Benefit Life Insurance Company funded a $49.0 million mezzanine loan (and together with the Moffett Place – Building 6 Loan Combination, the “Moffett Place – Building 6 Total Debt”). The mezzanine loan has a fixed interest rate per annum of 6.3500% and maturity date of August 6, 2030. The Cut-off Date LTV Ratio, Maturity Date LTV Ratio, DSCR Based on Underwritten NCF and Debt Yield Based on Underwritten NOI for the Moffett Place – Building 6 Total Debt are set forth below: |
Financial Information
Senior Notes | Loan Combination | Total Debt | |
Cut-off Date Balance | $133,100,000 | $200,000,000 | $249,000,000 |
Cut-off Date LTV Ratio | 37.1% | 55.7% | 69.3% |
Maturity Date LTV Ratio | 37.1% | 55.7% | 69.3% |
DSCR Based on Underwritten NCF | 3.50x | 2.33x | 1.59x |
Debt Yield Based on Underwritten NOI | 12.2% | 8.1% | 6.5% |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. None. |
■ | Release of Collateral. Not permitted. |
■ | Common Area Subdivision. The borrower, together with certain affiliates, may seek to reconfigure and reduce the Common Area Spaces and transfer a portion of the Common Area Spaces to an affiliate of the borrower or the Association to allow for the construction of one or more office buildings and associated common area improvements, to be owned in fee by an affiliate of borrower or of the Association (the “Common Area Subdivision and Release”). In connection with such transfer, the borrower and other members of the Association intend to amend the terms of the Moffett Place CCR to allow such Common Area Subdivision and Release. The Moffett Place – Building 6 Loan Combination documents permit the borrower to effectuate a Common Area Subdivision and Release subject to the satisfaction of certain terms and conditions, including, among others: (a) such subdivision and release (i) will not materially adversely interfere with any tenant’s use of its leased premises upon the Moffett Place - Building 6 Property pursuant to the terms of its lease, (ii) will not materially adversely affect the Moffett Place - Building 6 Property or its use or operation, (iii) does not violate the terms of any document or instrument relating to the Moffett Place - Building 6 Property or Common Area Spaces, including any lease, reciprocal easement agreement or the Moffett Place CCR, (iv) will not cause any portion of the Moffett Place - Building 6 Property and/or the reduced common area to be in violation of any legal requirements (including with respect to zoning and parking), and (v) does not create any liens on the Moffett Place - Building 6 Property or Common Area Spaces and (b) not less than 20 days prior to the date of the commencement of such Common Area Subdivision and Release, the borrower submits to the lender copies of all plans, specifications, permits and approvals (as well as drafts of any shared facilities, access, infrastructure or parking easements to be entered into in connection with such Common Area Subdivision and Release), each as reasonably requested by the lender. Notwithstanding the foregoing, no such Common Area Subdivision and Release will be permitted if at the time of the effectuation of such Common Area Subdivision and Release, and after giving effect thereto, in the lender’s good faith discretion, the ratio of the unpaid principal balance of the Moffett Place Building 6 Loan Combination to the value of the remaining Moffett Place - Building 6 Property is greater than 125%. |
■ | Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the Moffett Place – Building 6 Property, as well as 24 months of rental loss and/or business interruption coverage, together with a 12-month extended period of indemnity following restoration. For so long as the Terrorism Risk Insurance Program Reauthorization Act of 2015 or any replacement, reauthorization or extension thereof (“TRIPRA”) is in effect and continues to cover both foreign and domestic acts, the lender is required to accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. See “Risk Factors—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
79
LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
80
LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
Mortgaged Property Information | Mortgage Loan Information | ||||||||||
Number of Mortgaged Properties | 3 | Loan Seller | GSMC | ||||||||
Location (City/State) | Sunnyvale, California | Cut-off Date Principal Balance(3) | $53,100,000 | ||||||||
Property Type | Office | Cut-off Date Principal Balance per SF(3) | $465.58 | ||||||||
Size (SF) | 951,498 | Percentage of Initial Pool Balance | 4.8% | ||||||||
Total Occupancy as of 1/1/2021 | 100.0% | Number of Related Mortgage Loans | Group 2 | ||||||||
Owned Occupancy as of 1/1/2021 | 100.0% | Type of Security | Fee Simple | ||||||||
Year Built / Latest Renovation | 2008 / NAP | Mortgage Rate | 3.49000% | ||||||||
Appraised Value(1)(2) | $1,145,000,000 | Original Term to Maturity (Months) | 120 | ||||||||
Borrower Sponsor | Jay Paul | Original Amortization Term (Months) | NAP | ||||||||
Property Management | Paul Holdings, Inc. d/b/a Jay Paul Company | Original Interest Only Period (Months) | 120 | ||||||||
First Payment Date | 3/6/2020 | ||||||||||
Maturity Date | 2/6/2030 | ||||||||||
Underwritten Revenues | $69,255,640 | ||||||||||
Underwritten Expenses | $11,194,319 | Escrows(4) | |||||||||
Underwritten Net Operating Income (NOI)(2) | $58,061,321 | Upfront | Monthly | ||||||||
Underwritten Net Cash Flow (NCF)(2) | $56,850,031 | Taxes | $0 | $282,271 | |||||||
Cut-off Date LTV Ratio(1)(2)(3) | 38.7% | Insurance | $0 | $0 | |||||||
Maturity Date LTV Ratio(1)(2)(3) | 38.7% | Replacement Reserves | $0 | $15,858 | |||||||
DSCR Based on Underwritten NOI / NCF(2)(3) | 3.70x / 3.63x | TI/LC | $53,688,909 | $0 | |||||||
Debt Yield Based on Underwritten NOI / NCF(2)(3) | 13.1% / 12.8% | Other(5) | $34,016,766 | $0 | |||||||
Sources and Uses | |||||||||||
Sources | $ | % | Uses | $ | % | ||||||
Senior Loan Amount | $443,000,000 | 57.5% | Loan Payoff | $364,012,737 | 47.3% | ||||||
Subordinate Loan Amount | 327,000,000 | 42.5 | Principal Equity Distribution | 314,083,651 | 40.8 | ||||||
Reserves | 87,705,675 | 11.4 | |||||||||
Origination Costs | 2,715,794 | 0.4 | |||||||||
Leasing Commissions | 1,482,143 | 0.2 | |||||||||
Total Sources | $770,000,000 | 100.0% | Total Uses | $770,000,000 | 100.0% | ||||||
(1) | Based on the “As-Stabilized” portfolio value of $1,145,000,000 as of October 1, 2021. The “As-Stabilized” value assumes that both Google and Comcast accept delivery at the Moffett Towers Buildings A, B & C Property and are paying unabated rent as of October 1, 2021. The appraisal also concluded an “As-Is” portfolio appraised value of $995,000,000, which results in an LTV ratio of 44.5% for the Moffett Towers Buildings A, B & C Senior Loans. We cannot assure you that Google and Comcast will accept delivery and commence paying rent as expected or at all. |
(2) | All NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic, and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the Moffett Towers Buildings A, B &C Loan Combination was underwritten, based on such prior information. See “Risk Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and May Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
(3) | The Moffett Towers Buildings A, B & C Loan is part of the Moffett Towers Buildings A, B & C Loan Combination evidenced by 21 senior pari passu notes and three subordinate notes, with an aggregate outstanding principal balance as of the Cut-off Date of $770.0 million. Calculated based on the aggregate outstanding principal balance of the Moffett Towers Buildings A, B & C Senior Loans and excludes Moffett Towers Buildings A, B & C Subordinate Loan unless otherwise specified. See “—The Mortgage Loan” below. |
(4) | See “—Escrows” below. |
(5) | Other reserves represent a free rent reserve ($11,268,221) and a gap rent reserve ($22,748,545). |
■ | The Mortgage Loan. The mortgage loan (the “Moffett Towers Buildings A, B & C Loan”) is part of a loan combination (the “Moffett Towers Buildings A, B & C Loan Combination”) with an aggregate outstanding principal balance as of the Cut-off Date of $770.0 million, which is secured by the borrower’s fee simple interest in three, eight-story Class A office buildings located in Sunnyvale, California (collectively, the “Moffett Towers Buildings A, B & C Property”). The Moffett Towers Buildings A, B & C Loan Combination is comprised of (i) a senior loan, comprised of 21 senior pari passu notes with an aggregate principal balance as of the Cut-off Date of $443.0 million (the “Moffett Towers Buildings A, B & C Senior Loans”), three of which (notes A-1-C-3, A-1-C-7, and A-1-C-10) with an aggregate outstanding principal balance as of the Cut-off Date of $53.1 million are being contributed to the Benchmark 2020-B19 trust and constitute the Moffett Towers Buildings A, B & C Loan, and (ii) three subordinate notes with an outstanding principal balance as of the Cut-off Date of $327.0 million (collectively, the “Moffett Towers Buildings A, B & C Subordinate Loans”) as detailed in the “Loan Combination” table below. The Moffett Towers Buildings A, B & C Loan Combination was co-originated by Goldman Sachs Bank USA (“GSBI”), JPMorgan Chase Bank, National Association (“JPMCB”), and DBR Investments Co. Limited (“DBRI”). The Moffett Towers Buildings A, B & C Loan Combination has a 10-year term and will be interest-only for its entire term. |
The Moffett Towers Buildings A, B & C Loan represents approximately 4.8% of the Initial Pool Balance. The Moffett Towers Buildings A, B & C Loan Combination had an initial term of 120 months and has a remaining term of 113 months as of the Cut-off Date. The scheduled maturity date of the Moffett Towers Buildings A, B & C Loan Combination is February 6, 2030. The borrower has the option to defease the $770.0 million Moffett Towers Buildings A, B & C Loan Combination in whole (and not in part) after two years after the closing date of the Benchmark 2020-B19 securitization trust. In addition, on and after the due date in March 2022, the Moffett Towers Buildings A, B & C Loan Combination may be voluntarily prepaid with a prepayment fee equal to the greater of the yield maintenance amount or 1% of the unpaid principal balance as of the prepayment date.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
The Moffett Towers Buildings A, B & C Loan Combination proceeds were used to refinance the existing debt on the Moffett Towers Buildings A, B & C Property, return equity to the borrower sponsor, pay leasing commissions, fund upfront reserves and pay origination costs.
The table below summarizes the promissory notes that comprise the Moffett Towers Buildings A, B & C Loan Combination. The relationship between the holders of the Moffett Towers Buildings A, B & C Loan Combination is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Loan Combinations—The Moffett Towers Buildings A, B & C Pari Passu-AB Loan Combination” in the Preliminary Prospectus.
Loan Combination Summary | ||||
Note | Original Balance | Cut-off Date Balance | Note Holder(s) | Controlling Piece |
A-1-C-2 | 50,000,000 | 50,000,000 | BMARK 2020-B18 | No |
A-1-C-3 | 40,000,000 | 40,000,000 | BMARK 2020-B19 | No |
A-1-C-4 | 30,000,000 | 30,000,000 | BMARK 2020-IG3 | No |
A-1-C-5 | 20,000,000 | 20,000,000 | JPMDB 2020-COR7 | No |
A-1-C-6 | 20,000,000 | 20,000,000 | BMARK 2020-B18 | No |
A-1-C-7 | 10,000,000 | 10,000,000 | BMARK 2020-B19 | No |
A-1-C-8 | 5,000,000 | 5,000,000 | GSMS 2020-GC47 | No |
A-1-C-9 | 5,000,000 | 5,000,000 | BMARK 2020-B18 | No |
A-1-C-10 | 3,100,000 | 3,100,000 | BMARK 2020-B19 | No |
A-1-S-1 | 550,000 | 550,000 | MOFT 2020-ABC | No |
A-2-C-1 | 50,000,000 | 50,000,000 | BMARK 2020-IG3 | No |
A-2-C-2 | 30,000,000 | 30,000,000 | BMARK 2020-IG2 | No |
A-2-C-3 | 10,000,000 | 10,000,000 | BMARK 2020-B17 | No |
A-2-C-4 | 9,450,000 | 9,450,000 | BMARK 2020-B17 | No |
A-2-S-1 | 225,000 | 225,000 | MOFT 2020-ABC | No |
A-3-C-1 | 50,000,000 | 50,000,000 | BMARK 2020-B17 | No |
A-3-C-2 | 30,000,000 | 30,000,000 | BMARK 2020-IG2 | No |
A-3-C-3 | 10,000,000 | 10,000,000 | BMARK 2020-B17 | No |
A-3-C-4 | 9,450,000 | 9,450,000 | BMARK 2020-IG2 | No |
A-3-S-1 | 225,000 | 225,000 | MOFT 2020-ABC | No |
Total Senior Notes | $443,000,000 | $443,000,000 | ||
B-1, B-2 and B-3 | 327,000,000 | 327,000,000 | MOFT 2020-ABC | Yes(1) |
Total | $770,000,000 | $770,000,000 |
(1) | The initial controlling notes are Notes B-1, B-2 and B-3, so long as no Moffett Towers Buildings A, B & C control appraisal period has occurred and is continuing. If and for so long as a Moffett Towers Buildings A, B & C control appraisal period has occurred and is continuing, then the controlling note will be the Note A-1-C-1. See “Description of the Mortgage Pool—The Loan Combinations—The Moffett Towers Buildings A, B & C Pari Passu – AB Loan Combination”. The Moffett Towers Buildings A, B & C Loan Combination will be serviced pursuant to the MOFT 2020-ABC trust and servicing agreement. For so long as no Moffett Towers Buildings A, B & C control appraisal period has occurred and is continuing, the control rights of the Moffett Towers Buildings A, B & C Subordinate Companion Notes will be exercisable by the controlling class under the MOFT 2020-ABC trust and servicing agreement. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
83
LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
The capital structure for the Moffett Towers Buildings A, B & C Loan Combination is shown below:
Moffett Towers Buildings A, B & C Total Debt Capital Structure
(1) | The Moffett Towers Buildings A, B & C Loan Combination weighted average interest rate is 3.49000%. |
(2) | Based on collateral square footage of the office components of 951,498 SF. |
(3) | Based upon the “As-Stabilized” portfolio value of $1.145 billion as determined by the appraisal as of October 1, 2021. The appraisal concluded an “As-Is” value of $995.0 million as of January 3, 2020, which results in an LTV of 44.5%. |
(4) | UW NOI/NCF Debt Yield and UW NOI/NCF DSCR are calculated based on an UW NOI and UW NCF of $58,061,321 and $56,850,031, respectively. See “—Operating History and Underwritten Cash Flow Analysis” below. |
(5) | Based on the “As-Stabilized” value of $1.145 billion, the Implied Borrower Sponsor Equity is $375.0 million. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
■ | The Mortgaged Property. The Moffett Towers Buildings A, B & C Property consists of three, eight-story office buildings totaling 951,498 SF of Class A office space located in Sunnyvale, California. The buildings were built by the borrower sponsor in 2008. As of January 1, 2021, the Moffett Towers Buildings A, B & C Property is expected to have an UW occupancy of 100.0% and according to a third party market research report as of year-end 2019, has maintained an average historical occupancy of approximately 98.1% since 2014. The Moffett Towers Buildings A, B & C Property is a part of a larger seven-building campus known as Moffett Towers (the “Moffett Towers Campus”) which includes approximately 2.0 million SF of Class A office space, an approximately 48,207 SF amenities facility, a swimming pool, a café, an outdoor common area space and two parking structures. |
The Moffett Towers Campus is 100.0% leased as of February 6, 2020 with Google leasing the entirety of Building A and Building B, four tenants leasing Building C (including Google), and Amazon leasing Buildings D, E, F and G, which are not part of the collateral. The Moffett Towers Buildings A, B & C Property features access to the amenities facility and the enclosed parking structure (the “Moffett Towers Common Area Spaces”). Use of and access to the Moffett Towers Common Area Spaces is governed by certain declaration of covenants, conditions, restrictions, easements and charges agreements (the “Moffett Towers Lot 1 CCR&Es”) made by the borrower as the sole member of the Moffett Towers Lot I Association LLC and a certain declaration of covenants, conditions, restrictions, easements and charges agreement (the “Moffett Towers Amenities Parcel CCR&E” and together with the Lot 1 CCR&E, collectively, the “Moffett Towers CCR&E”) made by the then-current members of the Moffett Towers Building H & Amenities Parcel Association LLC (each a “Moffett Towers Association” and collectively, the “Moffett Towers Associations”). The borrower is the sole member of the Moffett Towers Lot I Association LLC and the borrower and the owners of the non-collateral buildings at the Moffett Towers Campus are the members of the Moffett Towers Building H & Amenities Parcel Association LLC.
The Moffett Towers CCR&Es grant the borrower non-exclusive easement rights over the Moffett Towers Common Area Spaces. The Moffett Towers Associations are obligated to maintain insurance coverage over the Moffett Towers Common Area Spaces and are also responsible for maintenance of the Moffett Towers Common Area Spaces, subject to the terms of the leases. The Moffett Towers CCR&Es delineate shares of the voting interests in the Moffett Towers Associations based on the number of buildings at the Moffett Towers Campus, with each completed building entitled to a proportionate share of the voting interest. In the Moffett Towers Building H & Amenities Parcel Association LLC, the Moffett Towers Buildings A, B & C Property (collectively among all three buildings) is entitled to a 47.595% share of the voting interest in the applicable Moffett Towers Association as of the origination date. In the Moffett Towers Lot I Association LLC, each building is entitled to one-third share of the voting interest in the applicable Moffett Towers Association as of the loan origination date.
Google has executed a lease for Building B but has not yet accepted delivery or begun paying rent. Google is expected to take possession of Building B in January 2021. Additionally, the ongoing COVID-19 pandemic may delay the delivery of the remaining space that Google is expected to take in Building B, which would impact and/or delay the rent commencement date for such space. We cannot assure you if or when the space will be delivered or when Google will begin paying rent on their delivered space.
Google took possession of the initial phase of their space in Building C (96,282 SF of the total 181,196) on March 1, 2020 and took possession of the remaining space in Building C (84,914 SF of the total 181,196) on July 1, 2020.
Google, through an affiliate, has occupied the Moffett Towers Buildings A, B & C Property in some capacity since 2012 and is currently in the process of its third expansion. The Moffett Towers Buildings A, B & C Property is located just four miles east of Google’s world headquarters in Mountain View, California. Further, the Moffett Towers Buildings A, B & C Property is located across the street from the NASA-owned Moffett Naval Airfield. In 2014, Google entered into a 60-year lease of Moffett Naval Airfield, an approximate total obligation of more than $1.1 billion. Google reportedly is in the process of investing more than $200 million to renovate the airfield, including major renovations to the three hangars, and has expressed that it plans to use the facility for research, development, assembly and testing in various emerging technologies. Google also uses the facility as a private airport for its corporate planes for the founders and top executives.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
The second largest tenant, Comcast (111,707 SF; 11.7% of NRA; 12.5% of U/W Base Rent) leases 111,707 SF through October 31, 2027. Comcast’s lease is triple-net, includes 3.0% annual rent increases and features one five-year extension option and no early termination rights. Comcast began leasing space at the Moffett Towers Buildings A, B & C Property in 2011 via an affiliate (Plaxo, Inc.). Comcast has executed a lease extension and relocation for a total of 111,707 SF and has not yet accepted delivery or begun paying rent on the 40,296 SF of relocation space. Comcast is expected to begin paying rent on both the existing space and relocation premises in March 2021. We cannot assure you that Comcast will take occupancy and commence paying rent as expected or at all.
