FREE WRITING PROSPECTUS | ||
FILED PURSUANT TO RULE 433 | ||
REGISTRATION FILE NO.: 333-228597-10 | ||
December [1], 2021 | |||||||||
BENCHMARK 2021-B31 Commercial Mortgage Trust | |||||||||
Free Writing Prospectus Structural and Collateral Term Sheet | |||||||||
$1,496,650,164 (Approximate Initial Mortgage Pool Balance) | |||||||||
$[ ] | |||||||||
(Approximate Offered Certificates) | |||||||||
Citigroup Commercial Mortgage Securities Inc. Depositor | |||||||||
Commercial Mortgage Pass-Through Certificates, Series 2021-B31 | |||||||||
Citi Real Estate Funding Inc. German American Capital Corporation JPMorgan Chase Bank, National Association Goldman Sachs Mortgage Company | |||||||||
As Sponsors and Mortgage Loan Sellers | |||||||||
Citigroup | J.P. Morgan | Goldman Sachs & Co. LLC | Deutsche Bank Securities | ||||||
Co-Lead Managers and Joint Bookrunners | |||||||||
Academy Securities | Drexel Hamilton | ||||||||
Co-Managers | |||||||||
STATEMENT REGARDING THIS FREE WRITING 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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. | |||||||||
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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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
2
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 DECEMBER [ ], 2021
MAY BE AMENDED OR SUPPLEMENTED PRIOR TO TIME OF SALE
BMARK 2021-B31
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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 December 2021 (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 summary of risks associated with an investment in the offered securities under the heading “Summary of Risk Factors” and a detailed discussion of such risks 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.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
3
LOAN #1: CX – 350 & 450 WATER STREET
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
4
LOAN #1: CX – 350 & 450 WATER STREET
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #1: CX – 350 & 450 WATER STREET
Mortgaged Property Information | Mortgage Loan Information | |||||
Number of Mortgaged Properties | 1 | Loan Seller(4) | GACC, JPMCB | |||
Location (City/State) | Cambridge, Massachusetts | Cut-off Date Balance(3) | $148,140,816 | |||
Property Type | Mixed Use - Laboratory/Office | Cut-off Date Balance per SF(3) | $889.39 | |||
Size (SF) | 915,233 | Percentage of Initial Pool Balance(3) | 9.9% | |||
Total Occupancy as of 10/14/2021 | 100.0% | Number of Related Mortgage Loans | None | |||
Owned Occupancy as of 10/14/2021 | 100.0% | Type of Security | Fee | |||
Year Built / Latest Renovation | 2021 / NAP | Mortgage Rate(5) | 2.79200% | |||
Appraised Value(1) | $1,954,000,000 | Original Term to Maturity (Months)(5) | 120 | |||
Appraisal Date(1) | 4/1/2023 | Original Amortization Term (Months) | NAP | |||
Borrower Sponsors(2) | DivcoWest; California State Teachers’ Retirement System; Teacher Retirement System of Texas | Original Interest-Only Period (Months)(5) | 120 | |||
Property Management | Divco West Real Estate Services, Inc. | First Payment Date | 12/6/2021 | |||
Anticipated Repayment Date(5) | 11/6/2031 | |||||
Final Maturity Date(5) | 11/6/2036 | |||||
Underwritten Revenues | $92,929,288 | |||||
Underwritten Expenses | $12,225,756 | Escrows(6) | ||||
Underwritten Net Operating Income (NOI) | $80,703,532 | Upfront | Monthly | |||
Underwritten Net Cash Flow (NCF) | $80,566,247 | Taxes | $0 | Springing | ||
Cut-off Date LTV Ratio(1)(3) | 41.7% | Insurance | $0 | Springing | ||
Maturity Date LTV Ratio(1)(3)(5) | 41.7% | Replacement Reserve | $0 | $0 | ||
DSCR Based on Underwritten NOI / NCF(3) | 3.50x / 3.50x | TI / LC | $52,062,079 | Springing | ||
Debt Yield Based on Underwritten NOI / NCF(3) | 9.9% / 9.9% | Other(7) | $97,383,122 | $0 | ||
Sources and Uses | |||||
Sources | $ | % | Uses | $ | % |
Senior Notes | $814,000,000 | 66.4% | Loan Payoff | $617,846,136 | 50.4% |
Junior Notes | 411,000,000 | 33.6 | Principal Equity Distribution | 451,939,764 | 36.9 |
Upfront Reserves | 149,445,201 | 12.2 | |||
Closing Costs | 5,768,900 | 0.5 | |||
Total Sources | $1,225,000,000 | 100.0% | Total Uses | $1,225,000,000 | 100.0% |
(1) | Based on the “Prospective Market Value Upon Completion & Stabilization” appraised value of $1,954,000,000 as of April 1, 2023, which assumes that the outstanding capital expenditure of approximately $56,000,000 for 350 Water Street and $80,000,000 for 450 Water Street are fully funded and reserved by the lender, and that these reserved funds would pass with title to any purchaser of the CX – 350 & 450 Water Street Property (as defined below). The appraisal concluded to an “as-is” appraised value of $1,778,000,000 as of September 8, 2021. The “as-is” appraised value results in a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 45.8% for the CX - 350 & 450 Water Street Senior Notes (as defined below), and a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 68.9% for the CX - 350 & 450 Water Street Loan Combination (as defined below). The appraisal concluded to an aggregate “as dark” appraised value of $1,901,000,000. The “as dark” appraised value results in a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 42.8% for the CX - 350 & 450 Water Street Senior Notes, and a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 64.4% for the CX - 350 & 450 Water Street Loan Combination. |
(2) | There is no non-recourse carveout guarantor or environmental indemnitor for the CX - 350 & 450 Water Street Loan Combination. |
(3) | The CX - 350 & 450 Water Street Mortgage Loan (as defined below) is part of the CX - 350 & 450 Water Street Loan Combination evidenced by 20 senior pari passu notes with an aggregate outstanding principal balance as of the Cut-off Date of $814.0 million and four junior pari passu notes with an aggregate outstanding principal balance as of the Cut-off Date of $411,0000,000. LTV Ratios, DSCR, Debt Yield and Cut-off Date Balance per SF set forth above are calculated based on the outstanding balance of the CX 350 & 450 Water Street Senior Notes and exclude the CX 350 & 450 Water Street Junior Notes. |
(4) | The CX – 350 & 450 Water Street Loan Combination was co-originated by DBR Investments Co. Limited, JPMorgan Chase Bank, National Association (“JPMCB”), Bank of America, N.A. and 3650 Cal Bridge Lending, LLC. GACC will be contributing Note A-1-2, Note A-1-4 and Note A-1-9 with an aggregate Cut-off Date Balance of approximately $124,161,224 and JPMCB will be contributing Note A-3-3 with a Cut-off Date Balance of approximately $23,979,592 to the Benchmark 2021-B31 securitization. |
(5) | The CX - 350 & 450 Water Street Loan Combination is structured with an Anticipated Repayment Date (“ARD”) of November 6, 2031 and a final maturity date of November 6, 2036. The initial interest rate for the CX – 350 & 450 Water Street Loan Combination is 2.79200% per annum. After the ARD, the interest rate will increase by 200 basis points over the greater of (x) 2.792000%, and (y) (1) the swap rate in effect on the ARD plus (2) 1.26000%. The metrics presented above are calculated based on the ARD. |
(6) | See “—Escrows” below. |
(7) | Other upfront reserve includes a Base Building Work Reserve of approximately $86,650,891 and an Aventis Rent Reserve of approximately $10,732,231. |
■ | The Mortgage Loan. The mortgage loan (the “CX - 350 & 450 Water Street Mortgage Loan”) is part of a loan combination (the “CX - 350 & 450 Water Street Loan Combination”) comprised of (i) 20 senior pari passu notes with an aggregate outstanding principal balance as of the Cut-off Date of $814.0 million (the “CX - 350 & 450 Water Street Senior Notes”), and (ii) four pari passu junior notes with an aggregate outstanding principal balance as of the Cut-off Date of $411,000,000 (the “CX - 350 & 450 Water Street Junior Notes”) as detailed in the “Loan Combination Summary” table below. The CX - 350 & 450 Water Street Mortgage Loan, evidenced by the non-controlling Note A-1-2, Note A-1-4, Note A-1-9 and Note A-3-3, has an aggregate outstanding principal balance as of the Cut-off Date of approximately $148,140,816 and represents approximately 9.9% of the Initial Pool Balance. The CX – 350 & 450 Water Street Loan Combination is secured by the borrowers’ fee interest in two adjacent Class A life sciences laboratory and office buildings located in Cambridge, Massachusetts (the “CX - 350 & 450 Water Street Property”). The borrowers utilized proceeds for the CX - 350 & 450 Water Street Loan Combination to retire existing debt, fund upfront reserves, pay closing costs and return equity to the borrower sponsors. |
The CX - 350 & 450 Water Street Loan Combination accrues interest at the rate of 2.79200% per annum through the ARD. After the ARD, through and including November 6, 2036, the following structure will apply: the interest rate will increase (such new rate, the “Adjusted Interest Rate”) by 200 basis points over the greater of (x) 2.79200%, and (y)(1) the swap rate in effect on the ARD plus (2) 1.26000%; however, interest accrued at the excess of the Adjusted Interest Rate over the initial interest rate will be deferred as described below under “Lockbox / Cash Management.”
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
6
LOAN #1: CX – 350 & 450 WATER STREET
The CX - 350 & 450 Water Street Loan Combination has an initial term to the ARD of 120 months and has a remaining term to the ARD of 119 months as of the Cut-off Date. The CX - 350 & 450 Water Street Loan Combination requires payments of interest only until the ARD in November 2031 or, if not repaid on the ARD, the final maturity date in November 2036. The CX - 350 & 450 Water Street Loan Combination may be voluntarily prepaid in whole (but not in part, except in relation to a collateral release) beginning on or after the payment date in December 2023 with the payment of the yield maintenance premium if such prepayment occurs prior to the payment date in May 2031. In addition, the CX – 350 & 450 Water Street Loan Combination may be defeased in whole (but not in part, except in relation to a collateral release) at any time after the earlier to occur of (i) October 14, 2024 or (ii) the date that is two years from the closing date of the securitization that includes the last pari passu note to be securitized.
The table below summarizes the promissory notes that comprise the CX - 350 & 450 Water Street Loan Combination. The relationship between the holders of the CX - 350 & 450 Water Street Loan Combination is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Loan Combinations—The Non-Serviced AB Loan Combinations” in the Preliminary Prospectus.