COVID-19 Update. As of August 13, 2020, the Moffett Towers Buildings A, B & C Property is open, however most, if not all, tenants are working remotely. Based on the underwritten rent roll, there are a total of 6 tenant leases at the Moffett Towers Buildings A, B & C Mortgaged Property and 4 of those tenant leases, owed rent for August 2020. Of those 4 tenant leases, 1 tenant lease, representing approximately 4% of the expected August 2020 rent collection, did not pay. Two tenants, Google and Comcast, have executed leases but had no rent due under those leases for August 2020. Google has accepted additional leased premises and Comcast is scheduled to relocate at the Moffett Towers Buildings A, B & C Mortgaged Property. Google has executed leases for Buildings B and C, representing approximately 56% of UW Base Rent. Google is expected to take possession of Building B in January 2021. Google has taken possession of its premises in Building C in 2 phases: 96,282 SF in March 2020 and 84,914 SF in July 2020. Google is expected to begin paying rent for Building B, Building C (Phase I) and Building C (Phase II) in October 2021, September 2020 and February 2021, respectively. Comcast has executed a lease extension and relocation for Building C and is expected to take possession of the relocation space in November 2020 and begin paying rent on both the existing space and relocation space in March 2021, representing approximately 13% of UW Base Rent. Approximately 98.3% of the occupied SF paid rent for August 2020, representing 96.3% of the UW Base Rent. As of August 13, 2020, the Moffett Towers Buildings A, B & C Loan Combination is not subject to any modification or forbearance request related to the COVID-19 pandemic.
The following table presents certain information relating to the tenants at the Moffett Towers Buildings A, B & C Property:
Largest Tenants Based on Underwritten Base Rent(1)
Tenant Name | Credit Rating (Fitch/MIS/S&P)(2) | Tenant | % of GLA | UW Base | % of Total | UW Base | Lease | Renewal / Extension |
Google (Building B)(5) | NR / Aa2 / AA+ | 317,166 | 33.3% | $19,029,960 | 35.5% | $60.00 | 12/31/2030 | 1, 7-year option |
Google (Building A) | NR / Aa2 / AA+ | 317,166 | 33.3 | 15,723,273 | 29.3 | $49.57 | 6/30/2026 | 1, 7-year option |
Google (Building C)(6) | NR / Aa2 / AA+ | 181,196 | 19.0 | 10,763,043 | 20.1 | $59.40 | 9/30/2027 | 1, 7-year option |
Comcast(7) | A- / A3 / A- | 111,707 | 11.7 | 6,702,420 | 12.5 | $60.00 | 10/31/2027 | 1, 5-year option |
Level 10 Construction | NR / NR / NR | 12,944 | 1.4 | 719,945 | 1.3 | $55.62 | 2/29/2024 | None |
Acuitus, Inc | NR / NR / NR | 11,319 | 1.2 | 720,500 | 1.3 | $63.65 | 8/31/2024 | None |
Total / Wtd. Avg. | 951,498 | 100.0% | $53,659,141 | 100.0% | $56.39 | |||
Vacant | 0 | 0.0 | 0 | |||||
Totals / Wtd. Avg. All Owned Tenants | 951,498 | 100.0% | $53,659,141 |
(1) | Based on the underwritten rent roll dated as of January 1, 2021. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | Tenant GLA does not include each tenant’s pro-rata share of the amenities facility. The Moffett Towers Buildings A, B & C Property is part of the Moffett Towers Campus. The Moffett Towers Campus includes a certain common area amenities parcel, which is owned by the Moffett Towers Building H & Amenities Parcel Association LLC. The Moffett Towers Campus also includes a Lot 1 common area, which is owned by the Moffett Towers Lot 1 Association LLC. Building owners within the Moffett Towers Campus are members of the associations and share the right to use these areas by virtue of such membership. There is no allocation of the common area amenities to any particular building, and the common areas are not included in the collateral. |
(4) | UW Base Rent, % of Total UW Base Rent and UW Base Rent $ per SF excludes the base rent payable on each tenant’s pro-rata share of the amenities facility, with rent steps through February 28, 2021. |
(5) | Google has executed a lease for Building B but has not yet accepted delivery or begun paying rent. Google is expected to take possession of Building B in January 2021. Additionally, the ongoing COVID-19 pandemic may delay the delivery of the space that Google is expected to take in Building B, which would impact and/ or delay the rent commencement date for the remaining space. We cannot assure you if or when Google will begin paying rent on their delivered space. |
(6) | Google took possession of the initial phase of their space in Building C (96,282 SF of the total 181,196) on March 1, 2020 and took possession of the remaining space in Building C (84,914 SF of the total 181,196) on July 1, 2020. Google is expected to begin paying rent for Building C (Phase I) and Building C (Phase II) in September 2020 and February 2021, respectively. |
(7) | Comcast has executed a lease extension and relocation for 111,707 SF. The relocation space consists of 40,296 SF and Comcast is expected to take possession of the relocation space in November 2020 and begin paying rent on both the existing space and relocation space in March 2021. We cannot assure you that the tenant will execute a lease or occupy its space as expected or at all. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
The following table presents certain information relating to the lease rollover schedule at the Moffett Towers Buildings A, B & C Property based on initial lease expiration dates:
Lease Expiration Schedule(1)(2)
Year Ending December 31, | Expiring Owned | % of Owned GLA | Cumulative % of Owned GLA | UW Base | % of Total UW | UW Base Rent $ | # of Expiring Leases | ||||||||||||||
MTM | 0 | 0.0 | % | 0.0 | % | $0 | 0.0 | % | $0.00 | 0 | |||||||||||
2020 | 0 | 0.0 | 0.0 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2021 | 0 | 0.0 | 0.0 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2022 | 0 | 0.0 | 0.0 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2023 | 0 | 0.0 | 0.0 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2024 | 24,263 | 2.5 | 2.5 | % | 1,440,445 | 2.7 | $59.37 | 2 | |||||||||||||
2025 | 0 | 0.0 | 2.5 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2026 | 317,166 | 33.3 | 35.9 | % | 15,723,273 | 29.3 | $49.57 | 1 | |||||||||||||
2027 | 292,903 | 30.8 | 66.7 | % | 17,465,463 | 32.5 | $59.63 | 2 | |||||||||||||
2028 | 0 | 0.0 | 66.7 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2029 | 0 | 0.0 | 66.7 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2030 | 317,166 | 33.3 | 100.0 | % | 19,029,960 | 35.5 | $60.00 | 1 | |||||||||||||
2031 & Thereafter | 0 | 0.0 | 100.0 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
Vacant | 0 | 0.0 | 100.0 | % | 0 | NAP | NAP | NAP | |||||||||||||
Total / Wtd. Avg. | 951,498 | 100.0 | % | $53,659,141 | 100.0 | % | $56.39 | 6 |
(1) | Calculated based on approximate square footage occupied by the tenants. |
(2) | Based on the underwritten rent roll dated January 1, 2021. |
(3) | Certain tenants may have termination or contraction options (which may become exercisable prior to the originally stated expiration date of the tenant lease) that are not considered in the above Lease Expiration Schedule. |
(4) | UW Base Rent $ per SF does not include each tenant’s pro-rata share of the amenities facility. The Moffett Towers Campus includes a certain common area amenities parcel, which is owned by the Moffett Towers Building H & Amenities Parcel Association LLC. The Moffett Towers Campus also includes a Lot 1 common area, which is owned by the Moffett Towers Lot 1 Association LLC. Building owners within the Moffett Towers Campus are members of the associations and share the right to use these areas by virtue of such membership. There is no allocation of the common area amenities to any particular building, and the common areas are not included in the collateral. |
(5) | Includes rent steps through February 28, 2021. |
The following table presents certain information relating to historical occupancy at the Moffett Towers Buildings A, B & C Property:
Historical Leased %(1)
2017 | 2018 | 2019 | As of 1/1/2021 |
100.0% | 100.0% | 100.0% | 100.0% |
(1) | As provided by the borrower and reflects average occupancy for the indicated year ended December 31 unless specified otherwise. |
■ | Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and Underwritten Net Cash Flow at the Moffett Towers Buildings A, B & C Property: |
Cash Flow Analysis(1)
2017 | 2018 | 2019 | UW(2) | UW PSF | |||||||||||
Base Rent(3) | $31,760,276 | $37,874,365 | $37,993,927 | $58,967,821 | $61.97 | ||||||||||
Total Reimbursement Revenue | 11,793,732 | 11,467,503 | 12,298,701 | 11,126,970 | 11.69 | ||||||||||
Total Other Income | 0 | 0 | 0 | 1,302,777 | 1.37 | ||||||||||
Gross Revenue | $43,554,008 | $49,341,867 | $50,292,627 | $71,397,567 | $75.04 | ||||||||||
Vacancy Loss | 0 | 0 | 0 | (2,141,927 | ) | (2.25 | ) | ||||||||
Effective Gross Revenue | $43,554,008 | $49,341,867 | $50,292,627 | $69,255,640 | $72.79 | ||||||||||
Total Operating Expenses | 12,008,858 | 11,771,512 | 12,255,535 | 11,194,319 | 11.76 | ||||||||||
Net Operating Income(4) | $31,545,149 | $37,570,355 | $38,037,092 | $58,061,321 | $61.02 | ||||||||||
Tenant Improvements | 0 | 0 | 0 | 510,495 | 0.54 | ||||||||||
Leasing Commissions | 0 | 0 | 0 | 510,495 | 0.54 | ||||||||||
Replacement Reserves | 0 | 0 | 0 | 190,300 | 0.20 | ||||||||||
Net Cash Flow | $31,545,149 | $37,570,355 | $38,037,092 | $56,850,031 | $59.75 | ||||||||||
Occupancy | 100.0% | 100.0% | 100.0% | 100.0% | |||||||||||
NOI Debt Yield | 7.1% | 8.5% | 8.6% | 13.1% | |||||||||||
NCF DSCR | 2.01 x | 2.40 x | 2.43 x | 3.63 x |
|
(1) | Certain items such as straight line rent, interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring or non-operating items were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | UW cash flow based on annualized in-place rents as of January 1, 2021, with rent steps through February 28, 2021. |
(3) | Base Rent includes $5,182,847 of straight line office rent steps over the lease term for investment grade tenants (Google and Comcast) and $125,834 of straight line amenities facility rent steps through February 28, 2021. |
(4) | The increase in UW Net Operating Income is primarily attributable to the signing of four new leases since August 2019 and includes the straight line average of contractual rent step increments over the lease term for investment grade tenants. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
87
LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
■ | Appraisal. According to the appraisal, the Moffett Towers Buildings A, B & C Property has an “As-Stabilized” appraised value of $1,145,000,000 as of October 1, 2021. The “As-Stabilized” value assumes that both Google and Comcast accept delivery at the Moffett Towers Buildings A, B & C Property and are paying unabated rent as of October 1, 2021. The appraisal also concluded an “As-Is” portfolio appraised value of $995,000,000, which results in a loan-to-value ratio of 44.5%. We cannot assure you that Google and Comcast will accept delivery and commence paying rent as expected or at all. |
Appraisal Approach | Value | Discount Rate | Capitalization Rate |
Direct Capitalization Approach | $1,155,000,000 | N/A | 4.75% |
Discounted Cash Flow Approach | $1,145,000,000 | 6.00% | 5.75%(1) |
(1) | Represents the terminal capitalization rate. |
■ | Environmental Matters. According to the Phase I environmental report dated January 14, 2020, there are no recognized environmental conditions or recommendations for further action at the Moffett Towers Buildings A, B & C Property. |
■ | Market Overview and Competition. The Moffett Towers Buildings A, B & C Property is located in Moffett Park, in Sunnyvale, California, which is located in Silicon Valley. Moffett Park is an approximately 519-acre area comprised of office spaces and research and development buildings. Notable technology firms currently in Moffett Park include Google, Hewlett Packard, Juniper Networks, Amazon, Lockheed-Martin, Microsoft, NetApp and Rambus. The Moffett Towers Buildings A, B & C Property is north of State Highway 237, which forms the southern border of the Moffett Park area and provides access from Interstate 680 and Interstate 280 to the northeast and U.S. Highway 101 in Sunnyvale to the southwest. U.S. Highway 101 runs northward through San Francisco and southward through San Jose, terminating in the city of Los Angeles. The Santa Clara County Transit System station is located within approximately one mile from the Moffett Towers Campus and services the surrounding residential communities. |
Per the appraisal, the Moffett Park office submarket contains 11.2 million SF and recorded an average asking rent of $67.80 PSF annually as of January 7, 2020. The submarket’s vacancy rate was noted at 3.4% and has not exceeded 7.1% since 2012. Per the appraisal, Moffett Park contains approximately 9.0 million SF of four- and five-star office properties which recorded an average asking rent of $71.64 PSF annually as of January 7, 2020. The Class A segment of the submarket features a vacancy rate of just 1.5%.
The appraisal identified five comparable office leases that had NNN base rents ranging from $50.40 to $72.00 PSF with a weighted average of $60.24 PSF. The appraisal concluded to a NNN market rent of $60.00 PSF.
The following table presents certain information relating to the primary office competition for the Moffett Towers Buildings A, B & C Property:
Competitive Set – Comparable Office Leases(1)
Location | Year Built | Stories | Tenant Name | Tenant | Lease Date | Lease Term (Years) | Base |
Moffett Towers Buildings A, B & C | 2008 | 8 | Various | 951,498(2) | Various | Various | $56.39(2) |
190 & 200 Mathilda Pl Sunnyvale, CA | 2002 | 5 | Uber Technologies, Inc. | 290,926 | June-20 | 10.5 | $72.00 |
620 National Ave Mountain View, CA | 2016 | 4 | Google, Inc. | 151,998 | Dec-18 | 10.0 | $59.40 |
625 N Mary Ave Sunnyvale, CA | 2020 | 3 | Proofpoint, Inc. | 242,400 | Nov-18 | 10.6 | $57.60 |
520 Almanor Ave Sunnyvale, CA | 2019 | 4 | Nokia, Inc. | 231,000 | Sep-18 | 12.5 | $50.40 |
221 N Mathilda Ave Sunnyvale, CA | 2019 | 3 | 23andMe, Inc. | 154,987 | Jun-18 | 12.0 | $60.00 |
(1) | Source: Appraisal, unless otherwise indicated. |
(2) | Based on the underwritten rent roll dated January 1, 2021, with rent steps through February 28, 2021. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
88
LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
■ | The Borrower. The borrower is MT1 ABC LLC, a Delaware limited liability company and single purpose entity. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Moffett Towers Buildings A, B & C Loan Combination. |
The borrower sponsor is Jay Paul and the non-recourse carveout guarantor is Paul Guarantor LLC. Founded in 1975, Jay Paul Company is a privately-held real estate firm based in San Francisco, California that concentrates on the acquisition, development and management of commercial properties throughout California with a specific focus on creating projects for technology firms. Jay Paul Company has developed over 13.0 million SF of institutional quality space including projects for Apple, Amazon, Facebook, Google, Microsoft, HP, Rambus, Nokia, Tencent and DreamWorks. Jay Paul Company owns 25 office buildings in Moffett Park, totaling nearly 7.2 million SF including Moffett Place, Moffett Gateway, Technology Corner, Moffett Towers and Moffett Towers II.
The borrower sponsor is affiliated with the borrowers of the mortgage loans identified on Annex A-1 to the Preliminary Prospectus as Moffett Place – Building 6, which has a Cut-off Date Balance of $57.75 million.
■ | Escrows. At loan origination, the borrower deposited approximately (i) $53,688,909 into a tenant improvement allowances and leasing commissions reserve, (ii) $11,268,221 for free rent, and (iii) $22,748,545 for gap rent. |
Tax Reserve – The borrower is required to deposit into a real estate tax reserve, on a monthly basis, 1/12 of the estimated annual real estate taxes (initially estimated at $282,271).
Insurance Reserve – The borrower is required to deposit into an insurance reserve, on a monthly basis, 1/12 of estimated insurance premiums, unless an acceptable blanket policy is in effect. As of the origination date, an acceptable blanket policy was in place.
Replacement Reserve – The borrower is required to deposit into a replacement reserve, on a monthly basis, an amount equal to approximately $15,858 for replacement reserves.
Lease Sweep Reserve – During a Lease Sweep Period, all excess cash flow after payment of debt service, required reserves and budgeted operating expenses is required to be deposited into a lease sweep reserve until amounts on deposit equal the Lease Sweep Cap Amount. In the event that excess cash flow is not sufficient to meet the Required Minimum Monthly Lease Sweep Deposit Amount, the borrower is required to deposit such minimum required amount.
A “Required Minimum Monthly Lease Sweep Deposit Amount” means, during a Lease Sweep Period, an amount equal to (i) with respect to a Lease Sweep Period continuing due to a lease sweep trigger caused by the Google lease (Building A), $875,044.76, (ii) with respect to a Lease Sweep Period continuing due to a lease sweep trigger caused by the Google lease (Building B), $875,044.76 and (iii) with respect to a Lease Sweep Period continuing due to a lease sweep trigger caused by the Google lease (Building C), $499,910.49; provided, that, if a Lease Sweep Period is continuing due to a lease sweep trigger caused by more than one Google lease, such amounts set forth above are aggregated based on all Google leases then in a Lease Sweep Period on the due date in question (i.e., if, on a due date, one or more Lease Sweep Periods are continuing which affect all Google leases, the Required Minimum Monthly Lease Sweep Deposit Amount for such due date is $2,250,000.01).
Additionally, during the continuance of a Moffett Trigger Period other than a Lease Sweep Period, all amounts in excess of the monthly debt service payment, required reserves and budgeted operating expenses are required to be reserved in a cash collateral reserve, capped, if such Moffett Trigger Period was caused by a Low DSCR Event, at $47,574,900.
A “Moffett Trigger Period” will be continuing (i) upon an event of default under the Moffett Towers Buildings A, B & C Loan Combination until cured, (ii) upon the debt service coverage ratio as calculated in the Moffett Towers Buildings A, B & C Loan Combination documents being less than 1.15x (assuming amortization) (a “Low DSCR Event”) until the earlier of the date (a) the Moffett Towers Buildings A, B & C Property achieves a debt service coverage ratio of at least 1.15x (assuming amortization) for one calendar quarter or (b) amounts on deposit in the cash collateral reserve equal $47,574,900, or (iii) during the continuance of a Lease Sweep Period.
A “Lease Sweep Period” will be in effect upon the earliest to occur (a) of October 1, 2025 with respect to Building A or the date that is nine months prior to the date any Google Tenant (or any replacement tenant of space leased by the Google Tenant) lease expires with respect to Building B and Building C and Google Tenant (or any replacement tenant of space leased by the Google Tenant) has not given notice of its intent to renew until either the Reserve Requirement is met or a Renewal or Re-tenanting occurs, (b) the date on which the Google Tenant (or any replacement tenant of 75% or more of the space leased by the Google Tenant) surrenders, cancels or terminates or gives notice of its intent to surrender, cancel or terminate any of its leases at the Moffett Towers Buildings A, B & C Property unless a replacement lease to one or more entities (or subsidiary of such entity) that is rated investment grade by at least two of Moody’s, S&P or Fitch (an “Investment Grade Tenant”) has been entered into until either the Reserve Requirement is
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
met or a Renewal or Re-tenanting occurs, (c) the date on which the Google Tenant (or any replacement tenant of 75% or more of the space leased by the Google Tenant) ceases operating its business in 20.0% or more of the space in a building subject to its leases (the “Dark Space”) (unless such tenant ceasing to operate (1) is the Google Tenant, (2) is an Investment Grade Tenant or (3) has subleased such space to one or more Investment Grade Tenants who has accepted delivery of such space, and is paying unabated rent at a contract rate no less than the contract rate required under the applicable lease until either the Reserve Requirement is met or a Renewal or Re-tenanting occurs), (d) upon the occurrence of a default under any lease by the Google Tenant (or any replacement tenant of 75% or more of the space leased by the Google Tenant) until either such default is cured and no other default occurs for three consecutive months or the Reserve Requirement is met, (e) a bankruptcy of the Google Tenant or any parent entity under the applicable lease until the related bankruptcy proceedings have terminated and the applicable lease has been affirmed, assumed or assigned in a manner satisfactory to the lender, and (f) the date on which the Google Tenant (or any replacement tenant of space leased by the Google Tenant) is no longer an Investment Grade Tenant until one of (1) such tenant becomes an Investment Grade Tenant again, (2) the Reserve Requirement is met or (3) a Renewal or Re-tenanting occurs.
The “Google Tenant” means the Google entity that is the tenant under the leases existing on the origination date.
A “Renewal or Re-tenanting” means the Google Tenant irrevocably renews its lease or at least 75% of the space demised under such lease has been re-tenanted pursuant to one or more leases meeting certain requirements under the mortgage loan agreement, as applicable.
A “Reserve Requirement” means funds equal to the applicable Lease Sweep Cap Amount have been deposited into the lease sweep reserve or the borrower has delivered an acceptable letter of credit in such applicable amount to the lender for such amount.
A “Lease Sweep Cap Amount” means the largest amount applicable to the Lease Sweep Periods then occurring as follows: with respect to a Lease Sweep Period continuing solely pursuant to clause (a) or (b), $45.00 per rentable square foot under the applicable lease (or if Building B has been released in accordance with the terms of the Moffett Towers Buildings A, B & C Loan Combination documents, $45.00 per rentable square foot that is leased pursuant to the applicable lease and every other lease existing at the Moffett Towers Buildings A, B & C Property with the same tenant or its affiliates, until such time as one of the remaining Google leases have been renewed or replaced, at which time, the Lease Sweep Cap Amount will revert back to $45.00 per rentable square foot under the applicable lease); with respect to a Lease Sweep Period continuing solely pursuant to clause (d), an amount equal to $35.00 per rentable square foot under the applicable lease); with respect to a Lease Sweep Period continuing pursuant to clause (c), whether or not a Lease Sweep Period pursuant to any other clause is concurrently continuing, $50.00 per rentable square foot of the dark space demised under the applicable lease; and with respect to a Lease Sweep Period continuing pursuant to a clause (f), whether or not a Lease Sweep Period pursuant to any other clause is concurrently continuing, an amount equal to $50.00 per rentable square foot under all leases with such downgraded tenant.
■ | Lockbox and Cash Management. The Moffett Towers Buildings A, B & C Loan Combination is structured with a hard lockbox and in-place cash management. The borrower is required to direct all existing tenants of the Moffett Towers Buildings A, B & C Property to directly deposit all rents into an account controlled by the lender. Funds in the deposit account are required to be applied and disbursed in accordance with the Moffett Towers Buildings A, B & C Loan Combination documents. During a Moffett Trigger Period, all excess cash after payment of the monthly debt service on the Moffett Towers Buildings A, B & C Loan Combination, all required reserves and budgeted operating expenses, and certain other items in the payment waterfall described in the Moffett Towers Buildings A, B & C Loan Combination documents will be reserved as additional collateral for the Moffett Towers Buildings A, B & C Loan Combination. |
■ | Property Management. The Moffett Towers Buildings A, B & C Property is managed by Paul Holdings, Inc. d/b/a Jay Paul Company, the borrower sponsor, pursuant to a management agreement. Under the Moffett Towers Buildings A, B & C Loan Combination documents, the lender may require the borrower to terminate any management agreement and replace the applicable property manager if: (i) an event of default under the Moffett Towers Buildings A, B & C Loan Combination documents exists, (ii) there exists a material default by the property manager under the management agreement beyond all applicable notice and cure periods, (iii) the property manager becomes insolvent or a debtor in any bankruptcy or insolvency proceeding or (iv) the property manager has engaged in gross negligence, fraud, willful misconduct or misappropriation of funds. Provided that no event of default is occurring under the Moffett Towers Buildings A, B & C Loan Combination documents, the borrower may, without the lender’s approval and without a Rating Agency Confirmation, terminate the management agreement and replace the manager with certain managers as set forth in the Moffett Towers Buildings A, B & C Loan Combination documents. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #7: MOFFETT TOWERS BUILDINGS A, B & C
■ | Current Mezzanine or Subordinate Secured Indebtedness. The Moffett Towers Buildings A, B & C Subordinate Loans have an aggregate outstanding principal balance as of the Cut-off Date of $327.0 million, and accrue interest at a fixed rate of 3.49000% per annum. The Moffett Towers Buildings A, B & C Companion Loans have a 10-year term and are interest-only for the full term. For additional information, see “Description of the Mortgage Pool—The Loan Combinations—The Moffett Towers Buildings A, B & C - Pari Passu AB Loan Combination” in the Preliminary Prospectus. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. None. |
■ | Release of Collateral. At any time on or after the due date in March 2022, the borrower is permitted to obtain the release of up to two (but not more than two) individual buildings that comprise the Moffett Towers Buildings A, B & C Property from the lien of the mortgage in connection with a bona fide third-party sale of such building or a transfer of such building to an affiliate for purposes of refinancing such building upon, among other conditions, (a) payment of the applicable Release Price, (b) no event of default under the Moffett Towers Buildings A, B & C Loan Combination documents is continuing, (c) after giving effect to the release, the debt service coverage ratio is no less than the greater of the debt service coverage ratio immediately prior to such release and 1.44x, (d) after giving effect to the release, the debt yield is no less than the greater of the debt yield immediately preceding such release and 7.75%, (e) after giving effect to the release, the loan to value ratio is not more than the lesser of the loan to value ratio immediately preceding such release and 70.0% and (f) delivery of customary REMIC opinions. |
“Release Price” means an amount equal to (a) with respect to the release of Building A or Building C, the greater of (1) 100% of the net sales proceeds of a sale or refinance of such parcel and (2) 115% of the allocated loan amount and (b) with respect to the release of Building B, the greater of (1) 100% of the net sales proceeds of a sale or refinance of such parcel and (2) 125% of the allocated loan amount, in each case together with the payment of any accrued and unpaid interest and any applicable prepayment fee.
■ | Common Area Subdivision. The borrower has the right to cause the Moffett Towers Lot I Association LLC to subdivide and release a portion of the Lot 1 Common Area in connection with the construction of another office building that may be no more than nine stories tall and contain no more than 326,666 rentable square feet so long as, among other conditions in the Moffett Towers Buildings A, B & C Loan Combination documents, such subdivision and release will not materially adversely affect the Moffett Towers Buildings A, B & C Property or its use or operation and is in compliance with the terms of other material documents related to the Moffett Towers Buildings A, B & C Property such as any leases or reciprocal easement agreements. See “Description of the Mortgage Pool—Statistical Characteristics of the Mortgage Loans—Condominium Interests and Other Shared Interests” in the Preliminary Prospectus. |
The “Lot 1 Common Area” comprises all of the Moffett Towers Buildings A, B & C Property that makes up lot 1 of the Moffett Towers Campus, other than the three buildings that comprise the collateral for the Moffett Towers Buildings A, B & C Loan Combination. The Lot 1 Common Area includes two parking structures and certain surface parking spaces in lot 1 of the Moffett Towers Campus, together with the landscaping, sidewalks, driveways and roadways within lot 1 of the Moffett Towers Campus.
■ | Terrorism Insurance. The Moffett Towers Buildings A, B & C Loan Combination documents require that the “all-risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Moffett Towers Buildings A, B & C Property, plus business interruption coverage in an amount equal to 100% of the projected gross income for the Moffett Towers Buildings A, B & C Property until the completion of restoration or the expiration of 24 months, with a 12-month extended period of indemnity. The “all-risk” policy containing terrorism insurance is required to contain a deductible that is no greater than $50,000. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
Mortgaged Property Information | Mortgage Loan Information | ||||||||||||
Number of Mortgaged Properties | 1 | Loan Seller | GSMC | ||||||||||
Location (City/State) | Chicago, Illinois | Cut-off Date Balance(3) | $50,000,000 | ||||||||||
Property Type | Office | Cut-off Date Balance per SF(2) | $198.78 | ||||||||||
Size (SF) | 1,207,380 | Percentage of Initial Pool Balance | 4.5% | ||||||||||
Total Occupancy as of 8/1/2020 | 90.5% | Number of Related Mortgage Loans | Group 3 | ||||||||||
Owned Occupancy as of 8/1/2020 | 90.5% | Type of Security | Fee Simple | ||||||||||
Year Built / Latest Renovation | 1972 / 2019 | Mortgage Rate | 3.53000% | ||||||||||
Appraised Value(1) | $382,000,000 | Original Term to Maturity (Months) | 96 | ||||||||||
Appraisal Date | 7/1/2020 | Original Amortization Term (Months) | NAP | ||||||||||
Borrower Sponsor | Michael Shvo; Deutsche Finance America LLC | Original Interest Only Period (Months) | 96 | ||||||||||
Property Management | SHVO Property Management LLC and Jones Lang LaSalle Americas (Illinois), L.P. | First Payment Date | 10/1/2020 | ||||||||||
Maturity Date | 9/1/2028 | ||||||||||||
Underwritten Revenues | $41,578,718 | ||||||||||||
Underwritten Expenses | $17,347,570 | Escrows(4) | |||||||||||
Underwritten Net Operating Income (NOI) | $24,231,148 | Upfront | Monthly | ||||||||||
Underwritten Net Cash Flow (NCF) | $23,327,488 | Taxes | $1,582,185 | $527,395 | |||||||||
Cut-off Date LTV Ratio(2) | 62.8% | Insurance | $94,591 | $47,296 | |||||||||
Maturity Date LTV Ratio(2) | 62.8% | Replacement Reserve | $0 | $0 | |||||||||
DSCR Based on Underwritten NOI / NCF(2) | 2.86x / 2.75x | TI/LC | $8,513,554 | $0 | |||||||||
Debt Yield Based on Underwritten NOI / NCF(2) | 10.1% / 9.7% | Other(5) | $23,921,811 | $0 | |||||||||
Sources and Uses | |||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||
Loan Combination Amount | $240,000,000 | 57.2% | Purchase Price(6) | $376,000,000 | 89.6% | ||||||||
Borrower Sponsor Equity | 179,786,770 | 42.8 | Upfront Reserves | 34,112,141 | 8.1 | ||||||||
Closing Costs | 9,674,629 | 2.3 | |||||||||||
Total Sources | $419,786,770 | 100.0% | Total Uses | $419,786,770 | 100.0% | ||||||||
(1) | The Appraised Value is based on an “as-is” appraised value of $382,000,000 as of July 1, 2020. |
(2) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the 333 South Wabash Loan Combination (as defined below). |
(3) | The Cut-off Date Balance of $50,000,000 represents the non-controlling note Tranche A-2-A, and is part of the 333 South Wabash Loan Combination (as defined below), which is evidenced by nine pari passu notes, and has an aggregate outstanding principal balance as of the Cut-off Date of $240,000,000. See “—The Mortgage Loan” below. |
(4) | See “—Escrows” below. |
(5) | At origination, the borrower reserved approximately $23.2 million for gap rent and rent concessions associated with Chicago Housing Authority, Akuna Capital LLC, Bright Horizons, The Northern Trust Company and Millhouse. Additionally, the borrower reserved $750,000 to be utilized in the re-tenanting of the 55 E. Jackson sublease space. |
(6) | The Purchase Price includes seller credits totaling approximately $34.1 million, which was escrowed at origination, for outstanding obligations, including tenant improvements and leasing commissions, gap rent, rent concessions, and sublease rent. |
■ | The Mortgage Loan. The mortgage loan (the “333 South Wabash Loan”) is part of a loan combination (the “333 South Wabash Loan Combination”) consisting of nine pari passu promissory notes with an aggregate original principal balance of $240,000,000 and secured by a first mortgage encumbering the borrower’s fee simple interest in a 1.2 million SF office tower located in downtown Chicago, Illinois (the “333 South Wabash Property”). |
The 333 South Wabash Loan is evidenced by the controlling note Tranche A-2-B and has an outstanding principal balance as of the Cut-off Date of $50,000,000, representing approximately 4.5% of the Initial Pool Balance. However, American International Group, Inc. (“AIG”) has been appointed as the controlling noteholder so long as certain AIG affiliates continue to hold notes aggregating at least $75,000,000 in outstanding principal balance of the 333 South Wabash Loan Combination and, accordingly, AIG will exercise control and consultation rights on behalf of the directing holder for the 333 South Wabash Loan Combination. The related pari passu companion loans, evidenced by the non-controlling notes A-1 (AGL), A-1 (AGL-Fortitude), A-1 (VALIC), A-1 (NUFIC-Fortitude), A-1 (AHAC), A-1 (AHAC-Fortitude) (the “Tranche A-1 Notes”), Tranche A-2-A and Tranche A-2-C (together with Tranche A-2-B, the “Tranche A-2 Notes”), have an aggregate outstanding principal balance as of the Cut-off Date of $190,000,000.
The 333 South Wabash Loan Combination was co-originated by Goldman Sachs Bank USA, American General Life Insurance Company, The Variable Annuity Life Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA., and American Home Assurance Company on August 12, 2020. Each note of the 333 South Wabash Loan Combination has an interest rate per annum of 3.53000%. The borrower utilized the proceeds of the 333 South Wabash Loan Combination to finance the acquisition of the 333 South Wabash Property, fund reserves and pay origination costs.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
The 333 South Wabash Loan Combination had an initial term of 96 months and has a remaining term of 96 months as of the Cut-Off Date. The 333 South Wabash Loan Combination requires interest-only payments during its term; provided that, under the terms of the 333 South Wabash Loan Combination documents, principal and interest payments based on a 30-year amortization schedule may be triggered, commencing on the August 2026 payment date and the August payment date of each subsequent year, in the event that (i) net operating income (as calculated under the loan documents) for the preceding 12 calendar months does not exceed $21.0 million or (ii) the amount of aggregate SF of the 333 South Wabash Property that is subject to leases expiring in the following 36 month period exceeds 241,348 SF (an “Amortization Trigger Event”). The borrower can prevent the occurrence of an Amortization Trigger Event for 12 months by depositing cash or letter of credit in an amount equal to $4,582,500. The scheduled maturity date of the 333 South Wabash Loan Combination is September 1, 2028.
The borrower may obtain the release of the 333 South Wabash Property on or after the due date in September 2024 by defeasing the Tranche A-2 Notes and prepaying the Tranche A-1 Notes. Any such release prior to the due date in April 2028 requires a (i) prepayment of the Tranche A-1 Notes together with a premium payment equal to the greater of (x) 1% of the aggregate outstanding balance as of the prepayment date of the Tranche A-1 Notes and (y) the present value of the remaining 333 South Wabash Loan Combination debt service payments, less the aggregate outstanding balance of the Tranche A-1 Notes, each as of the prepayment date, and (ii) defeasance of the Tranche A-2 Notes with certain direct full faith and credit obligations of the United States of America of the entire outstanding balance of the Tranche A-2 Notes in accordance with the 333 South Wabash Loan Combination documents.
The table below summarizes the promissory notes that comprise the 333 South Wabash Loan Combination. The relationship between the holders of the 333 South Wabash Loan Combination is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Loan Combinations—The Outside Serviced Loan Combinations” in the Preliminary Prospectus.
Loan Combination Summary | ||||
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
Tranche AGL | $75,600,000 | $75,600,000 | AGL(1) | No |
Tranche AGL-Fortitude | $15,400,000 | $15,400,000 | AGL(1) | No |
Tranche VALIC | $35,000,000 | $35,000,000 | VALIC(1) | No |
Tranche A-2-AB | $30,000,000 | $30,000,000 | GSBI(1) | No |
Tranche A-2-B | $50,000,000 | $50,000,000 | BMARK 2020-B19 | Yes(2) |
Tranche A-2-C | $20,000,000 | $20,000,000 | DBJPM 2020-C9 | No |
Tranche AHAC | $8,400,000 | $8,400,000 | AHAC(1) | No |
Tranche AHAC-Fortitude | $2,800,000 | $2,800,000 | AHAC(1) | No |
Tranche NUFI-Fortitude | $2,800,000 | $2,800,000 | NUFIC(1) | No |
Total | $240,000,000 | $240,000,000 |
(1) | Expected to be contributed to one or more future securitizations. |
(2) | The controlling note is the 333 South Wabash note A-2-B; however, so long as certain AIG affiliates continue to hold notes aggregating at least $75,000,000 in outstanding principal balance of the 333 South Wabash Loan Combination, an AIG affiliate has been irrevocably appointed as the controlling note holder representative entitled to exercise all control rights. |
■ | The Mortgaged Property. The 333 South Wabash Property consists of a 45-story central business district office building totaling 1,207,380 SF located in Chicago, Illinois. The 333 South Wabash Property was built in 1972 on a 0.94-acre site, located at the intersection of South Wabash Avenue and East Van Buren Street in Chicago’s East Loop office submarket. In 2019, the prior owner completed a $167.5 million renovation and opened a new food hall, Hayden Hall, including eight quick-service restaurants plus two full-service dining experiences. Based on the underwritten rent roll dated August 1, 2020, the 333 South Wabash Property is currently 90.5% leased. |
The Northern Trust Company (547,719 SF; 45.4% of NRA; 48.9% of Underwritten Base Rent) is the largest office tenant based on NRA at the 333 South Wabash Property, executing its lease in July 2017 to relocate its headquarters to the 333 South Wabash Property from the existing headquarters location at 50 South LaSalle Street, approximately a half mile west of the 333 South Wabash Property. The lease commenced on September 1, 2020 with The Northern Trust Company (“Northern Trust”) taking early occupancy of its space in phases beginning in February 2020 with an additional 56,932 SF expected to commence on two floors in 2023. Founded in Chicago in 1889, Northern Trust is a provider of wealth management, asset servicing, and banking to corporations, institutions, affluent families, and individuals. Northern Trust has a global presence with offices in 21 US states and Washington, DC, and across 22 locations in Canada, Europe, the Middle East, and the Asia-Pacific.
Chicago Housing Authority (222,141 SF; 18.4% of NRA; 17.0% of Underwritten Base Rent) is the second largest office tenant based on NRA at the 333 South Wabash Property and has occupied space in the 333 South Wabash Property since December 2006. The Chicago Housing Authority (“CHA”) is the third largest public housing agency in the nation in terms of households served and provides housing opportunities across Chicago. Through the provision of public
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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housing apartments and the management of Housing Choice Vouchers, CHA serves more than 63,000 low-income families and individuals.