Loan Combination Summary | |||||
Note | Original Balance | Cut-off Date Balance | Note Holder(1) | Controlling Piece | |
A-1-1, A-2-1, A-3-1, A-4-1 | $285,000,000 | 285,000,000 | CAMB 2021-CX2 | Yes | |
A-1-3, A-3-2 | 94,000,000 | 94,000,000 | Benchmark 2021-B30 | No | |
A-1-7, A-4-2, A-4-3 | 77,900,000 | 77,900,000 | 3650R 2021-PF1 | No | |
A-1-2, A-1-4, A-1-9, A-3-3(2) | $148,140,816 | $148,140,816 | Benchmark 2021-B31 | No | |
A-1-5, A-1-6, A-1-8 | 101,000,000 | 101,000,000 | DBRI | No | |
A-2-2, A-2-3, A-2-4, A-2-5 | 107,959,184 | 107,959,184 | BANA | No | |
Total Senior Notes | $814,000,000 | $814,000,000 | |||
B-1, B-2, B-3, B-4 | 411,000,000 | 411,000,000 | CAMB 2021-CX2 | No | |
Loan Combination | $1,225,000,000 | $1,225,000,000 | |||
(1) | Notes held by lenders are expected to be contributed to one or more future securitization transactions or may otherwise be transferred at any time. |
(2) | GACC is contributing Note A-1-2, A-1-4 and A-1-9 with an aggregate outstanding principal balance as of the Cut-off Date of approximately $124,161,224 and JPMCB is contributing Note A-3-3 with an outstanding principal balance as of the Cut-off Date of approximately $23,979,592. |
The capital structure for the CX – 350 & 450 Water Street Loan Combination is shown below:
CX – 350 & 450 Water Street Loan Combination Capital Structure
(1) | Based on the net rentable area of 915,233 SF. |
(2) | Based on the “Prospective Market Value Upon Completion & Stabilization” appraised value of $1,954,000,000 as of April 1, 2023, which assumes that the outstanding capital expenditure of approximately $56,000,000 for the 350 Water Street building and $80,000,000 for the 450 Water Street building are fully funded and reserved by the lender, and that these reserved funds would pass with title to any purchaser of the CX – 350 & 450 Water Street Property. The appraisal concluded to an “as-is” appraised value of $1,778,000,000 as of September 8, 2021. The “as-is” appraised value results in a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 45.8% for the CX - 350 & 450 Water Street Senior Notes, and a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 68.9% for the CX - 350 & 450 Water Street Loan Combination. The appraisal concluded to an aggregate “as dark” appraised value of $1,901,000,000. The “as dark” appraised value results in a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 42.8% for the CX - 350 & 450 Water Street Senior Notes, and a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 64.4% for the CX - 350 & 450 Water Street Loan Combination. |
(3) | Cumulative UW NOI/NCF Debt Yield and Cumulative UW NOI/NCF DSCR are calculated based on an UW NOI and UW NCF of $80,703,532 and $80,566,247, respectively. See “—Operating History and Underwritten Net Cash Flow” below. |
(4) | Based on the “Prospective Market Value” value of $1,954,000,000. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
7
LOAN #1: CX – 350 & 450 WATER STREET
■ | The Mortgaged Property. The CX – 350 & 450 Water Street Property consists of two Class A LEED Gold (targeted), life sciences laboratory and office buildings totaling 915,233 SF located in Cambridge, Massachusetts. The CX – 350 & 450 Water Street Property includes (i) the 350 Water Street building (Parcel G) (“350 Water Street”), which is a laboratory building consisting of 511,157 SF and (i) the 450 Water building (Parcel H) (“450 Water Street”), which is a contemporary office building consisting of 404,076 SF. Designed by Perkins +Will (350 Water Street) and NBBJ (450 Water Street), the CX – 350 & 450 Water Street Property has views of both the Cambridge and Boston skylines. The CX – 350 & 450 Water Street Property has an adjacent open space with playing field, a plaza to host food trucks and nearby access to two MBTA stops (Green and Orange line). The Lechmere MBTA green line is a 5-minute walk away. The CX – 350 & 450 Water Street Property is 100.0% leased to Aventis Inc., which is a wholly-owned subsidiary of Sanofi S.A. (“Sanofi”). |
350 Water Street is a 12-story building featuring laboratory space, ground floor retail, a third-floor terrace, three below-grade parking levels with 377 parking spaces (0.74 per 1,000 SF), bike storage with showers, an adjacent open space with playing field and fitness center. 350 Water Street has 15’ - 19’ ceiling heights and eight passenger elevators. 350 Water Street is anticipated to be Wired Score Platinum and LEED Gold certified upon completion.
450 Water Street is a 9-story building featuring office space, ground floor retail, a two-story mezzanine, three above-grade and two below-grade parking levels with 440 parking spaces (1.09 per 1,000 SF) and bike storage. 450 Water Street has 14’ - 16’ ceiling heights and five passenger elevators. 450 Water Street is anticipated to be Wired Score Platinum, WELL Gold and LEED Gold certified upon completion.
The CX – 350 & 450 Water Street Property is currently under construction and expected to be substantially completed for 350 Water Street in the second quarter of 2022 and the fourth quarter of 2021 for 450 Water Street. At loan origination, the borrowers reserved the following with the lender: (i) $86,650,891 for base building work related to hard costs, hard cost contingency, soft costs and soft cost contingency for the CX – 350 & 450 Water Street Property, (ii) approximately $15,483,880 on account of tenant improvement allowance related to 350 Water Street and $28,254,233 of tenant improvement allowances related to 450 Water Street and (iii) approximately $8,323,967 of leasing commissions related to 450 Water Street. Below is a chart which details the borrower sponsors’ development budgets, which do not include land allocations or financing costs. We cannot assure you either 350 Water Street or 450 Water Street will be completed as expected or at all.
Development Budget Summary | ||||||
350 Water Street (Parcel G) | 450 Water Street (Parcel H) | |||||
Budget | Remaining Cost | Budget | Remaining Cost | |||
Hard Costs | $221,627,140 | $35,507,711 | $181,926,397 | $28,882,890 | ||
HC Contingency | 915,139 | 1,065,231 | 866,487 | 866,487 | ||
Soft Costs | 43,854,255 | 8,357,324 | 42,547,726 | 11,379,153 | ||
SC Contingency | 210,241 | 250,720 | 341,375 | 341,375 | ||
TI Allowance | 139,789,250 | 15,483,880 | 64,916,764(1) | 28,254,233 | ||
Leasing Commissions | 26,886,858 | 0 | 21,254,398 | 8,323,967 | ||
Total | $433,282,883 | $60,664,866 | $311,853,147 | $78,048,105 |
(1) | A portion of the TI Allowance is carried in the Hard Costs. |
Sole Tenant. As of October 14, 2021, the CX – 350 & 450 Water Street Property is 100.0% leased to Aventis Inc., a wholly-owned subsidiary of Sanofi S.A. (rated A+/A1/AA by Fitch/Moody’s/S&P), which is the guarantor under the Aventis Inc. leases. Founded in 1973, Sanofi is a multinational pharmaceutical company headquartered in Paris, France. Sanofi engages in the research and development, manufacturing, and marketing of pharmaceutical drugs principally in the prescription market. Sanofi (NYSE:SNY) is publicly traded on the NASDAQ stock exchange and had a market cap of approximately $123.1 billion as of October 16, 2021.
The CX – 350 & 450 Water Street Property is expected to serve as Sanofi’s North American research headquarters, where it is expected to consolidate approximately 3,000 employees from a number of local offices in the Boston area, as well as the Company’s Center of Excellence dedicated to mRNA vaccine research. Additionally, Sanofi is expected to consolidate approximately 400 employees from various sites at the Cambridge Crossing development and in Lyon, France to form a Center of Excellence dedicated to mRNA vaccine research. Sanofi plans to invest more than $476.0 million per year to develop vaccines against infectious diseases.
The CX – 350 & 450 Water Street Property is currently undergoing a buildout with expected completion dates of the second quarter of 2022 for 350 Water Street and the fourth quarter of 2021 for 450 Water Street. We cannot assure you the buildouts will be completed as expected or at all. Sanofi’s tenant buildout contract and base building changes total
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
8
LOAN #1: CX – 350 & 450 WATER STREET
approximately $304.3 million ($595 PSF) for 350 Water Street and approximately $90.9 million ($225 PSF) for 450 Water Street. Sanofi is entitled to receive an approximately $139.8 million ($273 PSF) tenant improvement allowance for 350 Water Street and an approximately $73.7 million ($182 PSF) tenant improvement allowance for 450 Water Street. In total, the approximately $395.2 million ($432 PSF) tenant buildout contract and base building changes do not include any tenant investment for soft costs. Additionally, the approximately $395.2 million ($432 PSF) can be paid from the tenant improvement allowance to the extent available. In addition to the tenant buildout contract and base building changes, Sanofi is expected to invest approximately $181.7 million ($198 PSF) into the CX – 350 & 450 Water Street Property, not including furniture, fixtures and equipment (“FF&E”).
Aventis Inc. executed two, 15-year leases at the CX – 350 & 450 Water Street Property in late 2018. The rent commencement date of the lease at 350 Water Street was July 1, 2021. The rent commencement date of the lease at 450 Water Street is tied to substantial completion, such that rent commencement will occur on the later of (i) November 10, 2021 and (ii) the date that is 46 days prior to the substantial completion date for the base building work. As of the date of this term sheet, the rent commencement date has not yet occurred. The sole tenant, Aventis Inc. is not yet in occupancy of either 350 Water Street or 450 Water Street, pending the buildout of its space. We cannot assure you that the buildout of the CX – 350 & 450 Water Street Property will be completed as expected or at all, or that Aventis Inc. will take occupancy as expected or at all. At loan origination, the borrowers reserved approximately $10,732,231 into a gap rent reserve for the Aventis Inc. lease related to 450 Water Street. Aventis Inc. has the right to terminate each of its respective leases effective as of the end of the 14th lease year subject to a termination fee equal to 12 months base rent.
The blended starting base rent for the Aventis Inc. triple-net leases are $71.53 PSF for 350 Water Street and 450 Water Street. Base rent for the laboratory building, 350 Water Street, is $75.90 PSF and base rent for the office building, 450 Water Street, is $66.00 PSF, with both leases including approximately 2.5% annual rent steps. Sanofi did not receive any free rent as part of its lease. The in-place rent at 350 Water Street is approximately 31.0% below the appraisal’s concluded triple-net market rent of $110.00 PSF for the laboratory space and in-place rent at 450 Water Street is approximately 22.4% below the appraisal’s concluded triple-net market rent of $85.00 PSF for the office space. Sanofi’s guarantees of the leases at 350 Water Street and 450 Water Street have guaranty caps of $207.5 million and $142.5 million, respectively.
COVID-19 Update. As of October 14, 2021, the CX – 350 & 450 Water Street Loan Combination is not subject to any forbearance, modification or debt service relief request. The first payment date for the CX – 350 & 450 Water Street Loan Combination is December 6, 2021. See “Risk Factors—Special Risks—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus.