Continental Casualty Company (56,638 SF; 4.7% of NRA; 4.3% of Underwritten Base Rent) is the third largest office tenant based on NRA at the 333 South Wabash Property with the 333 South Wabash Property serving as the company’s headquarters from 1972 to 2018. Continental Casualty Company (“CNA”) is one of the largest commercial property and casualty insurance companies in the United States. CNA provides a range of standard and specialized property and casualty insurance products for businesses and professionals in the United States, Canada, and Europe.
COVID-19 Update. As of September 3, 2020, the 333 South Wabash Property is open, however most tenants have implemented a work from home policy for their employees, with a small group of employees coming to the 333 South Wabash Property daily. For July and August 2020, 98.3% and 98.3% of the occupied SF, and 97.6% and 97.6%, of the Underwritten Base Rent, respectively, were collected. As of September 3, 2020, the 333 South Wabash Loan Combination was not subject to any modification or forbearance requests.
The following table presents certain information relating to the tenants at the 333 South Wabash Property:
Ten Largest Tenants Based on Underwritten Base Rent(1)
Tenant Name | Credit Rating | Tenant GLA | % of GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent | Lease Expiration | Renewal / Extension Options |
Northern Trust(3) | A+ / A2 / A+ | 547,719 | 45.4% | $11,520,244 | 48.9% | $21.03 | 8/31/2035 | 2, 5-10-year options |
CHA(4) | NR / NR / NR | 222,141 | 18.4 | 3,998,538 | 17.0 | 18.00 | 12/31/2037 | 1, 5-year option |
Akuna Capital LLC(5) | NR / NR / NR | 56,382 | 4.7 | 1,552,261 | 6.6 | 27.53 | Various | 1, 4-year option |
CNA(6) | NR / NR / NR | 56,638 | 4.7 | 1,020,072 | 4.3 | 18.01 | 11/30/2024 | 1, 5-year option |
Hayden Hall | NR / NR / NR | 26,137 | 2.2 | 1,000,000 | 4.2 | 38.26 | 8/31/2030 | 2, 5-year options |
Hellmuth, Obata & Kassabaum | NR / NR / NR | 27,034 | 2.2 | 875,902 | 3.7 | 32.40 | 1/31/2025 | 1, 5-year option |
United Way of Metro Chicago(7) | NR / NR / NR | 28,892 | 2.4 | 872,875 | 3.7 | 30.21 | 4/30/2028 | 1, 5-year option |
IFF | NR / NR / NR | 27,928 | 2.3 | 830,858 | 3.5 | 29.75 | 9/30/2030 | 1, 5-year option |
Milhouse Engineering & Construction, Inc.(8) | NR / NR / NR | 28,466 | 2.4 | 794,147 | 3.4 | 27.90 | 6/30/2030 | 1, 5-year option |
Signature Office Centers, LLC(9) | NR / NR / NR | 18,927 | 1.6 | 567,810 | 2.4 | 30.00 | 6/30/2030 | 1, 5-year option |
Ten Largest Tenants | 1,040,264 | 86.2% | $23,032,706 | 97.7% | $22.14 | |||
Remaining Tenants(10) | 52,325 | 4.3 | 543,134 | 2.3 | 10.38 | |||
Vacant Space | 114,791 | 9.5 | 0 | 0.0 | 0.00 | |||
Total / Wtd. Avg. All Owned Tenants | 1,207,380 | 100.0% | $23,575,841 | 100.0% | $21.58 | |||
(1) | Based on the underwritten rent roll dated August 1, 2020. |
(2) | Credit Ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | Northern Trust includes 56,932 SF on floors 20 and 21, commencing July 1, 2023. Northern Trust lease provides for contraction options effective on August 31, 2027, August 31, 2030, and August 31, 2032, allowing for the contraction of up to two full floors on either the bottom of the high-rise portion or any of its floors within the mid-rise portion of the 333 South Wabash Property. Each contraction requires 12 months’ notice and a fee of unamortized leasing costs at 8.0% per annum. Northern Trust has two extension options for periods of not less than five and not more than 10 years. |
(4) | CHA has a one-time right to terminate its lease with respect to the entire premises effective December 31, 2031, with 18 months’ prior notice and payment of a termination fee. In addition, CHA has a free rent period until December 31, 2020 that is offset by distributions from the rent concessions reserve. |
(5) | Akuna Capital LLC (“Akuna”) has 27,916 SF expiring on December 31, 2025 and 28,466 SF expiring on December 31, 2029. Akuna has a one-time right to terminate its lease with respect to the entire premises effective December 31, 2027, with prior notice on or before December 31, 2026 and payment of a termination fee. In addition, Akuna has a free rent period until December 31, 2020 that is offset by distributions from the rent concessions reserve. Akuna has one option to extend the lease on the 27,916 SF space for four years. |
(6) | CNA has a one-time right to terminate its lease with respect to suite 400 (28,172 SF) effective May 31, 2023, with prior notice on or before May 31, 2022 and payment of a termination fee. |
(7) | United Way of Metro Chicago has the right to terminate its lease beginning on April 30, 2023 with 12 months’ prior notice and payment of a termination fee. |
(8) | Solely in the event that The Northern Trust exercises its expansion rights, the borrower has the right to terminate the lease of Milhouse Engineering & Construction, Inc. effective December 31, 2024, with prior notice on or before July 31, 2023. |
(9) | Signature Office Centers, LLC has the option to terminate its lease effective June 30, 2027, with 12 months’ prior notice and payment of a termination fee. |
(10) | Remaining Tenants is inclusive of 33,746 SF used as amenity space and 238 SF used as mechanical space, which has no attributable underwritten base rent. | |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
The following table presents certain information relating to the lease rollover schedule at the 333 South Wabash Property, based on the initial lease expiration date:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | Expiring Owned GLA | % of Owned GLA | Cumulative % of Owned GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent $ per SF | # of Expiring Leases | |||||||||||||||
MTM | 1,662 | 0.1 | % | 0.1% | $44,043 | 0.2 | % | $26.50 | 1 | |||||||||||||
2020 | 0 | 0.0 | 0.1% | 0 | 0.0 | 0.00 | 0 | |||||||||||||||
2021 | 0 | 0.0 | 0.1% | 0 | 0.0 | 0.00 | 0 | |||||||||||||||
2022 | 0 | 0.0 | 0.1% | 0 | 0.0 | 0.00 | 0 | |||||||||||||||
2023 | 0 | 0.0 | 0.1% | 0 | 0.0 | 0.00 | 0 | |||||||||||||||
2024 | 56,638 | 4.7 | 4.8% | 1,020,072 | 4.3 | 18.01 | 2 | |||||||||||||||
2025 | 54,950 | 4.6 | 9.4% | 1,713,382 | 7.3 | 31.18 | 2 | |||||||||||||||
2026 | 7,299 | 0.6 | 10.0% | 217,691 | 0.9 | 29.82 | 2 | |||||||||||||||
2027 | 0 | 0.0 | 10.0% | 0 | 0.0 | 0.00 | 0 | |||||||||||||||
2028 | 28,892 | 2.4 | 12.4% | 872,875 | 3.7 | 30.21 | 2 | |||||||||||||||
2029 | 28,466 | 2.4 | 14.7% | 714,781 | 3.0 | 25.11 | 1 | |||||||||||||||
2030 | 110,838 | 9.2 | 23.9% | 3,474,215 | 14.7 | 31.34 | 6 | |||||||||||||||
2031 & Thereafter(3) | 803,844 | 66.6 | 90.5% | 15,518,782 | 65.8 | 19.31 | 9 | |||||||||||||||
Vacant | 114,791 | 9.5 | 100.0% | NAP | NAP | NAP | NAP | |||||||||||||||
Total / Wtd. Avg. | 1,207,380 | 100.0 | % | $23,575,841 | 100.0 | % | $21.58 | 25 |
(1) | Certain tenants may have termination or contraction options that may become exercisable prior to the originally stated expiration date of the tenant lease that are not considered in this rollover schedule. |
(2) | Based on the underwritten rent roll dated August 1, 2020. |
(3) | 2031 & Thereafter is inclusive of 33,746 SF used as amenity space and 238 SF used as mechanical space, which has no attributable underwritten base rent. This space was excluded from the # of Expiring Leases. |
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the 333 South Wabash Property: |
Cash Flow Analysis(1)
2017 | 2018(2) | 2019(2) | T-12 5/31/2020(2) | Underwritten(2) | Underwritten $ per SF | |||||||||||||
Base Rent(3) | $19,249,428 | $14,262,067 | $9,974,877 | $8,526,667 | $26,666,957 | $22.09 | ||||||||||||
Vacant Income | 0 | 0 | 0 | 0 | 3,760,230 | 3.11 | ||||||||||||
Reimbursements(4) | 12,025,122 | 7,114,143 | 1,811,531 | 1,531,946 | 13,229,336 | 10.96 | ||||||||||||
Vacancy & Credit Loss | 0 | 0 | 0 | 0 | (3,760,230) | (3.11) | ||||||||||||
Other Income(5) | 1,477,249 | 622,862 | 137,677 | 190,143 | 1,682,425 | 1.39 | ||||||||||||
Effective Gross Revenue | $32,751,800 | $21,999,071 | $11,924,085 | $10,248,756 | $41,578,718 | $34.44 | ||||||||||||
Total Operating Expenses | 17,917,991 | 18,059,960 | 13,207,574 | 15,122,901 | 17,347,570 | 14.37 | ||||||||||||
Net Operating Income | $14,833,810 | $3,939,112 | ($1,283,489) | ($4,874,145) | $24,231,148 | $20.07 | ||||||||||||
TI/LC | 0 | 0 | 0 | 0 | 662,184 | 0.55 | ||||||||||||
Capital Expenditures | 0 | 0 | 0 | 0 | 241,476 | 0.20 | ||||||||||||
Net Cash Flow | $14,833,810 | $3,939,112 | ($1,283,489) | ($4,874,145) | $23,327,488 | $19.32 | ||||||||||||
Occupancy | 92.1% | 69.2% | 38.3% | 90.5%(6)(7) | 90.5%(6) | |||||||||||||
NOI Debt Yield | 6.2% | 1.6% | -0.5% | -2.0% | 10.1% | |||||||||||||
NCF DSCR | 1.75x | 0.46x | -0.15x | -0.58x | 2.75x |
(1) | Certain items such as FASB13, interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring or non-operating items were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | The decrease from 2018 Net Operating Income and Net Cash Flow to 2019 Net Operating Income and Net Cash Flow was due to the 2019 renovation and CNA vacating at the 333 South Wabash Property. The renovation included a new tenant build out for Northern Trust, which now occupies 45.4% of the net rentable SF. Northern Trust began to occupy their space in February of 2020. The increase in Underwritten Net Operating Income and Net Cash Flow from T-12 5/31/2020 Net Operating Income and Net Cash Flow is due to the recently completed $167.5 million renovation and execution of a new lease with Northern Trust Company at the 333 South Wabash Property. The 333 South Wabash Property is 90.5% leased as of August 1, 2020, compared to 38.3% leased as of December 31, 2019. |
(3) | Underwritten Base Rent is based on the underwritten rent roll dated as of August 1, 2020 inclusive of the rent steps through August 2021 for investment grade tenants (CHA, CNA, and Northern Trust) through the lease term, utilizing a 7.0% discount rate ($3,091,117). |
(4) | Underwritten Reimbursements include afterhours HVAC billing. |
(5) | Underwritten Other Income includes parking revenue, tenant service income, telecom and storage income excluded from rent, and amenity income. |
(6) | Based on the underwritten rent roll dated August 1, 2020. |
(7) | The increase in occupancy between 2019 and T-12 5/31/2020 is primarly due to the new lease executed with Northern Trust. |
■ | Appraisal. According to the appraisal, the 333 South Wabash Property had an “as-is” appraised value of $382,000,000 as of July 1, 2020. |
■ | Environmental Matters. According to a Phase I environmental report, dated July 2, 2020, there are no recognized environmental conditions or recommendations for further action at the 333 South Wabash Property. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
■ | Market Overview and Competition. The 333 South Wabash Property is located at 333 South Wabash Avenue in Chicago, Illinois. According to a third party market research report, the 333 South Wabash Property is located within Chicago’s Loop/central business district where there is a significant corporate and governmental presence. The 333 South Wabash Property is considered a Class A Office Building in this market whereas, the bulk of traditional office development in the subject neighborhood is Class C. |
The 333 South Wabash Property is located in the East Loop submarket. During the first quarter of 2020, asking rents in the East Loop submarket declined by 0.3% to an average of $35.22, higher than eight of the metro area’s thirteen submarkets. Since the same reporting period last year, asking rents have increased by 1.7%, up from $34.63. The East Loop submarket's current asking rent levels are higher than the metro area average of $32.38, while asking rent growth in the first quarter compares unfavorably to the metro average of 0.7%. Effective rents, which exclude the value of concessions offered to prospective tenants, declined by 0.2% during the first quarter to an average of $26.38.
A comprehensive overview of the Chicago office market suggests that the primary concentrations of competitive office space are located in the West Loop submarket, amounting to 46.4 million SF and 18.1% of the metropolitan inventory, followed by West, with a 15.7% share, and Northwest Suburbs with 15.1%. Since the beginning of the second quarter of 2010, the fastest growing area has been the West Loop submarket, adding 3.5 million SF over that period, or 29.7% of total metropolitan office completions. The East Loop submarket, one of thirteen distinct geographic concentrations within Chicago, contains 20.0 million market rate rental SF, or 7.8% of the metro area’s total inventory of office space.
The following table presents certain information relating to the primary office competition for the 333 South Wabash Property:
Competitive Set (1)
Property Name | Submarket | Building SF | Number of Stories | Year Built / Renovated | Occupancy |
333 South Wabash | East Loop | 1,207,380 | 45 | 1972 / 2019 | 90.5% |
The Rookery | Central Loop | 310,484 | 12 | 1888 / 2017 | 99.0% |
161 North Clark | Central Loop | 1,038,585 | 53 | 1992 / NAP | 85.0% |
Board of Trade | Central Loop | 1,392,875 | 44 | 1930 / 2013 | 89.0% |
180 North LaSalle Street | Central Loop | 781,670 | 38 | 1971 / 1999 | 89.0% |
AON Center | East Loop | 2,737,902 | 83 | 1972 / NAP | 98.0% |
200 North LaSalle Street | Central Loop | 629,040 | 30 | 1984 / NAP | 88.0% |
(1) | Source: Appraisal. |
■ | The Borrower. The borrower is DF 333 Wabash PropCo LLC, a Delaware limited liability company and single purpose entity with two independent directors (the “333 South Wabash Borrower”). Legal counsel to the 333 South Wabash Borrower delivered a non-consolidation opinion in connection with the origination of the 333 South Wabash Loan Combination. |
The borrower sponsors and non-recourse carveout guarantors are Michael Shvo and Deutsche Finance America LLC (“DFA”). The non-recourse carveout guarantors have provided a limited non-recourse carveout guaranty that covers only certain existing litigation in which the borrower, the related borrower sponsors and several entities in the borrower’s ownership structure are defendants (the “Existing Litigation”) and, among other things, any voluntary bankruptcy as a result of such Existing Litigation. See “Description of the Mortgage Pool—Litigation and Other Legal Considerations” in the Preliminary Prospectus. Michael Shvo is the founder, chairman, and CEO of SHVO, a New York-based commercial real estate development firm with a portfolio valued at over $7 billion. DFA is the US real estate private equity platform of the Munich-based Deutsche Finance Group, a global investment management firm active since 2005 with over $6 billion of assets under management and investments across 49 markets as of September 2020. The partnership between SHVO and DFA has acquired seven other assets located in New York, Miami Beach, and Beverly Hills.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
■ | Escrows. |
Tax Reserve – At origination, the borrower deposited into a real estate tax reserve $1,582,185, representing 1/12 of the estimated annual real estate taxes multiplied by the number of whole or partial months that elapsed since the date one month prior to the most recent due date for the Property’s real estate taxes. On each payment date thereafter, the borrower is required to deposit into a real estate tax reserve an amount equal to 1/12 of the estimated annual real estate taxes.
Insurance Reserve – At origination, the borrower deposited into an insurance reserve $94,591, representing 1/12 of the estimated annual insurance premiums multiplied by the number of whole or partial months that elapsed since the date one month prior to the most recent policy anniversary date for each of Borrower’s insurance policies. On each payment date thereafter, the borrower is required to deposit into an insurance reserve 1/12 of estimated annual insurance premiums.
55 E. Jackson Sublease Reserve – At origination, the borrower deposited $750,000 for the purpose of re-tenanting certain space the borrower leases at a neighboring property.
Tenant Improvement Costs / Leasing Commissions Reserve – At origination, the borrower deposited $8,513,554 into a tenant improvement and leasing commissions reserve related to certain outstanding tenant improvements and leasing commissions for certain tenants, including The Northern Trust Company, Chicago Housing Authority, Akuna Capital LLC and Milhouse Engineering & Construction, Inc..
Rent Concession Reserve – At origination, the borrower deposited $23,171,811 into a rent concession reserve in connection with certain outstanding free rent, rent abatements or other rent concessions.
Cash Collateral Reserve – On each payment date following the occurrence of a Litigation Trigger Event and until the aggregate funds held by the lender in the cash collateral reserve (the “Cash Collateral Reserve Funds”) exceed $3,000,000 (the “Maximum Cash Collateral Reserve Amount”), the borrower is required to deposit the lesser of (x) $125,000 and (y) the Litigation Trigger Event Excess Cash Flow. In the event that the Litigation Trigger Event Excess Cash Flow is less than $125,000, then, on each such payment date, the borrower is required to deposit an amount equal to the excess of (a) $125,000 over (b) the amount of the Litigation Trigger Event Excess Cash Flow available to be paid to the Cash Collateral Reserve account on such payment date.
A “Litigation Trigger Event” means if a final settlement of the Existing Litigation including, among other things, either (x) a dismissal with prejudice of the Existing Litigation as it pertains to any borrower-related parties or (y) a final settlement and release of the Existing Litigation as it pertains to any borrower-related parties with the payment and performance in full of all settlement obligations is, in each instance, not received on or prior to February 12, 2022.
“Litigation Trigger Event Excess Cash Flow” all cash flow not in excess of $125,000 remaining after all prior reserve and other payments required under the loan agreement for the Loan have been paid.
Material Tenant Rollover Reserve – On each payment date following the occurrence of a Material Tenant Trigger Event, the borrower is required to deposit with the lender all Material Tenant Trigger Event Excess Cash Flow.
A “Material Tenant Trigger Event” means, among other things, (i) if a tenant leasing either individually, or with an affiliate, 20,000 or more square feet of space at the 333 South Wabash Property (a “Material Tenant”) gives written notice to the borrower of its intention to terminate or cancel its lease (a “Material Lease”) or not to extend or renew a Material Lease; (ii) if, on or prior to the date that is twelve (12) months prior to the then applicable stated expiration date under a Material Lease, a Material Tenant does not extend or renew such Material Tenant Lease on terms and conditions reasonably acceptable to the lender unless such Material Lease is a lease satisfying certain safe harbor requirements under the 333 South Wabash Loan Combination documents; (iii) if, on or prior to the date by which a Material Tenant is required under its Material Tenant Lease to notify the borrower of its election to extend or renew such Material Tenant Lease, such Material Tenant does not give such notice; (iv) subject to clause (v) below, if an event of default under a Material Tenant Lease occurs and continues beyond any applicable notice and/or cure period; (v) if a Material Tenant or any lease guarantor with respect to a Material Tenant Lease becomes a debtor under the Title 11 of the United States Code entitled “Bankruptcy,” or any other bankruptcy law, or files any other petition under applicable state or federal laws seeking protection from its creditors, or to liquidate, dissolve or take other similar action, due to insolvency; or (vi) if a Material Tenant Lease is terminated or is no longer in full force and effect.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
A “Material Tenant Trigger Event Cure” means the aggregate amount of Material Tenant Trigger Event Cure Funds in the Material Tenant Rollover Reserve equals or exceeds $50.00 per SF of applicable Material Tenant space in respect of each Material Tenant for which a Material Tenant Trigger Event has occurred and is continuing.