The following table presents certain information relating to the tenant at the CX - 350 & 450 Water Street Property:
Largest Tenant Based on Underwritten Base Rent(1)
| Credit Rating | Tenant | % of | UW Base | % of Total | UW Base | Lease | Renewal / |
Aventis Inc. (350 Water Street) | A1 / A+ / AA | 511,157 | 55.8% | $38,796,816 | 59.3% | $75.90 | 6/30/2036 | 2, 10-year options |
Aventis Inc. (450 Water Street) | A1 / A+ / AA | 404,076 | 44.2 | 26,669,016 | 40.7 | $66.00 | 11/30/2036(6) | 2, 10-year options |
Total Occupied | 915,233 | 100.0% | $65,465,832 | 100.0% | $71.53 | |||
Vacant | 0 | 0.0 | 0 | |||||
Total / Wtd. Avg. | 915,233 | 100.0% | $65,465,832 |
(1) | Based on the underwritten rent roll as of October 14, 2021. |
(2) | Aventis Inc. is currently not in occupancy of either 350 Water Street or 450 Water Street, pending the substantial completion of the buildout out of its spaces at the CX- 350 & 450 Water Street Property. The CX – 350 & 450 Water Street Property is currently undergoing a buildout with expected completion dates of the second quarter of 2022 for 350 Water Street and fourth quarter of 2021 for 450 Water Street. The lease at 350 Water Street commenced on July 1, 2021. The commencement of the lease at 450 Water Street is tied to substantial completion, such that rent commencement will occur on the later of (i) November 10, 2021 and (ii) the date that is 46 days prior to the substantial completion date for the base building work. As of the date of this term sheet, the rent commencement date has not yet occurred. |
(3) | The credit ratings are those of the direct parent company, Sanofi, which is the guarantor under the leases. |
(4) | The Tenant GLA includes up to 10,000 SF of terrace space at 350 Water Street and up to 4,000 SF of terrace space at 450 Water Street. |
(5) | Aventis Inc. has the right to terminate each of the leases, with a termination fee, effective as of the end of its 14th lease year. If Aventis Inc. elects to exercise the early termination right, it must deliver to the landlord between 24 and 36 months prior to the early termination date (a) notice that the early termination right has been exercised and (b) the early termination payment. The early termination payment equals the sum of (i) the 12 monthly installments of base rent that would have been due for the 12-month period immediately following the early termination date in the absence of such termination and (ii) the stipulated operating expenses/tax component per the lease. |
(6) | Based on an anticipated rent commencement date of November 10, 2021. The actual rent commencement date, anniversary date, and expiration date to be determined as provided in the 450 Water Street lease and amendments, related to the substantial completion of the base building work at 450 Water Street. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #1: CX – 350 & 450 WATER STREET
The following table presents certain information relating to the lease rollover schedule at the CX - 350 & 450 Water Street Property, based on initial lease expiration dates:
Lease Expiration Schedule(1)
Year Ending | Expiring Owned | % of Owned | Cumulative % of | UW Base Rent | % of Total UW | UW Base Rent | # of Expiring |
MTM | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2021 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2022 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2023 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2024 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2025 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2026 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2027 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2028 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2029 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2030 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2031 | 0 | 0.0% | 0.0% | $0 | 0.0% | 0 | 0 |
2032 & Thereafter | 915,233 | 100.0% | 100.0% | 65,465,832 | 100.0% | $71.53 | 2 |
Vacant | 0 | 0.0% | 100.0% | NAP | NAP | NAP | NAP |
Total / Wtd. Avg. | 915,233 | 100.0% | $65,465,832 | 100.0% | $71.53 | 2 |
(1) | Based on the underwritten rent roll dated October 14, 2021. |
(2) | 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. |
The following table presents certain information relating to historical leasing at the CX - 350 & 450 Water Street Property:
Historical Leased %(1)
2018 | 2019 | 2020 | As of 10/14/2021(2) |
NAP | NAP | NAP | 100.0% |
(1) | Historical occupancy is not available because the CX - 350 & 450 Water Street Property is currently under construction. As of October 8, 2021, the base building work for the CX – 350 & 450 Water Street Property is 90% complete. |
(2) | Based on the underwritten rent roll as of October 14, 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #1: CX – 350 & 450 WATER STREET
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the CX - 350 & 450 Water Street Property: |
Cash Flow Analysis(1)(2)(3)
Underwritten | Underwritten PSF | |
Base Rent(4) | $65,465,832 | $71.53 |
Straight Line Base Rent Average(5) | 13,436,165 | $14.68 |
Gross Potential Rent | $78,901,997 | $86.21 |
Tenant Recoveries | 11,768,903 | $12.86 |
Total Recoveries | $11,768,903 | $12.86 |
Other Income | $3,673,555 | $4.01 |
Total Gross Income | $94,344,455 | $103.08 |
Vacancy | (1,415,167) | ($1.55) |
Effective Gross Income | $92,929,288 | $101.54 |
Total Fixed Expenses | $7,998,329 | $8.74 |
Total Variable Expenses | $4,227,428 | $4.62 |
Total Expenses | $12,225,756 | $13.36 |
Net Operating Income | $80,703,532 | $88.18 |
Reserves for Replacements | 137,285 | $0.15 |
TI/LC | 0 | $0.00 |
Net Cash Flow | $80,566,247 | $88.03 |
Occupancy(6) | 98.5% | |
NOI Debt Yield(7) | 9.9% | |
NCF DSCR(7) | 3.50x |
(1) | Certain items such as interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring expenses were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | Historical financial information and occupancy is not available because the CX - 350 & 450 Water Street Property is currently under construction. As of October 8, 2021, the base building work for the CX – 350 & 450 Water Street Property is 90% complete. |
(3) | Based on the underwritten rent roll as of October 14, 2021. |
(4) | The rent commencement date for the lease at 350 Water Street was in July 2021. The rent commencement date of the lease at 450 Water Street is tied to substantial completion, such that rent commencement will occur on the later of (i) November 10, 2021 and (ii) the date that is 46 days prior to the substantial completion date for the base building work. As of the date of this term sheet, the rent commencement date has not yet occurred. At loan origination, the borrowers reserved approximately $10,732,231 into a gap rent reserve for the Aventis Inc. lease related to 450 Water Street. |
(5) | Straight-line average rent credit for Aventis Inc. (Sanofi, investment grade rated parent company) through its lease term, including parking income rent adjusted for increases of 2.0% adjusted for CPI. The straight-line rent averages result in an average triple-net base rent of $90.99 PSF for the 350 Water Street lease and $78.98 PSF for the 450 Water Street lease over the life of the lease. |
(6) | Occupancy is based on the economic occupancy. |
(7) | The NOI Debt Yield and the NCF DSCR are calculated based on the CX – 350 & 450 Water Street Senior Notes. |
■ | Appraisal. According to the appraisal, the CX - 350 & 450 Water Street Property has an “Prospective Market Value Upon Completion & Stabilization” appraised value of $1,954,000,000 as of April 1, 2023, which assumes that the outstanding capital expenditure of approximately $56,000,000 for 350 Water Street and $80,000,000 for 450 Water Street are fully funded and reserved by the lender, and that these reserved funds would pass with title to any purchaser of the CX – 350 & 450 Water Street Property. The appraisal concluded to an “as-is” appraised value of $1,778,000,000 as of September 8, 2021. The “as-is” appraised value results in a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 45.8% for the CX - 350 & 450 Water Street Senior Notes, and a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 68.9% for the CX - 350 & 450 Water Street Loan Combination. The appraisal concluded to an aggregate “as dark” appraised value of $1,901,000,000. The “as dark” appraised value results in a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 42.8% for the CX - 350 & 450 Water Street Senior Notes, and a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 64.4% for the CX - 350 & 450 Water Street Loan Combination. |
Building Name | Appraisal Approach | Appraised Value | Capitalization Rate |
350 Water Street | Direct Capitalization Approach | $1,149,000,000 | 3.65% |
350 Water Street | Discounted Cash Flow Approach | $1,150,000,000 | 4.00%(1) |
450 Water Street | Direct Capitalization Approach | $786,000,000 | 3.65% |
450 Water Street | Discounted Cash Flow Approach | $786,000,000 | 4.00%(1) |
(1) | Represents the terminal capitalization rate. |
■ | Environmental Matters. According to a Phase I environmental report dated September 23, 2021, a recognized environmental condition was identified at each of the two parcels comprising the CX – 350 & 450 Water Street Property in connection with residual subsurface impacts related to historical releases of chemicals including volatile organic |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #1: CX – 350 & 450 WATER STREET
compounds, hydrocarbons and heavy metals. Remediation is ongoing and is being performed by the related borrowers. An environmental insurance policy was put in place for each parcel. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus for more information. |
■ | Market Overview and Competition. The CX – 350 & 450 Water Street Property is located in the Cambridge market within the Greater Boston area. The city of Cambridge is located in the Boston core-based statistical area directly north of the city of Boston and separated from Boston’s central business district by the Charles River. Cambridge is bordered by Somerville to the north and Watertown to the west. The city is acclaimed for its mix of venture capital, National Institutes of Health funding and state investments. In recent years, Cambridge has become a life sciences and biotechnology hub not only for the northeast, but for the entire United States. Cambridge is home to over 5,000 private business establishments with major companies including Watson Health, Amgen, Facebook and Apple, among others. |
The Cambridge market is best known for its innovation and high concentration of research and development operations. Cambridge has one of the highest densities of educated people in the world with 42 colleges, universities and community colleges and is home to Harvard University and the Massachusetts Institute of Technology. There are over 11,000 undergraduate students and over 11,000 graduate students living in Cambridge.
The CX – 350 & 450 Water Street Property is part of a larger approximately 4.5 million SF master-planned mixed-use-transit-oriented development known as Cambridge Crossing, which is an innovation community in East Cambridge, proximate to Kendall Square. Cambridge Crossing is spread across 43 acres and is expected to total over 17 buildings consisting of over 2.1 million SF of science and technology space, approximately 2.4 million SF of residential space, 100,000 SF of retail space and 11 acres of open space. The development of Cambridge Crossing has approximately 2.5 million SF completed or under construction and recent leases to Philips, Sanofi, and Bristol Myers Squibb.
Cambridge Crossing benefits from its various forms of transit, including one MBTA (Green Line) station soon to be on site, and one MBTA (Orange Line) station a short walk away, four Hubway stations, designated bike lanes, an EZ ride and private Cambridge Crossing shuttle, walking paths and acres of green spaces. In addition, Cambridge Crossing is approximately 3.5 miles from the Boston Logan International Airport.
The following table presents the submarket statistics for the laboratory and office space in the Cambridge market:
Laboratory Submarket Statistics(1) | ||||||||
Submarket | Inventory | Overall Vacancy Rate | Direct Vacancy Rate | YTD Construction Completions | YTD Overall Absorptions | Under Construction | Direct Avg. Rent | Direct (Class A) |
Alewife | 1,192,000 | 1.0% | 0.0% | 0 | 100,681 | 3,100,000 | $71.00 | N/A |
East Cambridge | 7,397,000 | 1.3% | 0.0% | 0 | (56,745) | 2,304,000 | $105.81 | $105.81 |
Mid Cambridge | 3,934,000 | 1.3% | 0.0% | 0 | (41,966) | 0 | $82.88 | $81.07 |
Total/Wtd. Avg. | 12,523,000 | 1.0% | 0.0% | 0 | 1,970 | 5,404,000 | $100.40 | $104.14 |
(1) | Source: Appraisal. |
Office Submarket Statistics(1) | ||||||||
Submarket | Inventory | Overall Vacancy Rate | Direct Vacancy Rate | YTD Construction Completions | YTD Overall Absorptions | Under Construction | Direct Avg. Rent | Direct Avg. (Class A) |
Alewife | 1,652,770 | 5.6% | 3.6% | 0 | 37,442 | 0 | $59.92 | $60.22 |
East Cambridge | 8,207,363 | 7.2% | 2.8% | 0 | 196,420 | 1,235,423 | $82.60 | $82.29 |
Mid Cambridge | 2,175,363 | 6.8% | 3.7% | 0 | (40,073) | 0 | $65.07 | $80.56 |
Total/Wtd. Avg. | 12,035,496 | 6.9% | 3.0% | 0 | 193,789 | 1,235,423 | $75.07 | $79.92 |
(1) | Source: Appraisal. |
The laboratory lease comparables range in size from 40,000 SF to 260,000 SF with lease terms ranging from 5 to 15 years. The comparables exhibit a range in rents from $88.50 to $105.00 PSF, with an average of $95.20 PSF on a net basis. Free rent concessions ranged from 0 to 12 months, averaging 1.71 months with tenant improvement allowances ranging from $0.00 to $225.00 PSF, an average of $182.14 PSF.
The appraiser concluded to a market rent of $110.00 PSF at 350 Water Street, which is a 44.9% premium to the in-place rent of $75.90 PSF.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #1: CX – 350 & 450 WATER STREET
The following table summarizes the comparable laboratory leases in the surrounding market.
Summary of Comparable Laboratory Leases(1) | ||||||||||
Property | Location | Year Built | Tenant Name | Lease Start Date | Term (yrs.) | Lease Type | Tenant Size (SF) | Base Rent PSF | Rent Steps | TI PSF |
350 Water Street(2) | Cambridge, MA | 2021(3) | Aventis Inc. | Jul-21 | 15.0 | Net | 511,157 | $75.90 | 2.50% | $250.00 |
Seaport Labs | Boston, MA | 2023 | Eli Lilly LOI | Jan-23 | 15.0 | Net | 165,000 | $103.00 | 3.00% | $210.00 |
201 Brookline Avenue | Boston, MA | 2022 | Verve Therapeutics | Jun-22 | 15.0 | Net | 105,000 | $91.00 | 3.00% | $225.00 |
Cambridge Crossing EF | Cambridge, MA | 2023 | Bristol Myers Squibb | May-22 | 15.0 | Net | 40,000 | $105.00 | 2.75% | $225.00 |
238 Main Street | Cambridge, MA | 2021 | Beam Therapeutics | Aug-21 | 12.0 | Net | 122,620 | $96.50 | 3.00% | $190.00 |
65 Landsdowne Street | Cambridge, MA | 2001 | Brigham and Women's | Feb-21 | 5.0 | Net | 112,410 | $100.00 | 3.00% | $0.00 |
Cambridge Crossing EF | Cambridge, MA | 2023 | Bristol Myers Squibb | Aug-20 | 15.0 | Net | 260,000 | $88.50 | 2.50% | $225.00 |
Cambridge Crossing | Cambridge, MA | 2019 | Cereval | Feb-20 | 10.0 | Net | 59,865 | $92.00 | 3.00% | $200.00 |
Total/Wtd. Avg.(4) | 12.4 | 123,556 | $95.20 | $186.20 |
(1) | Source: Appraisal. |
(2) | Based on the rent roll date October 14, 2021. |
(3) | 350 Water Street is currently under construction with the base building substantial completion date expected in the second quarter of 2022. We cannot assure you the base building construction will be completed as expected or at all. |
(4) | The Total/Wtd. Avg. excludes 350 Water Street. |
The office lease comparables range in size from 47,304 SF to 581,538 SF and have lease terms ranging from 10 to 15 years. The lease comparables exhibit a range in rents from $64.95 to $100.00 PSF, with an average of $79.16 PSF on a net basis. Free rent concessions ranged from 0 to 8 months, averaging two months with tenant improvement allowances ranging from $0.00 to $161 PSF, an average of $66.00 PSF. The Google lease ($88.50 PSF) and Bluebird Bio lease ($100 PSF) are most comparable to 450 Water Street due to their Cambridge locations but warrant slight downward adjustments as they are in Kendall Square.
The appraiser concluded to a market rent of $85.00 PSF at 450 Water Street, which is a 28.8% premium to the in-place rent of $66.00 PSF.
The following table summarizes the comparable office leases in the surrounding market.
Summary of Comparable Office Leases(1) | |||||||||||
Property | Location | Year Built | Tenant Name | Lease Start Date | Term (yrs.) | Lease Type | Tenant Size (SF) | Base Rent PSF | Rent Steps | TI PSF | |
450 Water Street(2) | Cambridge, MA | 2021(3) | Aventis Inc. | Nov-21(4) | 15.0 | Net | 404,076 | $66.00 | 2.50% | $175.00 | |
Seaport Labs I | Boston, MA | 2023 | Foundation Medicine (Shell) | Sep-23 | 15.0 | Net | 581,538 | $69.50 | 2.50% | $0.00 | |
1001 BoylstonStreet | Boston, MA | 2022 | CarGurus | Jun-23 | 15.0 | Net | 225,428 | $64.95 | $1.30/SF | $161.00 | |
Google HQ | Cambridge, MA | 2022 | Apr-22 | 15.0 | Net | 385,423 | $88.50 | $1.00/SF | $84.00 | ||
222 Berkeley Street | Boston, MA | 1991 | GW&K Investments | Feb-21 | 10.0 | Net | 47,304 | $72.00 | 2.00% | $85.00 | |
Alexandria Center | Cambridge, MA | 2017 | Bluebird Bio | Jan-21 | 10.0 | Net | 267,000 | $100.00 | 3.00% | $0.00 | |
Total/Wtd. Avg.(5) | 13.0 | 301,339 | $79.16 | $48.24 |
(1) | Source: Appraisal. |
(2) | Based on the rent roll dated October 14, 2021. |
(3) | 450 Water Street is currently under construction with the base building substantial completion date expected in the fourth quarter of 2021. We cannot assure you that the base building work will be completed as expected or at all. |
(4) | The commencement of the lease at 450 Water Street, which is tied to base building substantial completion, such that rent commencement will occur on the later of (i) November 10, 2021 and (ii) the date that is 46 days prior to the substantial completion date for the base building work. As of the date of this term sheet, the rent commencement date has not yet occurred. |
(5) | The Total/Wtd. Avg. excludes 450 Water Street. |
■ | The Borrowers. The borrowers are DW PropCo G, LLC and DW PropCo H, LLC, both Delaware limited liability companies and single purpose entities with two independent directors. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the CX - 350 & 450 Water Street Loan Combination. There is no non-recourse carveout guarantor or environmental indemnitor for the CX – 350 & 540 Water Street Loan Combination. The borrower sponsors are a joint venture between DivcoWest (“Divco”), California State Teachers’ Retirement System (“CalSTRS”), and Teacher Retirement System of Texas (“TRS”). |
Founded in 1993, Divco is a multidisciplinary investment firm headquartered in San Francisco, California with over 160 employees across six investment offices. Divco is an experienced developer, owner and operator of real estate throughout the United States, with significant expertise in Boston, having invested in and managed over 22 commercial properties in the area, including offices in the Seaport, Financial District, and East Cambridge submarkets. Most notably, Divco owned and operated One Kendall Square, a life sciences office campus in the Kendall Square submarket. As of
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #1: CX – 350 & 450 WATER STREET
June 30, 2021, Divco had over $13.7 billion in assets under management. Since inception, Divco has acquired approximately 55.0 million SF.
CalSTRS is reported to be the nation’s second largest public pension fund with assets totaling approximately $312.2 billion as of September 30, 2021. Their investment portfolio is broadly diversified into nine asset categories, approximately including 12.8% (approximately $39.8 billion) which is allocated towards real estate investments in institutional Class A commercial assets across the United States. Divco and CalSTRS have an 18-year history of investing together with CalSTRS investing over $1.5 billion into various Divco sponsored investment vehicles.
Established in 1937, TRS provides retirement and related benefits for those employed by the public schools, colleges, and universities supported by the State of Texas. As of August, 31 2020, the agency is serving nearly 1.7 million participants and had assets under management of nearly $187 billion. TRS is the largest public retirement system in Texas in both membership and assets.
■ | Escrows. At loan origination, the borrowers deposited approximately (i) $52,062,079 into an existing TI/LC reserve, (ii) $86,650,891 into a base building work reserve and (iii) $10,732,231 into an Aventis rent reserve. |
Tax Reserve – During a Trigger Period (as defined below), the borrowers are required to deposit into a real estate tax reserve, on a monthly basis, 1/12 of the estimated annual real estate taxes.
Insurance Reserve – During a Trigger Period, the borrowers are 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.
Rollover Reserve – During a Lease Sweep Period (as defined below), all available cash will be swept into the deposit account held by the lender, which will be transferred to the rollover reserve.
■ | Lockbox and Cash Management. The CX - 350 & 450 Water Street Loan Combination is structured with a hard lockbox and springing cash management. The borrowers are required to deliver tenant direction letters instructing all tenants to deposit rents into a lender-controlled lockbox account. The borrowers are required to cause all rents to be deposited directly into the lender-controlled lockbox account. All funds received by the 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, funds on deposit in the lockbox account are required to be swept on a daily basis into a lender-controlled cash management account. Prior to the ARD, all excess cash is required to be transferred to a lender-controlled account as additional collateral for the CX - 350 & 450 Water Street Loan Combination, subject to certain permitted uses by the borrowers described in the CX – 350 & 450 Water Street Loan Combination documents, and except as described above with respect to a Lease Sweep Period. If the CX - 350 & 450 Water Street Loan Combination is not paid by the ARD, from and after the ARD, the CX - 350 & 450 Water Street Loan Combination will accrue interest at the Adjusted Interest Rate; however, interest accrued at the excess of the Adjusted Interest Rate over the initial interest rate will be deferred. |
After the ARD, 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 CX – 350 & 450 Water Street Loan Combination, first to the CX – 350 & 450 Water Street Senior Notes and then to the CX – 350 & 450 Water Street Junior Notes, until the outstanding principal balance has been reduced to zero, then to any excess interest until the excess interest has been reduced to zero and then to any other indebtedness due under the CX – 350 & 450 Water Street Loan Combination until the other indebtedness has been reduced to zero.
A “Trigger Period” will commence upon (i) the ARD, (ii) the occurrence of an event of default under the CX - 350 & 450 Water Street Loan Combination until cured, (iii) on any date from and after December 31, 2022, the debt service coverage ratio is less than 1.75x based on the CX - 350 & 450 Water Street Loan Combination as of two consecutive calendar quarters, and will end upon the earlier to occur of (a) the debt service coverage ratio based on the CX - 350 & 450 Water Street Loan Combination is equal to or greater than 1.75x for two consecutive calendar quarters or (b) the funds on deposit in the cash collateral account are equal to the sum of (x) $25,557,850, to the extent 350 Water Street has not been released and (y) $20,203,800, to the extent 450 Water Street has not been released, and (iv) the commencement of a Lease Sweep Period.
A “Lease Sweep Period” will commence (prior to the ARD), upon (i) the earliest to occur of (a) the date that is 12 months prior to the earliest stated expiration of the Lease Sweep Lease (as defined below), (b) the last date under such Lease Sweep Lease that the tenant has the right to give notice of its exercise of a renewal option, (c) with respect to any Lease Sweep Lease that is a Short Term Qualifying Lease (as defined below), the date that is 12 months prior to
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
14
LOAN #1: CX – 350 & 450 WATER STREET
the ARD and (d) with respect to any Lease Sweep Lease that is a Short Term Qualifying Lease, the date that the lender reasonably determines that a Lease Sweep Period commences in order for the aggregate amount of available cash that is projected to be deposited into the rollover account for the period commencing on such date through the ARD will be equal to the applicable Lease Sweep Deposit Amount (as defined below), (ii) the date of the early termination, early cancellation or early surrender of a Lease Sweep Lease (or any material portion thereof) prior to its then current expiration date or the receipt by the applicable borrower or manager of written notice from the tenant under a Lease Sweep Lease of its intent to effect an early termination, early cancellation or early surrender of such Lease Sweep Lease prior to its then current expiration date; (iii) solely with respect to any Lease Sweep Lease under which neither the tenant thereunder, nor any guarantor of all of the tenant’s obligations thereunder, is an investment grade entity, if such tenant has ceased operating its business (i.e., “goes dark”) in a majority of its leased space at the applicable property and the same has not been subleased, on the origination date or thereafter in accordance with the terms of the CX – 350 & 450 Water Street Loan Combination documents, pursuant to a sublease on the same or substantially similar or better terms as the applicable Lease Sweep Lease (provided that a Lease Sweep Period will not exist if the sole reason the tenant is dark is for certain reasons relating to the COVID-19 pandemic or any other pandemic or epidemic, and the tenant continues paying contractual rent under its lease); (iv) a monetary or material non-monetary default under a Lease Sweep Lease by the tenant; or (v) the occurrence of an insolvency proceeding of a tenant under a Lease Sweep Lease or its parent company or lease guarantor.
A Lease Sweep Period will end upon, (A) in the case of clauses (i)(a), (i)(b), (i)(c), and/or (i)(d) above, the entirety of the Lease Sweep Lease space (or applicable portion thereof) is leased pursuant to one or more qualified leases and in the lender’s reasonable judgment, sufficient funds have been accumulated in the rollover account, (B) in the case of clause (i)(a) above, the date on which the tenant under the Lease Sweep Lease irrevocably exercises its renewal or extension option or otherwise extends its Lease Sweep Lease in accordance with the terms of the CX – 350 & 450 Water Street Loan Combination documents with respect to all of its Lease Sweep Lease space, and, in the lender’s reasonable judgment, sufficient funds have been accumulated in the rollover account, (C) in the case of clause (ii) above, if the tenant under the applicable Lease Sweep Lease rescinds in writing the exercise of its notice exercising its early termination, cancellation or surrender right or option, (D) in the case of clause (iii) above, the circumstances giving rise to a Lease Sweep Period under clause (iii) no longer exist; (E) in the case of clause (iv) above, the date on which the subject default has been cured; (F) in the case of clause (v) above, either (x) the applicable insolvency proceeding has terminated or (y) the applicable Lease Sweep Lease has been assumed or assumed and assigned to a third party in a manner reasonably satisfactory to the lender; (G) in the case of clauses (i), (ii), (iii), (iv) and/or (v) above, the properties have achieved a debt yield of not less than 6.0% and, in the lender’s reasonable judgment, sufficient funds have been accumulated in the rollover account; or (H) in the case of clauses (i), (ii), (iii), (iv) and/or (v) above, the date on which funds in the rollover account collected with respect to the Lease Sweep Lease space in question is equal to the Lease Sweep Deposit Amount applicable to such Lease Sweep Lease space.