“Material Tenant Trigger Event Cure Funds” means the aggregate amount of all funds held by Lender in the Material Tenant Rollover Reserve account collectively with all Material Tenant Trigger Event Excess Cash Flow and any interest actually earned on thereon.
■ | Lockbox and Cash Management. The 333 South Wabash Loan Combination is structured with a hard lockbox and springing cash management. Under the 333 South Wabash Loan Combination documents, the borrower was required to establish and maintain a clearing account at an eligible institution in trust for the benefit of the lender, into which the borrower is required to deposit or cause to be deposited all revenues of the 333 South Wabash Property. The borrower was also required to deliver tenant direction letters instructing all tenants to deposit rents into the lender-controlled lockbox account. Funds on deposit in the clearing account are required to (x) during any Cash Management Period, be swept on a daily basis into the lender-controlled cash management account and applied and disbursed in accordance with the 333 South Wabash Loan Combination documents, first to pay servicing fees required to be paid by the borrower, tax and insurance reserves, and operating expenses in accordance with the annual budget (which is required to be reasonably approved by the lender, and is subject to certain deemed approval procedures, and subject to certain permitted operating expense deviations), in that order, then to pay amounts due under the 333 South Wabash Loan Combination, then to pay operating expense shortfalls funded by the borrower, then, during the continuance of a Material Tenant Trigger Event, the remaining amount to the Material Tenant Rollover Reserve as described above under “Escrows” (the “Material Tenant Trigger Event Excess Cash Flow”), then, during the continuance of a Litigation Trigger Event, the remaining amount (or a portion of the remaining amount not to exceed $125,000) to the Cash Collateral Reserve as described above under “Escrows” (the “Litigation Trigger Excess Cash Flow”) and finally the balance, if any, to the excess cash flow account to be held as additional collateral for the 333 South Wabash Loan Combination during the continuance of such Cash Management Period and (y) while no Cash Management Period is continuing, be swept on a daily basis into the borrower’s operating account. |
A “Cash Management Period” means any period following the occurrence of a Cash Management Event and prior to the occurrence of a Return Event.
A “Cash Management Event” means each period (i) commencing upon the occurrence of an event of default under the 333 South Wabash Loan Combination documents until cured, (ii) commencing upon the occurrence of a DSCR Cash Management Event until the occurrence of a DSCR Return Event, (iii) commencing upon the occurrence of a Material Tenant Trigger Event until the occurrence of a Material Tenant Trigger Event Cure, or (iv) commencing upon the occurrence of a Litigation Trigger Event until the occurrence of a Litigation Trigger Event Cure.
A “DSCR Cash Management Event” means that, as of any date of determination from and after September 1, 2021, (i) the debt service coverage ratio on the 333 South Wabash Loan Combination is less than 1.20x (ii) (or the lender determines in its reasonable discretion, that the debt service coverage ratio will be less than 1.20x within the next twelve months based on projected net operating income).
A “DSCR Return Event” means that, as of any date of determination, (A) (i) the debt service coverage ratio is greater than or equal to 1.25x for each of the two immediately preceding consecutive calendar quarters and (ii) the lender has received reasonably satisfactory evidence that such debt service coverage ratio will be maintained for the succeeding twelve consecutive calendar months or (B) if a Cash Management Event is caused solely by a DSCR Cash Management Event, the borrower has delivered to the lender a cash deposit (a “DSCR Cash Deposit”) in an amount equal to $2,600,000 (to be released to the borrower upon request if the debt service coverage ratio is at least 1.25x for two consecutive calendar quarters). The borrower is required to continue making the DSCR Cash Deposit on each twelve month anniversary of the date the borrower first received written notice that a DSCR Cash Management Event solely in respect of clause (ii) of the definition of “DSCR Cash Management Event” has occurred until the occurrence of a DSCR Return Event.
A “Return Event” means no event of default is then continuing and there is a Default Return Event, DSCR Return Event, Material Tenant Trigger Event Cure, or Litigation Trigger Event Cure with respect to any Cash Management Event that has occurred; provided that, no “Return Event” may occur (i) with respect to any Cash Management Event caused by an event of default (subject to waiver by the lender of such event of default in its sole and absolute discretion), or (ii) if, during the applicable Cash Management Period, any additional Cash Management Event has occurred and is continuing, or (iii) if a Cash Management Period has commenced an aggregate of three times (excluding a Cash Management Period triggered solely by a Litigation Trigger Event).
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #8: 333 SOUTH WABASH
A “Default Return Event” means that the 333 South Wabash Borrower shall have cured the outstanding event of default or all of the outstanding events of default (which cure lender may accept in its sole and absolute discretion) that gave rise to the applicable Cash Management Event.
A “Litigation Trigger Event Cure” means the aggregate amount of Cash Collateral Reserve Funds in the Cash Collateral Reserve equals or exceeds the Maximum Cash Collateral Reserve Amount.
■ | Property Management. The 333 South Wabash Property is currently managed by SHVO Property Management LLC, an affiliate of Michael Shvo, one of the related borrower sponsors, and sub-managed by Jones Lang LaSalle Americas (Illinois), L.P. The 333 South Wabash Property is required to be managed by a property manager and if applicable, a sub-manager, pursuant to a property management agreement, in each case approved by the lender, such approval not to be unreasonably withheld, conditioned or delayed so long as no monetary default, material non-monetary default or event of default under the 333 South Wabash Loan Combination documents then exists. The lender pre-approved (i) SHVO Property Management LLC as the initial property manager, so long as Jones Lang LaSalle America Inc. or a replacement sub-manager appointed and approved in accordance with the terms of the 333 South Wabash Loan Combination documents, is the sub-manager, and (ii) DFA or an affiliate of DFA, as a substitute or replacement property manager, if the borrower elects to replace SHVO Property Management LLC as the property manager, so long as Jones Lang LaSalle America Inc., or a substitute or replacement sub-manager appointed and approved in accordance with the terms of the 333 South Wabash Loan Combination documents, is the sub-manager. Any substitute or replacement property manager or any other change in property manager are subject to, among other things, (a) the prior written approval of the lender, not to be unreasonably withheld, conditioned or delayed so long as no monetary default, material non-monetary default or event of default under the 333 South Wabash Loan Combination documents then exists, (b) receipt by the lender of a rating agency confirmation from each applicable rating agency with respect to the replacement property manager and its replacement property management agreement, and (c) if such property manager is an affiliate of the borrower, the borrower delivers a new non-consolidation opinion with respect to such property manager and the related property management agreement reasonably acceptable to the lender. |
■ | Current Mezzanine or Secured Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
■ | Release of Collateral. Not permitted. |
■ | Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the 333 South Wabash Property, plus rental loss and/or business interruption coverage, for the longer of (a) 18 months or (b) the period of time it would take to rebuild the 333 South Wabash Property and a 6-month extended period of indemnity. See “Risk Factors—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #9: 1633 Broadway
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
102
LOAN #9: 1633 Broadway
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
103
LOAN #9: 1633 Broadway
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #9: 1633 Broadway
Mortgaged Property Information | Mortgage Loan Information | ||||||
Number of Mortgaged Properties | 1 | Loan Seller | GSMC / GACC | ||||
Location (City/State) | New York, New York | Cut-off Date Principal Balance(3) | $45,000,000 | ||||
Property Type | Office | Cut-off Date Principal Balance per SF(2) | $390.78 | ||||
Size (SF) | 2,561,512 | Percentage of Initial Pool Balance | 4.1% | ||||
Total Occupancy as of 10/31/2019(1) | 98.4% | Number of Related Mortgage Loans | None | ||||
Owned Occupancy as of 10/31/2019(1) | 98.4% | Type of Security | Fee Simple | ||||
Year Built / Latest Renovation | 1972 / 2013 | Mortgage Rate | 2.99000% | ||||
Appraised Value(1) | $2,400,000,000 | Original Term to Maturity (Months) | 120 | ||||
Borrower Sponsor | Paramount Group Operating Partnership LP | Original Amortization Term (Months) | NAP | ||||
Property Management | Paramount Group Property-Asset Management LLC | Original Interest Only Period (Months) | 120 | ||||
First Payment Date | 1/6/2020 | ||||||
Maturity Date | 12/6/2029 | ||||||
Underwritten Revenues | $190,585,947 | ||||||
Underwritten Expenses | $71,435,784 | Escrows(4) | |||||
Underwritten Net Operating Income (NOI) (1) | $119,150,163 | Upfront | Monthly | ||||
Underwritten Net Cash Flow (NCF) (1) | $116,677,727 | Taxes | $0 | $0 | |||
Cut-off Date LTV Ratio(1)(2) | 41.7% | Insurance | $0 | $0 | |||
Maturity Date LTV Ratio(1)(2) | 41.7% | Replacement Reserves | $0 | $0 | |||
DSCR Based on Underwritten NOI / NCF(1) (2) | 3.93x / 3.84x | TI/LC | $0 | $0 | |||
Debt Yield Based on Underwritten NOI / NCF(1) (2) | 11.9% / 11.7% | Other(5) | $36,389,727 | $0 | |||
Sources and Uses | |||||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||||
Senior Loan Amount | $1,001,000,000 | 80.1 | % | Loan Payoff | $1,052,884,467 | 84.2 | % | ||||||||
Subordinate Loan Amount | 249,000,000 | 19.9 | Principal Equity Distribution | 139,885,652 | 11.2 | ||||||||||
Reserves | 36,389,727 | 2.9 | |||||||||||||
Origination Costs | 20,840,154 | 1.7 | |||||||||||||
Total Sources | $1,250,000,000 | 100.0 | % | Total Uses | $1,250,000,000 | 100.0 | % |
(1) | All NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic, and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the 1633 Broadway Loan Combination was underwritten, based on such prior information. See “Risk Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and May Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
(2) | Calculated based on the aggregate outstanding principal balance of the 1633 Broadway Senior Loans and excludes the 1633 Broadway Subordinate Loans unless otherwise specified. See “—The Mortgage Loan” below. |
(3) | The 1633 Broadway Loan consists of the senior pari passu non-controlling notes A-1-C-4-A and A-2-C-4-B, and is part of the 1633 Broadway Loan Combination, evidenced by 40 senior pari passu notes and four subordinate notes, with an aggregate outstanding principal balance as of the Cut-Off Date of $1,250,000,000. For additional information, see “—The Mortgage Loan” below. |
(4) | See “—Escrows” below. |
(5) | Other reserve represents unfunded obligations related to multiple tenants. See “—Escrows” below |
■ | The Mortgage Loan. The mortgage loan (the “1633 Broadway Loan”) is part of a loan combination (the “1633 Broadway Loan Combination”) consisting of 40 senior pari passu promissory notes with an aggregate original and outstanding principal balance of $1,001,000,000 as of the Cut-off Date (the “1633 Broadway Senior Loans”) and four subordinate pari passu notes with an aggregate original and outstanding principal balance of $249,000,000 as of the Cut-off Date (the “1633 Broadway Subordinate Loans”). The 1633 Broadway Loan Combination has an aggregate original and outstanding principal balance of $1,250,000,000 as of the Cut-off Date and is secured by a first mortgage encumbering the borrowers’ fee simple interest in an office building in New York, New York (the “1633 Broadway Property”). The 1633 Broadway Loan, which will be included in the Benchmark 2020-B19 trust, is evidenced by the senior pari passu non-controlling notes A-1-C-4-A and A-2-C-4-B, and has an aggregate outstanding principal balance as of the Cut-off Date of $45,000,000 and represents approximately 4.1% of the Initial Pool Balance. |
The 1633 Broadway Loan Combination was co-originated by Goldman Sachs Bank USA (“GSBI”), JPMorgan Chase Bank, National Association (“JPMCB”), DBR Investments Co. Limited (“DBRI”) and Wells Fargo Bank, National Association (“WFB”) on November 25, 2019. The 1633 Broadway Loan Combination has an interest rate of 2.99000% per annum. The borrowers utilized the proceeds of the 1633 Broadway Loan Combination to refinance existing debt on the 1633 Broadway Property, fund reserves, pay origination costs and return equity to the borrower sponsor.
The 1633 Broadway Loan Combination had an initial term of 120 months and has a remaining term of 111 months as of the Cut-off Date. The 1633 Broadway Loan Combination requires interest-only payments during its term. The scheduled maturity date of the 1633 Broadway Loan Combination is the due date in December 2029. Voluntary prepayment of the 1633 Broadway Loan is permitted on or after the due date in June 2029. At any time after the earlier to occur of (i) November 25, 2022 and (ii) the second anniversary of the closing date of the securitization into which the last note of the 1633 Broadway Loan Combination is deposited, the 1633 Broadway Loan Combination may be defeased in whole (or in part) with direct, non-callable obligations of the United States of America.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #9: 1633 Broadway
The table below summarizes the promissory notes that comprise the 1633 Broadway Loan Combination. The relationship between the holders of the 1633 Broadway Loan Combination is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Loan Combinations—The 1633 Broadway Pari-Passu AB Loan Combination” in the Preliminary Prospectus.
Note | Original Balance | Cut-off Date Balance | Note Holder(s) | Controlling Piece | |||||
A-1-S-1 | $250,000 | $250,000 | BWAY 2019-1633 (GSBI) | No | |||||
A-1-C-1 | 50,000,000 | 50,000,000 | CGCMT 2020-GC46 (GSBI) | No(1) | |||||
A-1-C-2 | 45,000,000 | 45,000,000 | GSMS 2020-GC45 (GSBI) | No | |||||
A-1-C-3 | 45,000,000 | 45,000,000 | GSMS 2020-GC47 (GSBI) | No | |||||
A-1-C-4-A | 30,000,000 | 30,000,000 | BMARK 2020-B19 (GSBI) | No | |||||
A-1-C-4-B | 10,000,000 | 10,000,000 | JPMDB 2020-COR7 (GSBI) | No | |||||
A-1-C-5 | 32,500,000 | 32,500,000 | CGCMT 2020-GC46 (GSBI) | No | |||||
A-1-C-6 | 20,000,000 | 20,000,000 | GSMS 2020-GC47 (GSBI) | No | |||||
A-1-C-7 | 17,500,000 | 17,500,000 | BMARK 2020-IG3 (GSBI) | No | |||||
A-2-S-1 | 250,000 | 250,000 | BWAY 2019-1633 (DBRI) | No | |||||
A-2-C-1-A | 27,500,000 | 27,500,000 | CGCMT 2020-GC46 (DBRI) | No | |||||
A-2-C-1-B | 22,500,000 | 22,500,000 | BMARK 2020-B16 (DBRI) | No | |||||
A-2-C-2-A | 30,000,000 | 30,000,000 | BMARK 2020-IG2 (DBRI) | No | |||||
A-2-C-2-B | 20,000,000 | 20,000,000 | JPMDB 2020-COR7 (DBRI) | No | |||||
A-2-C-3-A | 20,000,000 | 20,000,000 | DBJPM 2020-C9 (DBRI) | No | |||||
A-2-C-3-B | 15,000,000 | 15,000,000 | BMARK 2020-IG1 (DBRI) | No | |||||
A-2-C-4-A | 10,000,000 | 10,000,000 | BMARK 2020-IG3 (DBRI) | No | |||||
A-2-C-4-B | 15,000,000 | 15,000,000 | BMARK 2020-B19 (DBRI) | No | |||||
A-2-C-4-C | 10,000,000 | 10,000,000 | DBJPM 2020-C9 (DBRI) | No | |||||
A-2-C-4-D | 10,000,000 | 10,000,000 | DBJPM 2020-C9 (DBRI) | No | |||||
A-2-C-5 | 15,000,000 | 15,000,000 | GSMS 2020-GC45 (DBRI) | No | |||||
A-2-C-6 | 35,000,000 | 35,000,000 | BMARK 2020-B18 (DBRI) | No | |||||
A-2-C-7 | 20,000,000 | 20,000,000 | BMARK 2020-IG3 (DBRI) | No | |||||
A-3-S-1 | 250,000 | 250,000 | BWAY 2019-1633 (JPMCB) | No | |||||
A-3-C-1-A | 27,850,000 | 27,850,000 | BMARK 2020-B18 (JPMCB) | No | |||||
A-3-C-1-B | 22,500,000 | 22,500,000 | BMARK 2020-B16 (JPMCB) | No | |||||
A-3-C-2 | 49,650,000 | 49,650,000 | BMARK 2020-IG1 (JPMCB) | No | |||||
A-3-C-3 | 40,000,000 | 40,000,000 | BMARK 2020-IG2 (JPMCB) | No | |||||
A-3-C-4 | 32,500,000 | 32,500,000 | BMARK 2020-IG3 (JPMCB) | No | |||||
A-3-C-5 | 30,000,000 | 30,000,000 | BMARK 2020-B17 (JPMCB) | No | |||||
A-3-C-6 | 20,000,000 | 20,000,000 | BMARK 2020-B17 (JPMCB) | No | |||||
A-3-C-7 | 27,500,000 | 27,500,000 | JPMDB 2020-COR7 (JPMCB) | No | |||||
A-4-S-1 | 250,000 | 250,000 | BWAY 2019-1633 (WFB) | No | |||||
A-4-C-1 | 50,000,000 | 50,000,000 | BANK 2020-BNK25 (WFB) | No | |||||
A-4-C-2 | 50,000,000 | 50,000,000 | BANK 2020-BNK25 (WFB) | No | |||||
A-4-C-3 | 40,000,000 | 40,000,000 | BANK 2020-BNK27 (WFB) | No | |||||
A-4-C-4 | 40,000,000 | 40,000,000 | WFCM 2020-C55 (WFB) | No | |||||
A-4-C-5 | 30,000,000 | 30,000,000 | WFCM 2020-C55 (WFB) | No | |||||
A-4-C-6 | 20,000,000 | 20,000,000 | BANK 2020-BNK26 (WFB) | No | |||||
Total Senior Notes | $1,001,000,000 | $1,001,000,000 | |||||||
B-1 | 62,250,000 | 62,250,000 | BWAY 2019-1633 | Yes(1) | |||||
B-2 | 62,250,000 | 62,250,000 | BWAY 2019-1633 | Yes(1) | |||||
B-3 | 62,250,000 | 62,250,000 | BWAY 2019-1633 | Yes(1) | |||||
B-4 | 62,250,000 | 62,250,000 | BWAY 2019-1633 | Yes(1) | |||||
Total | $1,250,000,000 | $1,250,000,000 |
(1) | During the continuance of a control shift event relating to the BWAY 2019-1633 securitization transaction (i.e., when the most senior class of certificates in such transaction have been control appraised out), Note A-1-C-1 will be the controlling note. See “Description of the Mortgage Pool—The Loan Combinations—The 1633 Broadway Pari-Passu AB Loan Combination” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
106
LOAN #9: 1633 Broadway
The capital structure for the 1633 Broadway Loan Combination is shown below:
1633 Broadway Loan Combination Capital Structure
(1) | The 1633 Broadway Loan Combination interest rate is 2.99000%. |
(2) | Based on the appraised value of $2.40 billion. |
(3) | Cumulative UW NOI Debt Yield and Cumulative UW NCF DSCR are calculated based on an UW NOI and UW NCF of $119,150,163 and $116,677,727, respectively. See “Underwritten Cash Flow Analysis” below. |
(4) | Based on the appraised value of $2.40 billion, the Implied Borrower Sponsor Equity is $1.15 billion. |
■ | The Mortgaged Property. The 1633 Broadway Property is an approximately 2.6 million SF, 48-story office tower that is situated with a full block of Broadway frontage between 50th and 51st Streets in Midtown Manhattan. The 1633 Broadway Property contains views of the Hudson River, Central Park, and Midtown from above the 36th floor. In addition to the office space, the 1633 Broadway Property includes retail space (anchored by Equinox), a parking garage across three levels below grade, two theaters comprising a total of 145,192 SF (the Gershwin Theatre and Circle in the Square Theatre) and storage space comprising 18,384 SF. |
The 1633 Broadway Property is located on a 90,400 SF parcel comprising the entire western block front of Broadway between West 50th and West 51st Streets within the Westside office submarket of Midtown. The 1633 Broadway Property was constructed in 1972 and was most recently renovated in 2013. Since 2010, the borrower sponsor has invested a total of approximately $41.6 million in lobby renovations, plaza redevelopment, and retail renovations. In addition, the borrower sponsor has invested approximately $230 million in tenant improvements and leasing commissions since 2010. Going forward, the borrower sponsor provided a 10-year renovation budget which totals approximately $55.98 million; the renovation budget is anticipated to be utilized for items including a roof replacement, structural upgrades, fire alarm system upgrades, Gershwin Theatre upgrades, completion of the terrace on the 47th and 48th floors, and development of the Retail Cube. Such renovations are not required by the 1633 Broadway Loan Combination documents, and have not been reserved for. We cannot assure you that such renovation will proceed as expected or at all.