A “Lease Sweep Lease” means (i) the Aventis Inc. lease at 350 Water Street, (ii) the Aventis Inc. lease at 450 Water Street or (iii) any replacement lease that, either individually, or when taken together with any other lease with the same tenant or its affiliates covers the majority of the Lease Sweep Lease space.
A “Lease Sweep Deposit Amount” means an amount equal to the total rentable SF of the applicable Lease Sweep Lease space that is the subject of a Lease Sweep Period multiplied by $50.00.
A “Short Term Qualifying Lease” means any qualified lease that has an initial term which does not extend at least two years beyond the ARD.
■ | Property Management. The CX - 350 & 450 Water Street Property is managed by Divco West Real Estate Services, Inc., an affiliate of one of the borrower sponsors. |
■ | Current Mezzanine or Subordinate Indebtedness. The CX - 350 & 450 Water Street Junior Notes have an aggregate outstanding principal balance as of the Cut-off Date of $411,000,000 and accrue interest at an initial fixed rate of 2.79200% per annum, followed by a rate increase after the ARD. For additional information, see “Description of the Mortgage Pool—The Loan Combinations—The Non-Serviced AB Loan Combinations—CX - 350 & 450 Water Street Loan Combination” in the Preliminary Prospectus. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
15
LOAN #1: CX – 350 & 450 WATER STREET
■ | Release of Collateral. The CX - 350 & 450 Water Street Loan Combination documents allow, on any business day after December 6, 2023, any borrower to obtain the release of its respective property in connection with a bona fide third-party sale upon the following conditions: (i) the borrowers must partially prepay (with the prepayment fee) or partially defease the CX – 350 & 450 Water Street Loan Combination in an amount equal to, (a) with respect to the release of 350 Water Street, 110% of the allocated loan amount and (b) with respect to the release of 450 Water Street, 105% of the allocated loan amount so long as after giving effect to such release, (ii) the debt service coverage ratio is equal to or greater than the greater of the debt service coverage ratio on the CX – 350 & 450 Water Street Loan Combination preceding such release and 1.90x and (iii) certain REMIC related conditions are satisfied. The allocated loan amount for the 350 Water Street property is $720,300,000 and the allocated loan amount for the 450 Water Street property is $504,700,000. |
■ | Terrorism Insurance. The borrowers are required to maintain terrorism insurance in an amount equal to the full replacement cost of the CX - 350 & 450 Water Street Property plus 24 months of rental loss and/or business interruption coverage. For so long as TRIPRA is in effect and continues to cover both foreign and domestic acts, the lender must accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. If TRIPRA is no longer in effect, the borrowers are required to purchase the foregoing terrorism insurance coverage to the extent it is available; however, it is not required to pay terrorism insurance premiums in excess of two times the amount of the insurance premium payable in respect of the CX – 350 & 450 Water Street Property and business interruption/rental loss insurance required under the loan documents (without giving effect to the cost of terrorism and earthquake components of such insurance) at the time that terrorism coverage is excluded from the applicable insurance policy. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
16
LOAN #2: GREENWICH OFFICE 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
17
LOAN #2: GREENWICH OFFICE 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
18
LOAN #2: GREENWICH OFFICE PARK
Mortgaged Property Information | Mortgage Loan Information | ||||||
Number of Mortgaged Properties | 1 | Loan Sellers | GACC, CREFI | ||||
Location (City/State) | Greenwich, Connecticut | Cut-off Date Balance | $94,000,000 | ||||
Property Type | Office | Cut-off Date Balance per SF | $273.85 | ||||
Size (SF) | 343,249 | Percentage of Initial Pool Balance | 6.3% | ||||
Total Occupancy as of 11/16/2021 | 82.8% | Number of Related Mortgage Loans | None | ||||
Owned Occupancy as of 11/16/2021 | 82.8% | Type of Security | Fee/Leasehold | ||||
Year Built / Latest Renovation | 1970-1978 / 2014 | Mortgage Rate | 3.25700% | ||||
Appraised Value | $146,500,000 | Original Term to Maturity (Months) | 120 | ||||
Appraisal Date | 8/10/2021 | Original Amortization Term (Months) | NAP | ||||
Borrower Sponsor | John J. Fareri | Original Interest Only Period (Months) | 120 | ||||
Property Management | Greenwich Premier Services Inc. | First Payment Date | 1/6/2022 | ||||
Maturity Date | 12/6/2031 | ||||||
Underwritten Revenues | $14,906,114 | ||||||
Underwritten Expenses | $5,106,790 | Escrows(1) | |||||
Underwritten Net Operating Income (NOI) | $9,799,323 | Upfront | Monthly | ||||
Underwritten Net Cash Flow (NCF) | $9,498,638 | Taxes | $537,919 | $89,653 | |||
Cut-off Date LTV Ratio | 64.2% | Insurance | $0 | Springing | |||
Maturity Date LTV Ratio | 64.2% | Replacement Reserve | $0 | $7,151 | |||
DSCR Based on Underwritten NOI / NCF | 3.16x / 3.06x | TI/LC(2) | $3,000,000 | Springing | |||
Debt Yield Based on Underwritten NOI / NCF | 10.4% / 10.1% | Other(3) | $938,901 | Springing | |||
Sources and Uses | |||||
Sources | $ | % | Uses | $ | % |
Loan Amount | $94,000,000 | 90.6% | Existing Loan Payoff(4) | $98,440,144 | 94.8% |
Principal’s New Cash Contribution | $9,798,754 | 9.4 | Upfront Reserves | 4,476,820 | 4.3 |
Closing Costs | 881,791 | 0.8 | |||
Total Sources | $103,798,754 | 100.0% | Total Uses | $103,798,754 | 100.0% |
(1) | See “—Escrows” below. |
(2) | Monthly payments do not commence until the amount of funds in the account falls below $1,500,000 |
(3) | Other upfront reserve includes an outstanding TI/LC reserve of approximately $753,750 and a free rent reserve of approximately $185,151. Additionally, there is a springing monthly ground rent reserve. |
(4) | The prior loan matured on November 5, 2021, prior to the November 17, 2021 origination date, and accordingly was in maturity default at the time of origination of the Greenwich Office Park Loan (as defined below). The prior loan was repaid in full on the origination date of the Greenwich Office Park Loan. |
■ | The Mortgage Loan. The Greenwich Office Park mortgage loan (the “Greenwich Office Park Loan”) is a fixed rate loan secured by a first mortgage encumbering the borrower’s fee and leasehold interest in an office park located in Greenwich, Connecticut (the “Greenwich Office Park Property”). The Greenwich Office Park Loan is evidenced by two promissory notes with an aggregate original principal balance and outstanding principal balance as of the Cut-off Date of $94,000,000, representing approximately 6.3% of the Initial Pool Balance. |
The Greenwich Office Park Loan was co-originated by DBR Investments Co. Limited (“DBRI”) and Citi Real Estate Funding Inc. (“CREFI”) on November 17, 2021. DBRI will be contributing Note A-1, which has a Cut-off Date Balance of $56,400,000, and CREFI will be contributing Note A-2, which has a Cut-off Date Balance of $37,600,000. The Greenwich Office Park Loan has a 10-year interest only term and accrues interest at a fixed rate of 3.25700% per annum. The Greenwich Office Park Loan proceeds were used to refinance the existing debt on the Greenwich Office Park Property, fund upfront reserves and pay origination costs.
The Greenwich Office Park Loan had an initial term of 120 months and has a remaining term of 120 months as of the Cut-off Date. The scheduled maturity date of the Greenwich Office Park Loan is the due date in December 2031. Voluntary prepayment of the Greenwich Office Park Loan in whole (but not in part) is permitted on or after the due date occurring in September 2031 without payment of any prepayment premium. Defeasance of the Greenwich Office Park Loan in whole (but not in part) is permitted at any time after the second anniversary of the closing date of the Benchmark 2021-B31 securitization.
■ | The Mortgaged Property. The Greenwich Office Park Property improvements were constructed between 1970 and 1978, renovated in 2014, and consist of five, three-story buildings, and two, four-story buildings comprising 343,249 SF that are situated on a 19.01-acre site. In total, approximately $16.7 million of capital expenditures were invested into the Greenwich Office Park Property since 2010, which includes some investment from the previous ownership. The borrower sponsor acquired the Greenwich Office Park Property in 2016 for $120.0 million ($350 PSF) and has since invested in capital expenditures, tenant improvements and general property maintenance for a total cost basis of approximately $132.1 million ($385 PSF). |
As of November 16, 2021, the Greenwich Office Park Property is 82.8% leased to 46 tenants representing a mix of companies including medical, finance, and legal tenants. The largest tenant, Orthopedic and Neurological (11.2% of NRA; 15.2% UW Base Rent), has been a tenant since 2012. The borrower sponsor has leased approximately 54,000 SF at the Greenwich Office Park Property since 2020 and through the COVID-19 pandemic.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
19
LOAN #2: GREENWICH OFFICE PARK
Amenities include a fitness center with personal trainers, a full-service café with catering services, a door-to-train shuttle service, complimentary partially covered parking, specialty services such as shoe repair and a notary, storage space and a tenant conference room. The Greenwich Office Park Property’s grounds are well maintained and include abundant outside seating as well as two freshwater ponds.
The office park in which the Greenwich Office Park Property is located also includes an additional 78,000 SF building, Building 8, and related land, which is not collateral for the Greenwich Office Park Loan. The building is currently vacant, and expected to be renovated by the borrower sponsor.