The 1633 Broadway Property comprises 2,561,512 SF and was 98.4% leased as of October 31, 2019. The 1633 Broadway Property office component is currently 100.0% leased to 18 tenants. The retail space within the 1633 Broadway Property totals approximately 80,000 SF of net rentable area and is anchored by Equinox (25,458 SF) through February 2040. Approximately 94.3% of the underwritten rent is from office tenants.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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LOAN #9: 1633 Broadway
The largest tenant based on underwritten base rent, Allianz Asset Management of America L.P. (“Allianz”) (12.5% of NRA; 15.7% of underwritten base rent), occupies 320,911 SF. Allianz occupies six suites with leases expiring in January 2031. Allianz is an asset manager with over 800 investment professionals in 25 offices worldwide and manages assets for individuals, families and institutions. The 1633 Broadway Property serves as the United States headquarters for Allianz.
The second largest tenant based on underwritten base rent, Morgan Stanley & Co (“Morgan Stanley”) (10.2% of NRA; 11.1% of underwritten base rent), occupies 260,829 SF of office space. Morgan Stanley occupies five suites with leases expiring in March 2032. Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions and individuals in the Americas, Europe, the Middle East, Africa and Asia. Morgan Stanley operates through three segments: Institutional Securities, Wealth Management and Investment Management.
The third largest tenant based on underwritten base rent, WMG Acquisition Corp (“Warner Music Group”) (11.5% of NRA; 10.4% of underwritten base rent), occupies 293,888 SF of office space. Warner Music Group is an American multinational entertainment and record label conglomerate. It is one of the “Big Three” recording companies and the third largest in the global music industry, next to Universal Music Group and Sony Music Entertainment. Warner Music Group is headquartered at the 1633 Broadway Property.
The 1633 Broadway Property features two theatres that comprise 5.7% of the total net rentable area and account for 1.2% of the underwritten rental revenue. The larger of the two theatres is the U. T. Associates of the Gershwin Theatre (“Gershwin Theatre”), which is notable for hosting Wicked since 2003. The Gershwin theatre contains three, five-year renewal options that could potentially extend the term through May 2042. The 1633 Broadway Property contains an additional theatre, where Thespian Theatre, Inc. is the tenant, known as the Circle in the Square, which comprises approximately 800 seats and 34,570 SF and currently hosts the show OKLAHOMA! The 1633 Broadway Property also houses the Circle in the Square Theatre School, the only accredited training conservatory associated with a Broadway theatre, which offers two, two-year training programs, in acting and musical theatre. Thespian Theatre, Inc. currently pays a total contract rent of $864,250, or $25.00 per SF through September 2021.
The parking component within the 1633 Broadway Property consists of 250-space parking garage across three levels below grade and comprises 64,158 SF. The space is currently leased to ABM Parking Services, Inc., a parking garage operator, which has leased the space through July 2026. The operator is responsible for a contract rent of approximately $2.39 million, or $9,560 per space, which is anticipated to increase by 1.50% per annum throughout the remainder of the lease.
COVID-19 Update. As of August 28, 2020, the 1633 Broadway Property is open, however all retail tenants and the two theaters are closed and most, if not all, office tenants are working remotely. For July and August 2020, 89.5% and 89.5% of the occupied SF, respectively, and 93.6% and 93.6%, of the Underwritten Base Rent, respectively, were collected. One of those tenants, representing approximately 8% of underwritten base rent, paid reduced rent and has signed an amendment for reduced rent through year end 2020. The difference between the underwritten contractual rent per the original lease and the reduced rent pursuant to the signed amendment is required to be repaid over a 36-month period beginning on January 1, 2021 at an imputed interest rate of 3.75% (from April 1, 2020) on the amount of rent deferred. As of August 28, 2020, the 1633 Broadway Loan Combination is not subject to any modification or forbearance requests.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
108
LOAN #9: 1633 Broadway
The following table presents certain information relating to the tenants at the 1633 Broadway Property:
Ten Largest Tenants Based on Underwritten Base Rent
Tenant Name | Credit Rating (Fitch/MIS/S&P)(1) | Tenant GLA(2) | % of GLA | UW Base Rent(2) | % of Total UW Base Rent | UW Base Rent $ per SF(2) | Lease Expiration | Renewal / Extension Options | |||||||||||||
Allianz(3) | AA- / Aa3 / AA | 320,911 | 12.5 | % | $26,527,064 | 15.7 | % | $82.66 | 1/31/2031 | 5 or 10-year terms; 15 years max in aggregate | |||||||||||
Morgan Stanley(4) | A / A3 / BBB+ | 260,829 | 10.2 | 18,677,050 | 11.1 | $71.61 | 3/31/2032 | 2, 5-year or 1, 10-year option | |||||||||||||
WMG Acquisition Corp(5) | NR / NR / NR | 293,888 | 11.5 | 17,520,179 | 10.4 | $59.62 | 7/31/2029 | 1, 5 or 10-year option | |||||||||||||
Showtime Networks Inc | BBB / Baa2 / BBB | 261,196 | 10.2 | 14,438,861 | 8.6 | $55.28 | 1/31/2026 | 1, 5 or 10-year option | |||||||||||||
Kasowitz Benson Torres(6) | NR / NR / NR | 203,394 | 7.9 | 13,830,452 | 8.2 | $68.00 | 3/31/2037 | 2, 5-year options | |||||||||||||
New Mountain Capital, LLC(7) | NR / NR / NR | 108,374 | 4.2 | 9,320,164 | 5.5 | $86.00 | 10/15/2035 | 1, 5-year option | |||||||||||||
Charter Communications Holding | NR / Ba2 / BB+ | 106,176 | 4.1 | 8,918,784 | 5.3 | $84.00 | 12/15/2025 | None | |||||||||||||
MongoDB, Inc. | NR / NR / NR | 106,230 | 4.1 | 8,073,480 | 4.8 | $76.00 | 12/31/2029 | 1, 5-year option | |||||||||||||
Travel Leaders Group, LLC | NR / NR / B+ | 107,205 | 4.2 | 7,994,846 | 4.7 | $74.58 | 12/31/2033 | 1, 5-year option | |||||||||||||
Assured Guaranty Municipal | NR / NR / A | 103,838 | 4.1 | 7,256,550 | 4.3 | $69.88 | 2/28/2032 | 1, 5-year option | |||||||||||||
Total / Wtd. Avg. | 1,872,041 | 73.1 | % | $132,557,430 | 78.5 | % | $70.81 | ||||||||||||||
Remaining Owned Tenants | 649,710 | 25.4 | 36,213,171 | 21.5 | $55.74 | ||||||||||||||||
Vacant Spaces (Owned Space) | 39,761 | 1.6 | NAP | NAP | NAP | ||||||||||||||||
Totals / Wtd. Avg. All Owned Tenants | 2,561,512 | 100.0 | % | $168,770,601 | 100.0 | % | $66.93 |
(1) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(2) | Borrowers’ owned space. Does not include non-owned anchors or outparcels. |
(3) | Allianz subleases 20,600 SF of suite 4600 (totaling 54,118 SF) to Triumph Hospitality at a base rent of $46.80 PSF through December 30, 2030. Triumph Hospitality further subleases 3,000 SF of suite 4600 to Stein Adler Dabah & Zelkowitz at a base rent of $41.33 PSF through July 31, 2022. Underwritten base rent is based on the contractual rent under the prime lease. |
(4) | Morgan Stanley has the option to terminate its lease as to all or any portion (but not less than one full floor) of its space at any time after April 1, 2027, upon 18 months’ notice and payment of a termination fee. |
(5) | WMG Acquisition Corp subleases 3,815 SF of suite 0400 (totaling 36,854 SF) to Cooper Investment Partners LLC at a base rent of $58.37 PSF on a month-to-month basis. Underwritten base rent is based on the contractual rent under the prime lease. |
(6) | Kasowitz Benson Torres subleases a collective 32,487 SF of Suite 2200 (totaling 50,718 SF) to three tenants. Delcath Systems, Inc. subleases 6,877 SF and pays a rent of $68.50 PSF through February 28, 2021; Avalonbay Communities subleases 12,145 SF through October 31, 2026 and pays a current rent of $74.00 PSF; Cresa New York subleases 13,195 SF and pays a rent of $65.00 PSF through April 30, 2021. Kasowitz Benson Torres has the right to terminate all or any portion of one full floor of the premises located on the uppermost or lowermost floors, effective as of March 31, 2024, upon notice by March 31, 2023. Underwritten base rent is based on the contractual rent under the prime lease. |
(7) | New Mountain Capital, LLC has executed a lease but has not yet taken occupancy or begun paying rent. New Mountain Capital, LLC is expected to take occupancy in the second quarter of 2020 and is expected to begin paying rent in October 2020. We cannot assure you that it will take occupancy or begin paying rent as expected or at all. |
The following table presents certain information relating to the lease rollover schedule at the 1633 Broadway Property based on initial lease expiration dates:
Lease Expiration Schedule(1)
Year Ending December 31, | Expiring Owned GLA | % of Owned GLA | Cumulative % of Owned GLA | UW Base Rent(2) | % of Total UW Base Rent | UW Base Rent $ per SF(2) | # of Expiring Leases | ||||||||||||||
MTM | 9,482 | 0.4 | % | 0.4 | % | $638,145 | 0.4 | % | $67.30 | 10 | |||||||||||
2020 | 960 | 0.0 | 0.4 | % | 28,800 | 0.0 | $30.00 | 2 | |||||||||||||
2021 | 34,570 | 1.3 | 1.8 | % | 864,250 | 0.5 | $25.00 | 2 | |||||||||||||
2022 | 116,337 | 4.5 | 6.3 | % | 2,813,374 | 1.7 | $24.18 | 4 | |||||||||||||
2023 | 38,550 | 1.5 | 7.8 | % | 1,299,854 | 0.8 | $33.72 | 2 | |||||||||||||
2024 | 51,276 | 2.0 | 9.8 | % | 4,666,116 | 2.8 | $91.00 | 1 | |||||||||||||
2025 | 106,176 | 4.1 | 14.0 | % | 8,918,784 | 5.3 | $84.00 | 1 | |||||||||||||
2026 | 435,474 | 17.0 | 31.0 | % | 24,289,491 | 14.4 | $55.78 | 4 | |||||||||||||
2027 | 55,247 | 2.2 | 33.1 | % | 4,584,436 | 2.7 | $82.98 | 2 | |||||||||||||
2028 | 90,001 | 3.5 | 36.6 | % | 6,043,229 | 3.6 | $67.15 | 2 | |||||||||||||
2029 | 399,717 | 15.6 | 52.2 | % | 25,579,624 | 15.2 | $63.99 | 3 | |||||||||||||
2030 | 0 | 0.0 | 52.2 | % | 0 | 0.0 | $0.00 | 0 | |||||||||||||
2031 & Thereafter | 1,183,961 | 46.2 | 98.4 | % | 89,044,498 | 52.8 | $75.21 | 10 | |||||||||||||
Vacant | 39,761 | 1.6 | 100.0 | % | NAP | NAP | NAP | NAP | |||||||||||||
Total / Wtd. Avg. | 2,561,512 | 100.0 | % | $168,770,601 | 100.0 | % | $66.93 | 43 |
(1) | Calculated based on approximate square footage occupied by the tenants. |
(2) | UW Base Rent, % of Total UW Base Rent and UW Base Rent $ per SF reflect the contractual base rent as of October 31, 2019. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
109
LOAN #9: 1633 Broadway
The following table presents certain information relating to historical occupancy at the 1633 Broadway Property:
Historical Leased %(1)
2016 | 2017 | 2018 | As of 10/31/2019 | |||
86.3% | 95.4% | 95.4% | 98.4% |
(1) | As provided by the borrowers and reflects average occupancy for the indicated year ended December 31 unless specified otherwise. |
■ | Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and Underwritten Net Cash Flow at the 1633 Broadway Property: |
Cash Flow Analysis(1)
2016 | 2017 | 2018 | TTM 9/30/2019 | TTM 5/30/2020 | Underwritten | Underwritten $ per SF | |||||||||||||||
Base Rent(2) | $141,156,682 | $143,219,431 | $160,621,035 | $161,646,240 | $164,097,000 | $168,770,601 | $65.89 | ||||||||||||||
Credit Tenant Rent Steps(3) | 0 | 0 | 0 | 0 | 0 | 7,558,579 | 2.95 | ||||||||||||||
Potential Income from Vacant Space | 0 | 0 | 0 | 0 | 0 | 2,879,875 | 1.12 | ||||||||||||||
Reimbursements | 9,150,315 | 11,228,307 | 13,952,510 | 16,874,074 | 17,589,000 | 15,267,588 | 5.96 | ||||||||||||||
Gross Potential Rent | $150,306,997 | $154,447,738 | $174,573,545 | $178,520,314 | $181,686,000 | $194,476,643 | $75.92 | ||||||||||||||
Other Income(4) | 5,692,549 | 5,017,065 | 4,645,691 | 4,240,034 | 2,761,000 | 4,279,853 | 1.67 | ||||||||||||||
Concessions | 0 | 0 | 0 | 0 | 0 | 0 | 0.00 | ||||||||||||||
Vacancy & Credit Loss | (309,756 | ) | 0 | 0 | 0 | 0 | (8,170,549 | ) | (3.19 | ) | |||||||||||
Effective Gross Income | $155,689,790 | $159,464,803 | $179,219,236 | $182,760,348 | $184,447,000 | $190,585,947 | $74.40 | ||||||||||||||
Real Estate Taxes | $35,413,254 | $38,391,946 | $41,366,170 | $43,693,114 | $45,484,000 | $45,478,153 | $17.75 | ||||||||||||||
Insurance | 1,061,417 | 908,564 | 1,009,544 | 1,082,131 | 1,170,000 | 1,069,190 | 0.42 | ||||||||||||||
Management Fee | 2,507,162 | 2,981,306 | 3,149,432 | 3,287,347 | 3,413,000 | 1,000,000 | 0.39 | ||||||||||||||
Other Operating Expenses | 22,886,571 | 22,992,980 | 24,595,640 | 23,888,441 | 23,554,000 | 23,888,441 | 9.33 | ||||||||||||||
Total Operating Expenses | $61,868,404 | $65,274,796 | $70,120,786 | $71,951,033 | $73,621,000 | $71,435,784 | $27.89 | ||||||||||||||
Net Operating Income | $93,821,386 | $94,190,007 | $109,098,450 | $110,809,315 | $110,826,000 | $119,150,163 | $46.52 | ||||||||||||||
TI/LC | 0 | 0 | 0 | 0 | 0 | 2,011,364 | 0.79 | ||||||||||||||
Capital Expenditures | 0 | 0 | 0 | 0 | 0 | 461,072 | 0.18 | ||||||||||||||
Net Cash Flow | $93,821,386 | $94,190,007 | $109,098,450 | $110,809,315 | $110,8026,000 | $116,677,727 | $45.55 | ||||||||||||||
Occupancy | 86.3 | % | 95.4 | % | 95.4 | % | NAP | NAP | 98.4 | % | |||||||||||
NOI Debt Yield | 9.4 | % | 9.4 | % | 10.9 | % | 11.1 | % | 11.1 | % | 11.9 | % | |||||||||
NCF DSCR | 3.09 | x | 3.10 | x | 3.60 | x | 3.65 | x | 3.65 | x | 3.84 | x |
(1) | Non-recurring or non-operating items were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | Underwritten Base Rent reflects annualized in-place rents as of October 31, 2019 ($167,497,806), with contractual rent steps through November 30, 2020 ($1,272,795). |
(3) | Reflects the net present value of contractual rent step increments over the lease term using a discount rate of 7.0% (for investment grade tenants). |
(4) | Other Income consists of overage rent, storage income, parking income, lease termination income, tenant work order income and other miscellaneous income. |
■ | Appraisal. According to the appraisal, the 1633 Broadway Property had an “as-is” appraised value of $2,400,000,000 as of October 24, 2019. |
Appraisal Approach | Value | Discount Rate | Capitalization Rate | |||
Direct Capitalization Approach | $2,450,000,000 | N/A | 4.50% | |||
Discounted Cash Flow Approach | $2,400,000,000 | 5.75% | 4.75%(1) |
(1) | Represents the terminal capitalization rate. |
■ | Environmental Matters. According to a Phase I environmental report, dated October 30, 2019, there are no recognized environmental conditions or recommendations for further action at the 1633 Broadway Property, other than the development and implementation of an asbestos operations and maintenance program. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
110
LOAN #9: 1633 Broadway
■ | Market Overview and Competition. The 1633 Broadway Property is located in the Times Square neighborhood of Midtown Manhattan, a commercial corridor that produces approximately 15% of New York City’s economic output. The neighborhood is bounded by 41st Street to the south and 52nd Street to the north between Avenue of the Americas and Eighth Avenue. The 1633 Broadway Property is located within one block of the 50th Street/Broadway, 50th Street and 49th Street subway stations, which serve the 1, 2, C, E, N, R and W lines. |
According to the appraisal, the 1633 Broadway Property is located within the Westside office submarket of Midtown within the Manhattan market. Historically, the submarket has benefitted from the office space located around the boundaries of Central Park along major corridors such as West 57th Street, Broadway and Seventh Avenue, which consist primarily of Class A office product that take advantage of protected Central Park views. The area’s proximity to these locations has assisted with the historically low vacancy and availability rates exhibited by this submarket since 2010. As of the third quarter of 2019, the Westside office submarket had an existing inventory of approximately 25.7 million SF, a vacancy rate of 5.4% and an average asking rent of $66.21 PSF. As of the third quarter of 2019, the Manhattan office market had an existing inventory of approximately 456.1 million SF, a vacancy rate of 5.9% and an average asking rent of $79.25 PSF.