■ | COVID-19 Update. As of November 1, 2021, the Greenwich Office Park Loan is not subject to any forbearance, modification or debt service relief request. The first payment date for the Greenwich Office Park Loan is January 6, 2022. Additionally, only one tenant at the Greenwich Office Park Property sought out rent deferment due to COVID-19. The tenant, Evolvere Health (1,885 SF, 0.55% of NRA, LXP: 9/30/2022), was allowed to defer $22,000 in rent, which represented a 50% rent reduction from September 2020 through February 2021), in exchange for forfeiting its security deposit in the same amount at lease expiration. See “Risk Factors—Special Risks—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
The following table presents certain information relating to the tenants at the Greenwich Office Park Property:
Largest Tenants Based on Underwritten Base Rent(1)
| Credit Rating (Fitch/MIS/S&P)(2) | Tenant GLA | % of GLA | UW Base | % of Total | UW Base | Lease Expiration | Renewal / |
Orthopedic and Neurological | NR/NR/NR | 38,479 | 11.2% | $2,073,394 | 15.2% | $53.88 | 10/31/2029 | 2, 5-year options |
Starwood Capital Operations LLC | NR/NR/NR | 24,027 | 7.0% | 1,069,569 | 7.9% | $44.52 | 2/28/2023 | 1, 5-year option |
Platinum Equity Advisors | NR/NR/NR | 15,747 | 4.6% | 850,338 | 6.3% | $54.00 | 11/30/2029 | 1, 5-year option |
Stark Office Suites Of Greenwich | NR/NR/NR | 14,752 | 4.3% | 774,480 | 5.7% | $52.50 | 9/30/2024 | 1, 5-year option |
MarbleGate | NR/NR/NR | 15,494 | 4.5% | 759,206 | 5.6% | $49.00 | 11/14/2030 | 1, 5-year option |
Performance Equity Management(3) | NR/NR/NR | 12,988 | 3.8% | 519,520 | 3.8% | $40.00 | 3/31/2027 | 1, 5-year option |
Winklevoss Consultants | NR/NR/NR | 10,664 | 3.1% | 479,880 | 3.5% | $45.00 | 7/31/2024 | 1, 5-year option |
Vertafore/RiskMatch LLC | NR/NR/NR | 7,703 | 2.2% | 400,556 | 2.9% | $52.00 | 6/30/2023 | 1, 5-year option |
Northcoast Asset Manager | NR/NR/NR | 7,331 | 2.1% | 384,878 | 2.8% | $52.50 | 6/30/2026 | 1, 5-year option |
Good Hill Partners LP | NR/NR/NR | 6,755 | 2.0% | 364,770 | 2.7% | $54.00 | 10/31/2026 | 1, 5-year option |
Ten Largest Tenants | 153,940 | 44.8% | $7,676,591 | 56.4% | $49.87 | |||
Remaining Occupied Tenants(4) | 130,413 | 38.0% | 5,925,784 | 43.6% | $45.44 | |||
Total Occupied | 284,353 | 82.8% | $13,602,374 | 100.0% | $47.84 | |||
Vacant | 58,896 | 17.2% | 0 | |||||
Total / Wtd. Avg. | 343,249 | 100.0% | $13,602,374 |
(1) | Based on the rent roll dated November 16, 2021. |
(2) | In some instances, ratings provided are those of the parent company of the entity shown, whether or not the parent company guarantees the lease. |
(3) | Performance Equity Management has a one time right to terminate its lease effective March 31, 2023, by written notice given no earlier than December 1, 2021 and no later than March 31, 2022, upon payment of an early termination fee. |
(4) | Includes amenity spaces that have no expiration date. |
The following table presents certain information relating to the lease rollover schedule at the Greenwich Office Park Property, based on initial lease expiration dates:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | Expiring | % of Owned | Cumulative % of | UW Base Rent | % of Total UW | UW Base Rent | # of Expiring |
MTM | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 |
2021 | 2,390 | 0.7% | 0.7% | $124,280 | 0.9% | $52.00 | 1 |
2022 | 17,374 | 5.1% | 5.8% | $840,452 | 6.2% | $48.37 | 8 |
2023 | 76,703 | 22.3% | 28.1% | $3,653,414 | 26.9% | $47.63 | 12 |
2024 | 39,531 | 11.5% | 39.6% | $1,931,556 | 14.2% | $48.86 | 5 |
2025 | 5,761 | 1.7% | 41.3% | $282,289 | 2.1% | $49.00 | 1 |
2026 | 27,581 | 8.0% | 49.3% | $1,418,484 | 10.4% | $51.43 | 6 |
2027 | 16,453 | 4.8% | 54.1% | $692,770 | 5.1% | $42.11 | 2 |
2028 | 2,208 | 0.6% | 54.8% | $108,192 | 0.8% | $49.00 | 1 |
2029 | 60,658 | 17.7% | 72.4% | $3,199,832 | 23.5% | $52.75 | 4 |
2030 | 15,494 | 4.5% | 77.0% | $759,206 | 5.6% | $49.00 | 1 |
2031 | 10,762 | 3.1% | 80.1% | $591,900 | 4.4% | $55.00 | 2 |
2032 & Thereafter(3) | 9,438 | 2.7% | 82.8% | $0 | 0.0% | $0.00 | 3 |
Vacant | 58,896 | 17.2% | 100.0% | NAP | NAP | NAP | NAP |
Total / Wtd. Avg. | 343,249 | 100.00% | $13,602,374 | 100.0% | $47.84 | 46 |
(1) | Based on the underwritten rent roll dated November 16, 2021. |
(2) | 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. |
(3) | Includes amenity spaces that have no expiration 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
20
LOAN #2: GREENWICH OFFICE PARK
The following table presents certain information relating to historical leasing at the Greenwich Office Park Property:
Historical Leased %(1)
2018 | 2019 | 2020 | As of 11/16/2021(2) |
77.5% | 81.5% | 82.2% | 82.8% |
(1) | As provided by the borrower and reflects year-end occupancy for the indicated year ended December 31 unless specified otherwise. |
(2) | Based on the underwritten rent roll dated November 16, 2021. |
■ | 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 Greenwich Office Park Property: |
Cash Flow Analysis(1)
2019 | 2020 | TTM 8/30/2021 | Underwritten(2) | Underwritten $ per SF | |
Base Rent(3) | 13,346,892 | 13,352,236 | $13,066,935 | $13,954,241 | 40.65 |
Vacant Income | 0 | 0 | 0 | 3,107,973 | 9.05 |
Reimbursements | 0 | 0 | 922,152 | 951,873 | 2.77 |
Vacancy & Credit Loss(4) | 0 | 0 | 0 | (3,107,973) | (9.05) |
Other Income | 0 | 0 | 11,455 | 0 | 0.00 |
Effective Gross Income | 13,346,892 | 13,352,236 | $14,000,542 | $14,906,114 | 43.43 |
Real Estate Taxes | $977,672 | 1,049,439 | $1,044,239 | $1,065,124 | 3.10 |
Insurance | 107,981 | 121,991 | 114,981 | 126,330 | 0.37 |
Management | 389,577 | 388,866 | 414,225 | 447,183 | 1.30 |
Ground Rent | 34,385 | 31,520 | 34,385 | 34,385 | 0.10 |
Other Operating Expenses | 3,843,553 | 3,426,786 | 3,373,777 | 3,433,768 | 10.00 |
Total Operating Expenses | $5,353,168 | $5,018,602 | $4,981,607 | $5,106,790 | $14.88 |
Net Operating Income | $7,993,724 | $8,333,634 | $9,018,934 | $9,799,323 | $28.55 |
Extraordinary CapEx(5) | 0 | 0 | 0 | (300,000) | (0.87) |
TI/LC | 0 | 0 | 0 | 514,874 | 1.50 |
Replacement Reserves | 0 | 0 | 0 | 85,812 | 0.25 |
Net Cash Flow | $7,993,724 | $8,333,634 | $9,018,934 | $9,498,638 | $27.67 |
Occupancy | 81.5% | 82.2% | 82.8%(2) | 82.7% | |
NOI Debt Yield | 8.5% | 8.9% | 9.6% | 10.4% | |
NCF DSCR | 2.58x | 2.68x | 2.91x | 3.06x |
(1) | Certain items such as interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | Based on in-place rent roll dated November 16, 2021. |
(3) | Underwritten Base Rent is inclusive of $351,867 of rent steps taken through November 2022. |
(4) | Represents an underwritten economic vacancy of 17.3%. |
(5) | Extraordinary CapEx represents 10% Credit taken for upfront general TI/LC reserve of $3.0 million. |
■ | Appraisal. According to the appraisal, the Greenwich Office Park Property has an “as is” appraised value of $146,500,000 as of August 10, 2021. |
Appraisal Approach | Appraised Value | Capitalization Rate |
Direct Capitalization Approach | $146,700,000 | 6.69% |
Discounted Cash Flow Approach | $146,300,000 | 7.75%(1) |
(1) | Represents the terminal capitalization rate. |
■ | Environmental Matters. According to a Phase I environmental report dated October 6, 2021, there are no recognized environmental conditions at the Greenwich Office Park Property. |
■ | Market Overview and Competition. The Greenwich Office Park Property is located at 1-6 and 9 Greenwich Office Park, Greenwich within Fairfield County, Connecticut. Greenwich is a regional hub for Fairfield County. The town’s economy is based on the healthcare/social assistance, manufacturing, finance/insurance, and wholesale/retail trade industries. According to a third party report, there has been interest in the Greenwich office market with five office properties acquired in the last 12 months. |
As of October 2021, the Greenwich office submarket had a total inventory of 6,759,826 SF according to a third party market report. Over the past 12 months, 15,000 SF were removed from the submarket. Since the beginning of 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #2: GREENWICH OFFICE PARK
approximately 15,000 SF have been removed from the total supply. As of October 2021, zero SF were under construction.
As of the third quarter of 2021, trailing twelve months net absorption in the Greenwich office submarket was negative 2,480 SF, as compared to 47,092 SF as of year-end 2020 and 91,848 SF as of year-end 2019. The office vacancy rate in the Greenwich submarket has ranged from 7.9% to 12.8% since 2015 and was 8.7% as of October 2021.
As of October 2021, the average rental rate for office space was $48.99 PSF in the Greenwich office submarket, representing an increase of 2.5% over year-end 2020. The following table summarizes the comparable office leases in the surrounding market.
Summary of Comparable Office Leases(1) | |||||||||
Property/Address | Location | Year Built / Renovated | Tenant Name | Lease Start Date | Term (yrs.) | Lease Type | Tenant Size (SF) | Base Rent PSF | |
Greenwich Office Park(2) | Greenwich, CT | 1970-1978/2014 | Eagle Health Investments LP | 1/2022 | 5 | MG(3) | 3,465 | $50.00 | |
67 Holy Hill Lane | Greenwich, CT | 1982/NAP | Not Disclosed | 6/2021 | 3 | MG | 400 | $52.50 | |
125 Greenwich Avenue | Greenwich, CT | 1917/NAP | Watchonista | 7/2021 | 3 | MG | 700 | $49.00 | |
411 West Putnam Avenue | Greenwich, CT | 1973/1996 | Not Disclosed | 2/2021 | 5 | MG | 10,061 | $54.00 | |
73 Arch Street | Greenwich, CT | 1980/NAP | DCF Capital | 10/2020 | 5 | MG | 2,700 | $57.00 | |
71 Arch Street | Greenwich, CT | 1978/NAP | Not Disclosed | 7/2020 | 3 | MG | 1,000 | $55.00 | |
200 Railroad Avenue | Greenwich, CT | 1975/1996 | Private Equity Firm | 12/2019 | 3 | MG | 2,150 | $55.00 | |
Total/Wtd. Avg. | 4.5 | $54.42 |
(1) | Source: Appraisal. |
(2) | Based on the underwritten rent roll dated 11/16/2021. |
(3) | This lease is modified gross, not all leases at the Greenwich Office Park Property are modified gross. |
■ | The Borrower. The borrower is New Greenwich Park LLC, a Delaware limited liability company and single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Greenwich Office Park Loan. |
The borrower sponsor and non-recourse carveout guarantor for the Greenwich Office Park Loan is John J. Fareri. Mr. Fareri is CEO of Fareri Associates, LP based in Greenwich, Connecticut, and is a developer, owner, and manager of commercial, industrial, and residential real estate in Westchester County and the Lower Hudson Valley in New York and Fairfield County, Connecticut. To date, Mr. Fareri and his affiliated companies have developed, repositioned and/or currently own approximately 5 million SF of real estate. His developments and investments include retail locations, mixed-use properties, office buildings, industrial properties, medical buildings, townhouse developments, residential-rental projects, and single-family homes.
■ | Escrows. At loan origination, the borrower deposited approximately (i) $537,919 into a tax reserve, (ii) $3,000,000 into a future TI/LC reserve, (iii) $753,750 into an outstanding TI/LC reserve and (iv) $185,151 into a free rent reserve. In addition, with respect to one new tenant and two prospective tenants, in lieu of the borrower funding the outstanding TI/LC reserve, the non-recourse carveout guarantor is guaranteeing the payment of the related tenant improvements and leasing commissions. |
Tax Reserve – On each due date, the borrower is required to fund 1/12 of the taxes (initially approximately $89,653), that the lender reasonably estimates will be payable over the next-ensuing 12-month period.
Insurance Reserve – On each due date, the borrower is required to fund 1/12 of the insurance premiums that the lender reasonably estimates will be required for the renewal of the insurance coverage. These deposits will be waived as long as an acceptable blanket policy is in effect, which was the case as of the origination date.