The following table presents certain information relating to the primary office competition for the 1633 Broadway Property:
Competitive Set – Comparable Office Leases(1)
Location | Total GLA (SF) | Tenant Name | Lease Date / Term | Lease Area (SF) | Monthly Base Rent PSF | Lease Type | ||||||
1633 Broadway New York, NY | 2,561,512 | |||||||||||
1155 Avenue of the Americas New York, NY | 752,996 | BKD, LLC | September 2019 / 162 Mos. | 20,899 | $77.00 | MG | ||||||
1 Rockefeller Plaza New York, NY | 603,397 | Veteran Advisers, Inc. | September 2019 / 92 Mos. | 2,552 | $83.50 | MG | ||||||
1675 Broadway New York, NY | 878,321 | Davis & Gilbert LLP | August 2019 / 192 Mos. | 85,852 | $72.00 | MG | ||||||
142 West 57th Street New York, NY | 255,586 | Wedbush Securities Inc. | August 2019 / 130 Mos. | 15,626 | $65.00 | MG | ||||||
1251 Avenue of the Americas New York, NY | 2,364,000 | IHI Americas, Inc | July 2019 / 124 Mos. | 9,438 | $70.50 | MG | ||||||
1345 Avenue of the Americas New York, NY | 1,998,994 | Global Infrastructure Partners | June 2019 / 204 Mos. | 84,856 | $89.50 | MG | ||||||
810 Seventh Avenue New York, NY | 765,000 | Colonial Consulting LLC | May 2019 / 150 Mos. | 17,320 | $71.00 | MG | ||||||
1271 Avenue of the Americas New York, NY | 2,100,000 | Greenhill & Company | May 2019 / 183 Mos. | 77,622 | $91.00 | MG | ||||||
1271 Avenue of the Americas New York, NY | 2,100,000 | AIG - American International Group, Inc. | April 2019 / 198 Mos. | 320,237 | $97.13 | MG | ||||||
1700 Broadway New York, NY | 625,000 | Excel Sports Management, LLC | April 2019 / 91 Mos. | 17,078 | $79.00 | MG | ||||||
1325 Avenue of the Americas New York, NY | 808,998 | Dominus Capital, L.P. | March 2019 / 126 Mos. | 9,361 | $75.00 | MG | ||||||
1290 Avenue of the Americas New York, NY | 2,113,000 | Linklaters, LLP | March 2019 / 193 Mos. | 90,508 | $84.00 | MG | ||||||
1177 Avenue of the Americas New York, NY | 1,000,000 | Mill Point Capital | January 2019 / 126 Mos. | 11,644 | $87.00 | MG | ||||||
1700 Broadway New York, NY | 625,000 | M. Arthur Gensler, Jr. & Associates, Inc. | January 2019 / 119 Mos. | 13,237 | $71.00 | MG | ||||||
114 West 47th Street New York, NY | 658,000 | IFM Investments | October 2018 / 180 Mos. | 18,000 | $68.00 | MG |
(1) | Source: Appraisal. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
111
LOAN #9: 1633 Broadway
The following table presents certain information relating to the primary retail competition for the 1633 Broadway Property:
Competitive Set – Comparable Retail Leases(1)
Location | Tenant Name | Lease Date / Term | Lease Area (SF) | Monthly Base Rent PSF | Lease Type | ||||||
1633 Broadway New York, NY | |||||||||||
1740 Broadway New York, NY | Sweetgreen | Q2 2019 / 127 Mos. | 2,706 | $215.00 | MG | ||||||
1700 Broadway New York, NY | Confidential Restaurant | Q1 2019 / 150 Mos. | 1,914 | $235.11 | MG | ||||||
1290 Sixth Avenue New York, NY | Just Salad | Q1 2019 / 120 Mos. | 1,795 | $255.00 | �� | MG | |||||
1865 Broadway New York, NY | Target | Q4 2018 / 134 Mos. | Grd. Fl. 1,546 LL 20,125 Sub LL 13,930 | $735.16 $100.00 $50.00 | MG | ||||||
1619 Broadway New York, NY | CVS | Q4 2018 / 186 Mos. | Grd. Fl. 4,299 LL 2,577 2nd Fl. 12,164 | $531.80 $75.00 $125.00 | MG | ||||||
129 West 52nd New York, NY | Bulldozer Restaurant Group | Q4 2018 / 180 Mos. | 5,200 | $150.00 | MG | ||||||
120 West 55th New York, NY | Quality Branded | Q4 2018 / 120 Mos. | Grd. Fl. 6,500 LL 2,500 | $175.00 $25.00 | MG | ||||||
850 Eighth Avenue New York, NY | Dunkin Donuts | Q2 2018 / 120 Mos. | Grd. Fl. 850 LL 250 | $411.18 $30.00 | MG | ||||||
1674 Broadway New York, NY | Flash Dancers | Q2 2018 / 120 Mos. | 1,800 | $375.00 | MG | ||||||
1360 Avenue of the Americas New York, NY | Bank of America | Q1 2018 / 120 Mos. | 1,346 | $350.00 | MG | ||||||
1695 Broadway New York, NY | Hen Penny Chicken | Q4 2017 / 120 Mos. | Grd. Fl. 1,250 LL 1,000 | $297.00 $25.00 | MG | ||||||
787 Seventh Avenue New York, NY | Citibank | Q3 2017 / 120 Mos. | 3,874 | $283.94 | MG |
(1) | Source: Appraisal. |
■ | The Borrowers. The borrowers are PGREF I 1633 Broadway Tower, L.P. and PGREF I 1633 Broadway Land, L.P., each a Delaware limited partnership. PGREF I 1633 Broadway Land, L.P. owns the 1633 Broadway Property entirely in fee and also ground leases the 1633 Broadway Property to PGREF I 1633 Broadway Tower, L.P. (i.e., both landlord and tenant interests in the ground lease are pledged as collateral, in addition to the fee interest in the 1633 Broadway Property). Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the 1633 Broadway Loan Combination. There is no non-recourse carveout guarantor or separate environmental indemnitor with respect to the 1633 Broadway Loan Combination. |
The borrower sponsor is Paramount Group Operating Partnership LP, which indirectly owns and controls the borrowers. Paramount Group, Inc. (NYSE: PGRE), an approximately 91.0% general partner of the borrower sponsor, is a real estate investment trust that owns and/or manages a 13.4 million SF portfolio of 18 Class A office and retail buildings in New York, Washington, D.C., and San Francisco as of December 31, 2019. Paramount Group, Inc. has a New York portfolio that includes: 1633 Broadway, 1301 Avenue of the Americas, 1325 Avenue of the Americas, 31 West 52nd Street, 900 Third Avenue, 712 Fifth Avenue, 60 Wall Street, 745 Fifth Avenue, 718 Fifth Avenue, and 0 Bond Street.
The borrowers have presented for the lenders’ consideration an elimination of the ground lease (such that collateral for the 1633 Broadway Loan would consist entirely of the fee interest in the 1633 Broadway Property) and an intended transfer of the 1633 Broadway Property in accordance with the 1633 Broadway Loan Combination documents to successor borrowers that would own the 1633 Broadway Property as tenants-in-common, which could result in a change of the ultimate ownership of the borrowers. We cannot assure you that the management skills, quality or judgment of any successor borrower or its equityholders would be equivalent to that of the current borrowers and their equityholders and that the value of the 1633 Broadway Property will be maintained at the same level by any successor borrowers.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
112
LOAN #9: 1633 Broadway
■ | Escrows. On the loan origination date, the borrowers provided a guaranty from Paramount Group Operating Partnership LP of up to $4,000,000 and funded a reserve of approximately $36,389,727 with respect to unfunded tenant improvements, tenant allowance and leasing commissions and free rent obligations consisting of (a) $24,105,228 for certain outstanding tenant improvements, (b) $804,393 for certain outstanding leasing commissions and (c) $10,203,088 for certain outstanding free rent. Subsequently, the borrowers substituted a letter of credit for the cash on reserve in such reserve account |
On each due date during the continuance of a 1633 Broadway Trigger Period, the borrowers are required to fund (i) a tax and insurance reserve in an amount equal to one-twelfth of the taxes and insurance premiums that the lender reasonably estimates will be payable during the next ensuing 12 months, unless in the case of insurance premiums, the borrowers are maintaining a blanket policy in accordance with the related 1633 Broadway Loan Combination documents; (ii) a tenant improvement and leasing commission reserve in an amount equal to $213,459.33 (capped at $5,123,024); and (iii) a capital expenditure reserve in an amount equal to $42,691.87 (capped at $1,024,604.80).
A “1633 Broadway Trigger Period” will be continuing (i) commencing when the debt yield (as calculated under the 1633 Broadway Loan Combination documents), determined as of the last day of each of two consecutive fiscal quarters, is less than 5.75%, until the debt yield (as calculated under the loan documents), determined as of the last day of each of two consecutive fiscal quarters thereafter, is at least 5.75%, and (ii) commencing upon the borrowers’ failure to deliver annual, quarterly or monthly financial reports as and when required under the 1633 Broadway Loan Combination documents and concluding when such reports are delivered and indicate that no other 1633 Broadway Trigger Period is ongoing.
Provided no 1633 Broadway Loan Combination event of default is continuing, the borrowers have the right to avoid the commencement, or terminate the continuance, of a 1633 Broadway Trigger Period by delivering to the lender additional collateral in the form of a guaranty, letter of credit and/or cash that is reasonably acceptable to the lender and that would, when subtracted from the then-outstanding principal balance of the 1633 Broadway Loan Combination, result in a debt yield (as calculated under the 1633 Broadway Loan Combination documents) equal to or greater than 5.75%.
■ | Lockbox and Cash Management. The 1633 Broadway Loan Combination is structured with a hard lockbox and springing cash management. The borrowers are required to direct each tenant at the 1633 Broadway Property to deposit rents directly into a lender-controlled lockbox account. In addition, the borrowers are required to cause all cash revenues relating to the 1633 Broadway Property and all other money received by the borrowers or the property manager with respect to the 1633 Broadway Property (other than tenant security deposits) to be deposited into the lockbox account or a lender-controlled cash management account within one business day of receipt. On each business day during the continuance of a 1633 Broadway Trigger Period or an event of default under the 1633 Broadway Loan Combination, all amounts in the lockbox account are required to be remitted to the cash management account. On each business day that no 1633 Broadway Trigger Period or event of default under the 1633 Broadway Loan Combination is continuing, all funds in the lockbox account are required to be swept into a borrower-controlled operating account. |
On each due date during the continuance of a 1633 Broadway Trigger Period or, at the lender’s discretion, during an event of default under the 1633 Broadway Loan Combination, all funds on deposit in the cash management account after payment of debt service, required reserves and budgeted operating expenses are required to be reserved as additional collateral for the 1633 Broadway Loan Combination.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
113
LOAN #9: 1633 Broadway
■ | Property Management. The 1633 Broadway Property is currently managed by Paramount Group Property-Asset Management LLC pursuant to a management agreement. Under the 1633 Broadway Loan Combination documents, the 1633 Broadway Property is required to be managed by (i) Paramount Group Property-Asset Management LLC or Paramount Group Property-Asset Management TRS LLC, (ii) any management company that is an affiliate of the borrower sponsor, (iii) any reputable management company that has, for at least five years prior to its engagement as property manager, managed at least five Class A office properties, and at the time of its engagement as property manager, manages at least 7,500,000 leasable square feet of Class A office space, and is not the subject of a bankruptcy or similar event, or (iv) any other management company reasonably approved by the lender and with respect to which a rating agency confirmation has been delivered. The lender has the right to replace, or require the borrowers to replace, the property manager with a property manager selected by the borrowers (or selected by the lender in the event of an event of default under the 1633 Broadway Loan Combination or following any foreclosure, conveyance in lieu of foreclosure or other similar transaction), subject to the lender’s reasonable approval (i) during the continuance of an event of default under the 1633 Broadway Loan Combination, (ii) following any foreclosure, conveyance in lieu of foreclosure or other similar transaction, (iii) during the continuance of a material default by the property manager under the management agreement (after the expiration of any applicable notice and/or cure periods), (iv) if the property manager files or is the subject of a petition in bankruptcy, or (v) if a trustee or receiver is appointed for the property manager’s assets or the property manager makes an assignment for the benefit of its creditors or is adjudicated insolvent. |
■ | Mezzanine or Subordinate Secured Indebtedness. On or after November 25, 2020, the owner of the direct or indirect equity interests of the borrowers is permitted to incur mezzanine debt secured by a pledge of direct or indirect equity interests in the borrowers, provided that certain conditions set forth in the 1633 Broadway Loan Combination documents are satisfied, including, without limitation: (i) the loan-to-value ratio (as calculated under the 1633 Broadway Loan Combination documents and taking into account the mezzanine loan and the 1633 Broadway Loan Combination) is no greater than 52.08%, (ii) the debt service coverage ratio (as calculated under the 1633 Broadway Loan Combination documents and taking into account the mezzanine loan and the 1633 Broadway Loan Combination) is at least 3.08x, (iii) the debt yield (as calculated under the 1633 Broadway Loan Combination documents and taking into account the mezzanine loan and the 1633 Broadway Loan Combination) is at least 9.35%, (iv) the execution of a subordination and intercreditor agreement that is reasonably acceptable to the lender, and (v) receipt of a rating agency confirmation. The 1633 Broadway permitted mezzanine loan may bear a floating rate of interest (subject to an interest rate cap agreement with a “reasonable strike price”), and may alternately take the form of debt-like preferred equity. |
■ | Release of Collateral. Not permitted. |
■ | Terrorism Insurance. The borrowers are required to maintain terrorism insurance in an amount equal to the full replacement cost of the 1633 Broadway Property, as well as 24 months of rental loss and/or business interruption coverage, together with a 12-month extended period of indemnity following restoration. If TRIPRA is no longer in effect, then the borrowers’ requirement will be capped at insurance premiums equal to two times the amount of the insurance premium payable in respect of the 1633 Broadway Property and business interruption/rental loss insurance required under the related loan documents. See “Risk Factors—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
114
LOAN #10: USAA PLANO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
115
LOAN #10: USAA PLANO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
116
LOAN #10: USAA PLANO
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
117
LOAN #10: USAA PLANO
Mortgaged Property Information | Mortgage Loan Information | ||||||||||||||
Number of Mortgaged Properties | 1 | Loan Seller | GSMC | ||||||||||||
Location (City/State) | Plano, Texas | Cut-off Date Principal Balance(2) | $38,600,000 | ||||||||||||
Property Type | Office | Cut-off Date Principal Balance per SF(2) | $275.78 | ||||||||||||
Size (SF) | 230,621 | Percentage of Initial Pool Balance | 3.5% | ||||||||||||
Total Occupancy as of 9/1/2020(1) | 100.0% | Number of Related Mortgage Loans | None | ||||||||||||
Owned Occupancy as of 9/1/2020(1) | 100.0% | Type of Security | Fee Simple | ||||||||||||
Year Built / Latest Renovation | 2012 / NAP | Mortgage Rate | 3.62400% | ||||||||||||
Appraised Value(1) | $119,900,000 | Original Term to Maturity (Months) | 120 | ||||||||||||
Borrower Sponsor | USRA Institutional Net Lease Fund III, LLC | Original Amortization Term (Months) | NAP | ||||||||||||
Property Management | Tenant Managed | Original Interest Only Period (Months) | 120 | ||||||||||||
First Payment Date | 10/6/2020 | ||||||||||||||
Final ARD | 9/6/2030 | ||||||||||||||
Final Maturity Date | 8/6/2031 | ||||||||||||||
Underwritten Revenues | $ 6,908,279 | ||||||||||||||
Underwritten Expenses | $209,748 | Escrows(3) | |||||||||||||
Underwritten Net Operating Income (NOI) | $6,698,530 | Upfront | Monthly | ||||||||||||
Underwritten Net Cash Flow (NCF) | $6,643,181 | Taxes | $0 | $0 | |||||||||||
Cut-off Date LTV Ratio(1) (2) | 53.0% | Insurance | $0 | $0 | |||||||||||
ARD LTV Ratio(1) (2) | 53.0% | Replacement Reserves | $0 | $0 | |||||||||||
DSCR Based on Underwritten NOI / NCF | 2.87x / 2.84x | TI/LC | $8,187,045.50 | $0 | |||||||||||
Debt Yield Based on Underwritten NOI / NCF(2) | 10.5% / 10.4% | Other(4) | $1,223,317.45 | $0 | |||||||||||
Sources and Uses | |||||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||||
Senior Loan Amount | $63,600,000 | 54.5% | Purchase Price | $107,000,000 | 91.6% | ||||||||||
Borrower Sponsor Equity | 43,729,390 | 37.5 | Upfront Reserves | 9,410,363 | 8.1 | ||||||||||
Seller TI Credit | 8,187,046 | 7.0 | Origination Costs | 329,390 | 0.3 | ||||||||||
Seller USAA Rent Abatement Credit | 266,667 | 0.2 | |||||||||||||
Seller nThrive Gap Rent Credit | 956,651 | 0.8 | |||||||||||||
Total Sources | $116,739,753 | 100.0% | Total Uses | $116,739,753 | 100.0% | ||||||||||
(1) | Based on the “Hypothetical Market Value - Accelerated Occupancy” value of $119,900,000 as of August 2, 2020. The “Hypothetical Market Value - Accelerated Occupancy” valuation assumes the contractual occupancy of USAA of the entire USAA Plano Property occurs as of the date of the valuation in August 2020, which is contrary to the actual lease terms as described under “—The Mortgaged Property” below. Thus, this premise reflects a hypothetical condition. The appraisal also concluded an “As-Is” appraised value of $99,200,000, which results in a Cut-off Date LTV Ratio of 53.0% and a ARD LTV Ratio of 53.0%. We cannot assure you that USAA will take occupancy and commence paying rent as expected or at all. See “—Appraisal” below. |
(2) | The Cut-off Date Principal Balance of $38,600,000 represents the controlling note A-1 of the $63,600,000 USAA Plano Loan Combination, which is evidenced by two pari passu notes. See “—The Mortgage Loan” below. |
(3) | See “—Escrows” below. |
(4) | Other reserves represent a free rent reserve ($266,667) and a gap rent reserve ($956,651). |
■ | The Mortgage Loan. The mortgage loan (the “USAA Plano Loan”) is part of a loan combination (the “USAA Plano Loan Combination”) consisting of two pari passu notes with an outstanding aggregate principal balance of $68,600,000 and is secured by a first mortgage encumbering the borrower’s fee simple interest in a 230,621 SF office building located in Plano, Texas (the “USAA Plano Property”). The USAA Plano Loan has an outstanding principal balance as of the Cut-off Date of $38,600,000 and represents approximately 3.5% of the Initial Pool Balance. Pursuant to an executed lease, the USAA Plano Property is expected to be 100.0% occupied by United Services Automobile Association (“USAA” or the “Tenant”) from January 2022. The USAA Plano Loan is structured with an Anticipated Repayment Date (“ARD”) of 120 months from closing. After the ARD, the coupon will increase by 300 basis points and all excess cash flow will be applied to repayment of the outstanding principal balance of the USAA Plano Loan. |
The USAA Plano Loan was originated by Goldman Sachs Bank USA on August 31, 2020. The USAA Plano Loan has an interest rate per annum of (i) prior to the ARD, 3.624% (the “Initial Interest Rate”) and (ii) from and after the ARD (the “ARD Period”), the greater of (1) the sum of (a) the Initial Interest Rate and (b) 300 basis points and (2) the sum of (x) the rate for U.S. dollar swaps with a 1-year maturity as of the ARD and (y) 292 basis points. The borrower utilized the proceeds of the USAA Plano Loan along with seller credits and borrower sponsor equity to finance the borrower sponsor’s acquisition of the USAA Plano Property, fund upfront reserves and pay closing costs. The loan amount represents 59.4% of the borrower sponsor’s net purchase price of $107.0 million. Seller credits are provided to bridge to 100.0% occupancy by USAA.