Capital Expenditure Reserve – On each due date, the borrower is required to fund a capital expenditure reserve in the amount of approximately $7,151; provided that the borrower’s obligation to make such deposits will cease at any time that the balance in the capital expenditure reserve equals 24 times the required monthly deposit therein.
TI/LC Reserve — On and after the first due date that the balance of the future TI/LC reserve is below $1,500,000 the borrower is required to fund such reserve in the monthly amount of approximately $42,906, provided that if at any time following the commencement of such monthly deposits the amount in such reserve equals or exceeds $2,000,000 (not including any remaining portion of the initial $753,750 deposit made to the upfront outstanding TI/LC reserve), the
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #2: GREENWICH OFFICE PARK
borrower’s obligation to make such monthly deposits will be suspended until the balance in such reserve falls below $2,000,000.
Ground Rent Reserve – On each due date during a Trigger Period (as defined below), the borrower is required to fund an amount equal to the ground rent for the month following the month of such due date into a ground rent reserve.
■ | Lockbox and Cash Management. The Greenwich Office Park Loan is structured with a hard lockbox and springing cash management. The borrower is required to cause all rents to be deposited directly into the lender-controlled lockbox account. The Greenwich Office Park Loan documents also require that all rents received by the borrower or property manager be deposited into the lockbox account within two business days of receipt. During the continuance of a Trigger Period, funds on deposit in the lockbox account are required to be swept on a daily basis into a lender-controlled cash management account and applied on each payment date (i) to make deposits into the tax and insurance and ground rent reserves, (ii) to pay debt service on the Greenwich Office Park Loan, (iii) to make deposits into the capital expenditure and TI/LC reserve, (iv) to pay (I) the lesser of lender-approved budgeted operating expenses and actual operating expenses, minus (II) the amount by which lender-approved budgeted operating expenses exceeded actual operating expenses in prior months, to the extent not previously deducted pursuant to this clause (II), and (v) to pay lender-approved extraordinary expenses, if any, with any excess cash after such application required to be deposited into a lender-controlled account to be held as additional collateral for the Greenwich Office Park Loan during such Trigger Period. |
A “Trigger Period” will commence upon (i) the occurrence of an event of default under the Greenwich Office Park Loan (ii) a Low DSCR Period (as defined below) and (iii) if a property manager is an affiliate of the borrower or guarantor and such property manager becomes insolvent or a debtor in any bankruptcy or insolvency proceeding and will end, if, (A) with respect to a Trigger Period continuing pursuant to clause (i), the event of default commencing the Trigger Period has been cured and such cure has been accepted by the lender or (B) with respect to a Trigger Period continuing due to clause (ii), the Low DSCR Period has ended pursuant to the terms in the loan agreement or (C) with respect to clause (iii), if the property manager is replaced with an unaffiliated qualified manager approved by the lender under a replacement management agreement approved by the lender.
A “Low DSCR Period” will commence if the debt service coverage ratio (“DSCR”) is less than 2.25x based on the Greenwich Office Park Loan documents as of the last day of any calendar quarter, however if any tenant is subject to a Tenant Adjustment Event (as defined below), then the underwritten net cash flow as of the most recent calendar quarter may be immediately adjusted downward by the lender and to the extent said adjustment results in a debt service coverage ratio that is below 2.25x, a Low DSCR Period will immediately commence, and will end upon the Greenwich Office Park Property achieving a DSCR of at least 2.30x for two consecutive calendar quarters.
A “Tenant Adjustment Event” will mean the exclusion of (X) amounts representing non-recurring items and (Y) amounts received from (1) tenants not currently in occupancy and paying full, unabated rent, (2) tenants affiliated with the borrower or non-recourse guarantor (other than the Greenwich Premier Services Inc. lease), (3) tenants in default or in bankruptcy, (4) tenants under month-to-month leases, (5) tenants under leases where the term is set to expire in the next two succeeding calendar quarters or (6) tenants under leases where the tenant thereunder has a renewal option and has failed to exercise such renewal option within the time period set forth in the lease or has given notice of intent to vacate.
■ | Property Management. The Greenwich Office Park Property is managed by Greenwich Premier Services Inc, an affiliate of the borrower. Such property manager is also a tenant at the Greenwich Office Park Property. |
■ | Current Mezzanine or Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
■ | Release of Collateral. The borrower may obtain the free release of any unimproved, non-income producing vacant land at the Greenwich Office Park Property and the parking lots at the Greenwich Office Park Property, which parcel(s) may be released from time-to-time, which parcel(s) are identified in a schedule to the loan documents and the exact size and location of which must be reasonably approved by the lender, provided that certain conditions are satisfied, including compliance with zoning and other legal requirements, separate tax parcels and zoning lots (or one or more condominium units subject to a condominium have been created pursuant to a condominium conversion of the Greenwich Office Park Property (see below)), provision of reasonable evidence that the value of the Greenwich Office Park Property will not be materially less following the release, delivery of an anti-poaching restrictive covenant of which |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #2: GREENWICH OFFICE PARK
the lender must be a third party beneficiary, and compliance with REMIC related conditions (including prepayment of the Greenwich Office Park Loan to the extent required to comply with REMIC requirements, together with, if prior to the open period, a prepayment fee equal to the greater of a yield maintenance premium and 5.00% of the amount prepaid). In order to effect such a release, the borrower may convert the entire Greenwich Office Park Property to an air-rights condominium form of ownership, provided that certain conditions are satisfied, including but not limited to lender approval of the condominium documents, the condominium units and the common areas, and compliance with REMIC requirements.
■ | Ground Lease. The Greenwich Office Park Property is comprised of 19.01 acres, of which 0.95 acres, on which Building 9 is located, are ground leased by the borrower under a ground lease from PIC Associates, which commenced in September 1977 and expires September 2076, with approximately 55 years remaining. The current rent is $34,385 annually and will increase in 2023 to $39,543, which will remain the annual rent through 2032. The ground lease provides that annual rent from 2033 through the remaining term of the ground lease will be determined by agreement between the ground lessor and ground lessee, and that such agreement must incorporate commercially reasonable escalators to become effective at commercially reasonable intervals. The ground lease provides that the purpose of such provision is to provide the opportunity to adjust the annual rent to reflect a reasonable commercial rental for commercial real estate in Greenwich, Connecticut at the time of such adjustment. If the parties are unable to reach agreement on the annual rent for the remainder of the term by the end of 2032, the rent is required to be determined by binding arbitration, and during the period of arbitration will be $3,500 a month, to be adjusted once the rent is determined by the arbitration. The ground lease is a net lease, with all insurance, taxes, utilities, and other property expenses required to be paid by the ground lessee. The ground lease provides that the ground lessor has a right of first offer to purchase the ground lessee's leasehold interest. Pursuant to a ground lessor estoppel, the ground lessor has agreed such right will not apply to a foreclosure or a deed-in-lieu thereof by the lender. |
■ | Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the Greenwich Office Park Property plus 24 months of rental loss and/or business interruption coverage, provided that such coverage is available. For so long as TRIPRA is in effect and continues to cover both foreign and domestic acts, the lender must accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #3: NOVO NORDISK HQ |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
25
LOAN #3: NOVO NORDISK HQ |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
26
LOAN #3: NOVO NORDISK HQ |
Mortgaged Property Information | Mortgage Loan Information | |||||||||||
Number of Mortgaged Properties | 1 | Loan Seller | GACC | |||||||||
Location (City / State) | Plainsboro, New Jersey | Cut-off Date Balance(3) | $75,000,000 | |||||||||
Property Type | Office | Cut-off Date Balance per SF(3) | $288.15 | |||||||||
Size (SF) | 731,104 | Percentage of Initial Pool Balance | 5.0% | |||||||||
Total Occupancy as of 12/6/2021 | 77.0% | Number of Related Mortgage Loans | None | |||||||||
Owned Occupancy as of 12/6/2021 | 77.0% | Type of Security | Fee | |||||||||
Year Built / Latest Renovation | 1985, 1989, 1994 / 2013 | Mortgage Rate(4) | 2.83800% | |||||||||
Appraised Value(1) | $330,000,000 | Original Term to Maturity (Months)(4) | 60 | |||||||||
Appraisal Date(1) | 9/21/2021 | Original Amortization Term (Months) | NAP | |||||||||
Borrower Sponsor(2) | Hana Alternative Asset Management Co., Ltd. | Original Interest Only Period (Months)(4) | 60 | |||||||||
Property Management | Ivy Realty Services, LLC | First Payment Date | 12/6/2021 | |||||||||
Anticipated Repayment Date(4) | 11/6/2026 | |||||||||||
Final Maturity Date(4) | 4/6/2031 | |||||||||||
Underwritten Revenues | $32,650,130 | |||||||||||
Underwritten Expenses | $13,331,718 | Escrows(5) | ||||||||||
Underwritten Net Operating Income (NOI) | $19,318,412 | Upfront | Monthly | |||||||||
Underwritten Net Cash Flow (NCF) | $19,172,191 | Taxes | $525,310 | $525,310 | ||||||||
Cut-off Date LTV Ratio(1)(3) | 63.8% | Insurance | $90,983 | $22,746 | ||||||||
Maturity Date LTV Ratio(1)(3)(4) | 63.8% | Replacement Reserve | $0 | $1,218 | ||||||||
DSCR Based on Underwritten NOI / NCF(3) | 3.19x / 3.16x | TI / LC | $0 | $0 | ||||||||
Debt Yield Based on Underwritten NOI / NCF(3) | 9.2% / 9.1% | Other(6) | $27,146,846 | $0 | ||||||||
Sources and Uses | ||||||||||||
Sources | $ | % | Uses | $ | % | |||||||
Loan Combination Amount | $210,667,000 | 100.0% | Loan Payoff | $169,240,404 | 80.3% | |||||||
Upfront Reserves | 27,763,140 | 13.2 | ||||||||||
Return of Equity | 11,803,118 | 5.6 | ||||||||||
Closing Costs | 1,860,338 | 0.9 | ||||||||||
Total Sources | $210,667,000 | 100.0% | Total Uses | $210,667,000 | 100.0% | |||||||
(1) | The appraisal concluded to a “go dark” appraised value of $205,000,000, which results in a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 102.8%. |
(2) | There is no non-recourse carveout guarantor or separate environmental indemnitor for the Novo Nordisk HQ Mortgage Loan (as defined below). |
(3) | The Novo Nordisk HQ Mortgage Loan is part of the Novo Nordisk HQ Loan Combination (as defined below) evidenced by four pari passu notes with an aggregate outstanding principal balance as of the Cut-off Date of $210,667,000. LTV Ratios, DSCR, Debt Yield and Cut-off Date Balance per SF set forth above are calculated based on the outstanding balance of the Novo Nordisk HQ Loan Combination. |
(4) | The Novo Nordisk HQ Loan Combination is structured with an Anticipated Repayment Date (“ARD”) of November 6, 2026 and a final maturity date of April 6, 2031. The initial interest rate for the Novo Nordisk HQ Loan Combination is 2.83800% per annum. From and after the ARD, the per annum interest rate will equal to the greater of (i) the initial interest rate plus 2.5000% and (ii) the swap rate in effect on the ARD plus 4.19000%. The metrics presented above are calculated based on the ARD. |
(5) | See “—Escrows” below. |
(6) | Other upfront reserve includes an expansion reserve of approximately $14,146,846 and a seller credit reserve of $13,000,000. |
■ | The Mortgage Loan. The mortgage loan (the “Novo Nordisk HQ Mortgage Loan”) is part of a Loan Combination (the “Novo Nordisk HQ Loan Combination”) with an aggregate outstanding principal balance as of the Cut-off Date of $210,667,000, which is secured by the borrower’s fee interest in a Class A office building located in Plainsboro, New Jersey (the “Novo Nordisk HQ Property”). The Novo Nordisk HQ Mortgage Loan will be evidenced by the controlling Note A-1 with an outstanding principal balance as of the Cut-off Date of $75,000,000, representing approximately 5.0% of the Initial Pool Balance. The Novo Nordisk HQ Loan Combination is comprised of four pari passu notes with an aggregate principal balance as of the Cut-off Date of $210,667,000 as detailed in the “Loan Combination Summary” table below. The Novo Nordisk HQ Loan Combination was originated by DBR Investments Co. Limited (“DBRI”) on November 5, 2021. |
The Novo Nordisk HQ Loan Combination has a five-year interest-only term through the ARD of November 6, 2026 and a final maturity date of April 6, 2031. The initial interest rate for the Novo Nordisk HQ Loan Combination is 2.83800% per annum (the “Initial Interest Rate”). From and after the ARD, the per annum interest rate will be equal to the greater of (i) the Initial Interest Rate plus 2.5000% and (ii) the swap rate (as calculated in the Novo Nordisk HQ Loan Combination documents) in effect on the ARD plus 4.19000% (the “Adjusted Interest Rate”); however, interest accrued at the excess of the Adjusted Interest Rate over the Initial Interest Rate will be deferred as described below under “Lockbox / Cash Management.”