The USAA Plano Loan had an initial term of 120 months to the ARD and has a remaining term of 120 months as of the Cut-off Date. The stated maturity date is the due date in August 2031 (the “USAA Plano Stated Maturity Date”). The USAA Plano Loan requires interest-only payments during its term until the ARD. During the ARD Period, all cash flow in excess of the monthly debt service payment, required reserves and budgeted operating expenses will be required to be applied to the prepayment of the outstanding principal balance of the USAA Plano Loan.
The USAA Plano Loan may be voluntarily prepaid in whole (but not in part) on or after the due date in September 2021. Any voluntary prepayments prior to the due date in June 2030 require a yield maintenance premium, which may be no less than 1% of the amount prepaid.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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The table below summarizes the promissory notes that comprise the USAA Plano Loan Combination. The relationship between the holders of the USAA Plano Loan Combination is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Loan Combinations—The Serviced Pari Passu Loan Combinations” in the Preliminary Prospectus.
Loan Combination Summary | ||||
Note | Original Balance | Cut-off Date Balance | Note Holder(s) | Controlling Piece |
Note A-1 | $38,600,000 | $38,600,000 | BMARK 2020 B19 | Yes |
Note A-2 | 25,000,000 | 25,000,000 | GSBI1 | No |
Total Senior Notes | $63,600,000 | $63,600,000 |
(1) | Expected to be contributed to one or more future securitization transactions. |
■ | The Mortgaged Property. The USAA Plano Property is a 230,621 SF four story office space located in Plano, Texas approximately 20 miles from downtown Dallas. The USAA Plano Property features an on-site conference center, cafeteria and dining area, fitness center with a basketball and tennis court, car charging stations, mini-golf course, and Class A finishes throughout. As of August 2, 2020, the USAA Plano Property is leased to two tenants, USAA (125,000 SF / 54.2% NRA) and nThrive (105,621 SF / 45.8% NRA). nThrive is expected to vacate the USAA Plano Property in full by the end of 2021. Additionally, USAA has executed a lease for 105,621 SF that is currently occupied by nThrive at the USAA Plano Property. USAA has executed a lease (the “USAA Lease”) over 100.0% of the USAA Plano Property, commencing in phases. The Phase I space (floors 2 and 3) of 125,000 SF had a commencement date of January 2020. This space was subject to a nine-month free rent period, and USAA is expected to commence paying rent on this space in October 2020. USAA is expected to take occupancy of the Phase II (floor 1) and Phase III (floor 4) space in July and September 2021. We cannot assure you that USAA will execute take possession of or begin paying rent on its space as expected or at all. |
USAA was founded in 1922 and is a financial services and insurance provider based in Texas with subsidiaries offering banking, investing, and insurance to people and families that serve, or served, in the United States military. With over 33,000 employees and 12.4 million members, USAA posted a profit of $2.3 billion in 2019 and entered the Fortune 100.
nThrive, previously known as MedAssets, is a revenue cycle management company that acts as a comprehensive Patient-to-Payment resource in health care. nThrive's annual revenues are over $550 million and it has over 3,000 employees.
The following table presents certain information relating to USAA, which is the sole tenant at the USAA Plano Property:
Sole Tenant Based on Underwritten Base Rent(1)
Tenant Name | Credit Rating | Tenant GLA | % of GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent $ per SF | Lease Expiration | Renewal / Extension |
USAA(3) | NR / Aa1 / AA | 230,621 | 100.0% | $6,021,976 | 100.0% | $26.11 | 7/31/2031 | 2, 5-year options |
Totals / Wtd. Avg. | 230,621 | 100.0% | $6,021,976 | 100.0% | $26.11 |
(1) | Based on the underwritten rent roll dated September 1, 2020. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | USAA currently occupies 125,000 SF of the USAA Plano Property (Phase I space - floors 2 and 3) of 125,000 SF had a commencement date of January 2020. This space was subject to a nine-month free rent period, and USAA is expected to commence paying rent on this space in October 2020. USAA is expected to take occupancy of the Phase II (floor 1) and Phase III (floor 4) space in July and September 2021, respectively, and is expected to commence paying rent for the Phase II and Phase III space in January 2022. We cannot assure you that USAA will take possession of or begin paying rent on its space as expected or at all. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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The following table presents certain information relating to the lease rollover schedule at the USAA Plano Property based on initial lease expiration dates:
Lease Expiration Schedule(1)
Year Ending December 31, | Expiring Owned GLA | % of Owned GLA | Cumulative % of Owned GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent $ per SF | # of Expiring Leases | ||||||||||||||
MTM | 0 | 0.0 | % | 0.0 | % | $0 | 0.0 | % | $0.00 | 0 | |||||||||||
2020 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2021 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2022 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2023 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2024 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2025 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2026 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2027 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2028 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2029 | 0 | 0.0 | 0.0 | 0 | 0.0 | 0.00 | 0 | ||||||||||||||
2030 & Thereafter | 230,621 | 100.0 | 100.0 | 6,021,976 | 100.0 | 26.11 | 1 | ||||||||||||||
Vacant | 0 | 0.0 | 100.0 | NAP | NAP | NAP | NAP | ||||||||||||||
Total / Wtd. Avg. | 230,621 | 100.0 | % | $6,021,976 | 100.0 | % | $26.11 | 1 |
(1) | Calculated based on approximate square footage occupied by the sole tenant; assumes the contractual occupancy of USAA of the entire USAA Plano Property occurs as of the date of the valuation in August 2020, which is contrary to the actual lease terms as described under “—The Mortgaged Property” above. |
The following table presents certain information relating to historical occupancy at the USAA Plano Property:
Historical Leased %(1)
As of 9/1/2020 |
100.0% |
(1) | Historical leasing information is not available as the USAA Plano Property was recently acquired at origination. |
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the performance and the Underwritten Net Cash Flow at the USAA Plano Property: |
Cash Flow Analysis(1)
Underwritten(2) | Underwritten $ per SF | |||||
Base Rental Revenue | $6,021,976 | $26.11 | ||||
Contractual Rent Steps | 856,190 | 3.71 | ||||
Total Reimbursement Revenue | 207,248 | 0.90 | ||||
Gross Revenue | 7,085,414 | 30.72 | ||||
Vacancy Loss | 177,135 | 0.77 | ||||
Effective Gross Revenue | $6,908,279 | $29.96 | ||||
Total Operating Expenses | 209,748 | 0.91 | ||||
Net Operating Income | $6,698,530 | $29.05 | ||||
Replacement Reserves | 55,349 | 0.24 | ||||
Net Cash Flow | $6,643,181 | $28.81 | ||||
Occupancy(3) | 100.0 | % | ||||
NOI Debt Yield | 10.5 | % | ||||
NCF DSCR | 2.84 | x | ||||
(1) | Certain items such as straight line rent, interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring or non-operating items were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | Underwritten cash flows are treated with USAA as the sole tenant based on contractual rents as of August 2, 2020 and contractual rent steps through September 30, 2021. |
(3) | Accelerated occupancy as of August 2, 2020 per appraisal as described under “—Appraisal” below. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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■ | Appraisal. According to the appraisal, the USAA Plano Property had an “As-Is” appraised value of $99,200,000 as of August 2, 2020. The appraisal also provided a “Prospective Market Value Upon Stabilization” of $119,900,000 as of January 1, 2022, which value assumes that (i) the USAA occupies 100.0% of the USAA Plano Property, (ii) all tenant improvements have been completed and (iii) USAA pays full rent. The appraisal also provided a “Hypothetical Market Value - Accelerated Occupancy” of $119,900,000 as of August 2, 2020, which value assumes the contractual occupancy of USAA of the entire USAA Plano Property occurs as of the date of the valuation in August 2020, which is contrary to the actual lease terms as described under “—The Mortgage Property” above. Thus, this premise reflects a hypothetical condition. The appraisal also provided a “Hypothetical Market Value Go Dark” of $67,200,000 as of August 2, 2020, which results in an loan-to-value ratio of 94.6%. |
Location | Appraisal Approach | Value1 | Discount Rate | Capitalization Rate2 |
Plano, Texas | Direct Capitalization Approach | $117,000,000 | N/A | 5.25% |
(1) | Represents the as-stabilized value derived from the direct capitalization method. |
(2) | Represents the terminal cap rate derived from the direct capitalization method. |
■ | Environmental Matters. According to a Phase I environmental report, dated August 10, 2020, there are no recognized environmental conditions or recommendations for further action at the USAA Plano Property. |
■ | COVID-19 Update. As of September 1, 2020 the USAA Plano Property is open and 98% of USAA’s employees across the company are working from home. USAA has executed a lease for 100.0% of the USAA Plano Property, commencing in phases. The Phase I space (floors 2 and 3) of 125,000 SF had a commencement date of January 2020. This space is subject to a 9-month free rent period, and USAA is expected to commence paying rent on this space in October 2020. USAA is expected to take occupancy of the Phase II (floor 1) and Phase III (floor 4) space in July and September 2021. We cannot assure you that USAA will execute take possession of or begin paying rent on its space as expected or at all. As of September 1, 2020, USAA Plano Loan is not subject to any modification or forbearance request. Market Overview and Competition. The USAA Plano Property is located in the Upper Tollway/West Plano submarket and approximately 20 miles north of downtown Dallas, Texas. According to residential development projections by the city’s planning department, population is projected to grow to 310,000 by 2040. According to the U.S. Census Bureau, the median household income of Plano is $85,578. The four largest job industries are management and business, sales and office, and service industries. The unemployment rate in Plano for fiscal year 2019 remained at 3.0%. Upper Tollway/West Plano serves as a corporate hub for Toyota's North American headquarters and is a regional location for Liberty Mutual, AmerisourceBergen, JPMorgan Chase, and USAA. Companies located here have access to a deep and well-educated labor pool. According to the U.S. Census Bureau, 55.6% of Plano residents have a bachelor’s degree or higher. |
■ | The Borrower. The borrower is US2A Property LLC, a Delaware limited liability company. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the USAA Plano Loan. The non-recourse carveout guarantor under the USAA Plano Loan is USRA Net Lease III Capital Corp, provided that it is controlled by USRA Institutional Net Lease Fund III, LLC (“USRA”). |
The borrower sponsor is USRA, which was founded in 1989 and is a single-tenant real estate and asset management firm. As of August 2020, USRA’s current portfolio exceeds $3 billion of investments, including assets for USRA’s own account, institutional investors, corporate clients, and private families. USRA’s principals have acquired more than $3 billion of single-tenant assets ranging from individual properties to large portfolios involving numerous properties leased to a single tenant. USRA owns or manages over 1,500 net leased properties across almost every state. As of March 31, 2020, USRA Net Lease III Capital Corp had a net worth of approximately $167.8 million, and liquidity of approximately $175.9 million, inclusive of approximately $168.0 million of uncalled capital. Total capital commitments to the fund (called plus uncalled) equal $348.6 million. The fund is closed-end, and the fundraising period ended in 2017.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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■ | Escrows. At origination, the borrower funded (i) an unfunded obligations reserve, covering gap rent, free rent and tenant improvements in connection with the USAA Lease, in an amount equal to $9,410,363 and (ii) an nThrive Lease letter of credit, covering the aggregate amount of all rent remaining due under the nThrive Lease, in an amount equal to $3,983,876. |
Provided no USAA Plano Loan Combination event of default is continuing, on each due date, the borrower is required to fund a tax and insurance reserve in an amount equal to one-twelfth of the taxes and insurance premiums that the lender reasonably estimates will be payable during the next ensuing 12 months, unless (i) in the case of taxes, the USAA is paying or contesting the taxes, and (ii) in the case of insurance premiums, the USAA, the borrower or the guarantor is paying the insurance premiums.
On each due date during a USAA Plano Trigger Period, the borrower is required to fund (i) a tenant improvement and leasing commission reserve in an amount equal to $28,827.63 and (ii) a capital expenditure reserve in the amount equal to $4,804.60.
“USAA Plano Trigger Period” means, at any time prior to the ARD, (a) any period during the continuance of (i) an event of default by the borrower under the USAA Lease beyond any applicable grace or cure period, which (in the lender’s reasonable opinion) is reasonably expected to lead to the termination of the USAA Lease in its entirety, (ii) a bankruptcy or similar insolvency proceeding of USAA, unless the USAA Lease has been affirmed in such proceeding, or (iii) a USAA Plano Tenant Vacancy Period, (b) the period commencing on July 31, 2030 if the USAA has not delivered written notice to exercise its renewal option under its lease prior to such date and (c) each period commencing when the net operating income (as calculated under the USAA Plano Loan documents and excluding any net operating income attributable to the nThrive Lease), determined as of the first day of any fiscal quarter, is less than $5,084,962.65, and ending when the net operating income (as calculated under the loan documents and excluding any net operating income attributable to the nThrive Lease), determined as of the first day of each of two consecutive fiscal quarters, is at least $5,084,962.65, or (d) each period commencing upon the borrower’s failure to deliver required annual, quarterly or monthly financial reports and ending when such reports are delivered and indicate that no other USAA Plano Trigger Period is ongoing.
“USAA Plano Tenant Vacancy Period” means any period (a) during the continuance of which (i) 50% or more of the leasable square footage at the USAA Plano Property is vacant or is no longer occupied by USAA or (ii) 50% or more of the leasable square footage is not in regular ongoing use pursuant to the USAA Lease, as reasonably determined by the lender, in each case under clauses (i) and (ii), for more than (x) 90 consecutive days or (y) 150 days in any 12 month period (other than (A) a temporary vacancy for permitted repair, restorations or alterations (including initial tenant improvements to be performed by the USAA pursuant to the terms of the USAA Lease), (B) space that is subleased to an investment grade tenant that is in occupancy and open for business, subject to each of (A) and (D) of this clause (C) on or before January 2022, space demised under the nThrive Lease that becomes vacant or that is no longer in regular ongoing use in the ordinary course prior to the occupancy of such space by USAA, or (D) a temporary vacancy occurring prior to January 2022 as a result of closures mandated in connection with the COVID-19 pandemic) and (b)(i) during the continuance of which USAA is downgraded to below investment grade by at least two of Moody’s, Fitch and S&P (or one of those rating agencies if USAA is only rated by one or two of those rating agencies), or (ii) if USAA is not rated by Moody’s, Fitch or S&P, commencing when the ratio of USAA’s total debt to EBITDA (as calculated under the loan documents), determined as of the first day of any fiscal quarter, is greater than 4.0 to 1, and ending when USAA’s total debt to EBITDA (as calculated under the loan documents), determined as of the first day of each of two consecutive fiscal quarters, is 4.0 to 1 or less.
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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■ | Lockbox and Cash Management. The USAA Plano Loan is structured with a hard lockbox and in place cash management. The borrower was required to deliver a tenant direction letter instructing the USAA and nThrive to deposit rents into a lender-controlled lockbox account. In addition, the borrower is required to cause all cash revenues relating to the USAA Plano Property and all other money received by the borrower or the property manager with respect to the USAA Plano Property (other than tenant security deposits) to be deposited into such lockbox account or a lender-controlled cash management account within one business day following receipt. On each business day, all funds in the lockbox account are required to be swept into the cash management account. |
For so long as no USAA Plano Trigger Period, ARD Period or event of default under the USAA Plano Loan documents is continuing, all amounts in the cash management account in excess of the aggregate amount required to be paid to or reserved with the lender on the next monthly due date are required to be swept into a borrower- controlled operating account on each business day. During the continuance of a USAA Plano Trigger Period or, at the lender’s discretion, during an event of default under the USAA Plano Loan documents, all amounts on deposit in the cash management account after payment of debt service, required reserves and budgeted operating expenses are required to (i) be remitted into the borrower-controlled operating account (and the borrower will be entitled to distribute the same to its equityholders) if (a) no event of default under the USAA Plano Loan documents is continuing, (b) USAA Plano Trigger Period is continuing solely as a result of a USAA Plano Tenant Vacancy Period, (c) USAA is timely paying all rent under its lease, and (d) the amount in the tenant improvement and leasing commission reserve and the excess cash flow reserve is equal to or greater than an amount equal to (x) $30.00 multiplied by (y) the number of square feet demised under the USAA Lease that is no longer in regular use, has been vacated or for which the USAA ceases to occupy, or (ii) otherwise, be reserved as additional collateral for the USAA Plano Loan documents. Additionally, during the continuance of an event of default under the USAA Plano Loan, the lender may apply funds on deposit in the cash management account in such order of priority as it may determine.
During the ARD Period, all amounts on deposit in the cash management account after payment of debt service, required reserves and budgeted operating expenses will be required to be applied to the prepayment of the outstanding principal balance of the USAA Plano Loan.
■ | Property Management. The USAA Plano Property is currently managed by USAA. Under the USAA Plano Loan documents, the USAA Plano Property is required to be managed by USAA, any other management company approved by the lender or a property manager engaged by USAA pursuant to its lease. The lender has the right to replace, or to require the borrower to replace, the property manager with a property manager selected by the borrower (or selected by the lender in the event of an event of default under the USAA Plano Loan or following any foreclosure, conveyance in lieu of foreclosure or other similar transaction), subject to the lender’s reasonable approval (i) during the continuance of an event of default under the USAA Plano Loan, (ii) following any foreclosure, conveyance in lieu of foreclosure or other similar transaction, (iii) during the continuance of a material default by the property manager under any management agreement (after the expiration of any applicable notice and/or cure periods), (iv) if the property manager files or is the subject of a petition in bankruptcy or (v) if a trustee or receiver is appointed for the property manager’s assets or the property manager makes an assignment for the benefit of its creditors or is adjudicated insolvent. |
■ | Current Mezzanine or Subordinate Secured Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. None. |
■ | Release of Collateral. Not permitted. |
■ | Terrorism Insurance. The borrower, the guarantor or USAA is required to maintain terrorism insurance in an amount equal to the full replacement cost of the USAA Plano Property, as well as 18 months of rental loss and/or business interruption coverage, together with a 12-month extended period of indemnity following restoration. If TRIPRA is no longer in effect, then the borrower’s requirement will be capped at insurance premiums equal to two times the amount of the insurance premium payable in respect of the property and business interruption/rental loss insurance required under the related loan documents. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus. |
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-228597) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the depositor or Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Academy Securities Inc. and Drexel Hamilton, LLC or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
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