The Novo Nordisk HQ Loan Combination has an initial term to the ARD of 60 months and has a remaining term to the ARD of 59 months as of the Cut-off Date. The Novo Nordisk HQ Loan Combination requires payments of interest only until the ARD in November 2026 or, if not repaid on the ARD, the final maturity date in April 2031. Defeasance of the Novo Nordisk HQ Loan Combination is permitted under the Novo Nordisk HQ Loan Combination documents at any time after the earlier of (i) November 5, 2024 or (ii) the second anniversary of the closing date of the securitization that includes the last note of the Novo Nordisk HQ Loan Combination to be securitized. On or after the monthly payment date in July 2026, the Novo Nordisk HQ Loan Combination may be voluntarily prepaid in whole and in part without penalty.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #3: NOVO NORDISK HQ |
The table below summarizes the promissory notes that comprise the Novo Nordisk HQ Loan Combination. The relationship between the holders of the Novo Nordisk HQ 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 | Controlling Piece | |
A-1 | $75,000,000 | $75,000,000 | Benchmark 2021-B31 | Yes | |
A-2, A-3, A-4 | $135,667,000 | $135,667,000 | DBRI(1) | No | |
Loan Combination | $210,667,000 | $210,667,000 | |||
(1) | Expected to be contributed to one or more future securitization transactions or may otherwise be transferred at any time. |
■ | The Mortgaged Property. The Novo Nordisk HQ Property is a Class A office property totaling 731,104 SF across nine interconnected buildings on a 58.63-acre site located in Plainsboro, New Jersey. The Novo Nordisk HQ Property was originally built in 1985 and in 2013 underwent a full redevelopment and modernization. The Novo Nordisk HQ Property is LEED Silver-certified and features modern technology, energy-efficient systems and design upgrades such as a new façade, 10-foot glass exterior walls and a two-story, 30-foot lobby with floor-to-ceiling glass. The campus amenities include a 267-seat full-service cafeteria, a fully-equipped fitness center, presidential suite and executive board room, a 4,000 SF rooftop terrace with kitchen and patio seating, concierge services, meeting spaces and 2,214 parking spaces (2.9 spaces per 1,000 SF), including a single-story parking garage. |
As of December 6, 2021, the Novo Nordisk HQ Property is 77.0% leased to its sole tenant, Novo Nordisk, Inc. (“Novo Nordisk” or the “Tenant”), the United States affiliate of the global healthcare company, Novo Nordisk A/S (NYSE: NVO; rated A1/AA- by Moody’s/S&P), which is the guarantor under the Novo Nordisk lease. Novo Nordisk occupies 563,289 SF or 100% of the SF of the space which it is obligated to lease under the terms of its lease. Novo Nordisk has the option to lease the remaining 167,815 SF at the Novo Nordisk HQ Property, which is located along the easterly side of the complex and is in “shell” condition. Novo Nordisk can exercise its right to expand into this space anytime during its lease term and as such, this expansion space cannot be marketed to another tenant without modifying the current Novo Nordisk lease. At loan origination, the borrower deposited approximately $14,146,846 into an expansion reserve and $13,000,000 into a seller credit reserve. See “—Escrows” below.
Novo Nordisk has maintained its North American headquarters at the Novo Nordisk HQ Property since taking occupancy in 2013, originally as part of an approximately $215.0 million renovate-to-suit project. Novo Nordisk has recently completed an approximately $32.0 million capital expenditure program at the Novo Nordisk HQ Property, which included IT infrastructure improvements, a new teleconference center, office furniture upgrades, locker room improvements and mechanical and lighting upgrades.
Founded in 1923, Novo Nordisk A/S is a global healthcare company, headquartered in Copenhagen, Denmark with more than 45,000 employees in 80 offices around the world. As of the trailing 12-month period ending in the third quarter of 2021, Novo Nordisk A/S reported a total revenue of approximately $134.6 billion and a net income of approximately $46.2 billion. Novo Nordisk, the United States subsidiary and Tenant, is a developer and manufacturer of biological medicines specializing in diabetes care and other serious chronic conditions such as hemophilia, obesity and growth disorders. Novo Nordisk is headquartered at the Novo Nordisk HQ Property and has other locations in seven states and nearly 6,000 employees with approximately 4.0 million people in the United States using its medicines.
Novo Nordisk occupies the Novo Nordisk HQ Property under a lease that expires in April 2031, with no termination options and one, ten-year renewal option. Novo Nordisk has a base rent of $32.81 per SF on a triple net basis with 2.00% annual rent steps.
As of September 2021, employees were slowly moving back to the office with reportedly around 400 employees at the Novo Nordisk HQ Property. The Novo Nordisk HQ Property typically has a full-time workforce of approximately 1,700 employees.
■ | COVID-19 Update. As of November 5, 2021, the Novo Nordisk HQ Loan Combination is not subject to any forbearance, modification or debt service relief request. The first payment date for the Novo Nordisk HQ Mortgage Loan is December 6, 2021. See “Risk Factors—Special Risks—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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The following table presents certain information relating to the sole tenant at the Novo Nordisk HQ Property:
Sole Tenant Based on Underwritten Base Rent(1)
| Credit Rating | Tenant GLA | % of GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent $ per SF | Lease Expiration | Renewal / Extension Options |
Novo Nordisk | NR / A1 / AA- | 563,289 | 77.0% | $18,481,512 | 100.0% | $32.81 | 4/30/2031 | 1, 10-year option |
Total Occupied | 563,289 | 77.0% | $18,481,512 | 100.0% | $32.81 | |||
Vacant | 167,815 | 23.0 | 0 | |||||
Total / Wtd. Avg. | 731,104 | 100.0% | $18,481,512 |
(1) | Based on the underwritten rent roll as of December 6, 2021. |
(2) | The credit ratings are those of the direct parent company, Novo Nordisk A/S, which is the guarantor under the lease. |
The following table presents certain information relating to the lease rollover schedule at the Novo Nordisk HQ 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 |
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 | 563,289 | 77.0% | 77.0% | $18,481,512 | 100.0% | $32.81 | 1 |
2032 & Thereafter | 0 | 0.0% | 77.0% | $0 | 0.0% | $0.00 | 0 |
Vacant | 167,815 | 23.0% | 100.0% | NAP | NAP | NAP | NAP |
Total / Wtd. Avg. | 731,104 | 100.0% | $18,481,512 | 100.0% | $32.81 | 1 |
(1) | Based on the underwritten rent roll as of December 6, 2021. |
The following table presents certain information relating to historical leasing at the Novo Nordisk HQ Property:
Historical Leased %(1)
2018 | 2019 | 2020 | As of 12/6/2021(2) |
77.0% | 77.0% | 77.0% | 77.0% |
(1) | As provided by the borrowers and reflects year-end occupancy for the indicated year ended December 31 unless specified otherwise. |
(2) | Based on the underwritten rent roll as of December 6, 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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■ | Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the Novo Nordisk HQ Property: |
Cash Flow Analysis(1)(2)
2018 | 2019 | 2020 | Underwritten | Underwritten $ per SF | |
Base Rent | $17,302,360 | $17,649,722 | $18,002,716 | $18,481,512 | $25.28 |
Rent Steps(3) | 0 | 0 | 0 | 371,771 | $0.51 |
IG Rent Step Credit(4) | 0 | 0 | 0 | 465,129 | $0.64 |
Value of Vacant Space | 0 | 0 | 0 | 9,458,516 | $12.94 |
Gross Potential Rent | $17,302,360 | $17,649,722 | $18,002,716 | $28,776,928 | $39.36 |
Tenant Recoveries | 12,185,965 | 13,111,052 | 13,295,581 | 13,331,718 | $18.24 |
Total Gross Income | $29,488,325 | $30,760,774 | $31,298,297 | $42,108,646 | $57.60 |
Vacancy | 0 | 0 | 0 | (9,458,516) | ($12.94) |
Effective Gross Income | $29,488,325 | $30,760,774 | $31,298,297 | $32,650,130 | $44.66 |
Total Fixed Expenses | 5,987,351 | 6,090,604 | 6,261,061 | 6,515,840 | $8.91 |
Total Variable Expenses | 6,825,278 | 7,302,888 | 6,776,411 | 6,815,878 | $9.32 |
Total Expenses | $12,812,629 | $13,393,492 | $13,037,472 | $13,331,718 | $18.24 |
Net Operating Income | $16,675,696 | $17,367,282 | $18,260,825 | $19,318,412 | $26.42 |
Reserves for Replacements | 0 | 0 | 0 | 146,221 | $0.20 |
TI / LC | 0 | 0 | 0 | 0 | $0.00 |
Net Cash Flow | $16,675,696 | $17,367,282 | $18,260,825 | $19,172,191 | $26.22 |
Occupancy(5) | 77.0% | 77.0% | 77.0% | 78.0% | |
NOI Debt Yield(6) | 7.9% | 8.2% | 8.7% | 9.2% | |
NCF DSCR(6) | 2.75x | 2.87x | 3.01x | 3.16x |
(1) | Certain items such as interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring expenses were excluded from the historical presentation and are not considered for the underwritten cash flow. |
(2) | Based on the underwritten rent roll as of December 6, 2021. |
(3) | Based on contractual rent steps through October 1, 2022. |
(4) | Based on the straight-line rent steps through the final maturity date of the Novo Nordisk HQ Loan Combination. |
(5) | Underwritten occupancy is based on the economic occupancy. |
(6) | The NOI Debt Yield and the NCF DSCR are calculated based on the Novo Nordisk HQ Loan Combination. |
■ | Appraisal. According to the appraisal, the Novo Nordisk HQ Property has an “As-Is” appraised value of $330,000,000 as of September 21, 2021. In addition, the appraisal concluded to an “as dark” appraised value of $205,000,000 as of September 21, 2021. |
Appraisal Approach | Appraised Value | Capitalization Rate |
Direct Capitalization Approach | $330,000,000 | 5.00% |
Discounted Cash Flow Approach | $330,000,000 | 5.50%(1) |
(1) | Represents the terminal capitalization rate. |
■ | Environmental Matters. According to a Phase I environmental report dated September 20, 2021, there are no recognized environmental conditions at the Novo Nordisk HQ Property. However, historical recognized environmental conditions relating to on-site underground storage tanks were identified and the environmental report recommended the continued upkeep and maintenance of the tank monitoring systems associated with such on-site underground storage tanks. |
■ | Market Overview and Competition. The Novo Nordisk HQ Property is located in Plainsboro Township in Middlesex County, New Jersey, a suburban community that offers convenient highway access, proximity to major universities, an educated labor pool, area amenities and a diverse housing base. The Novo Nordisk HQ Property is within the Princeton Forrestal Center Office and Research Complex, which is Princeton University’s corporate office and research complex. The Princeton Forestal Center is in the Princeton business and pharmaceutical corridor as the municipality of Princeton is adjacent to Plainsboro Township. The Princeton Forrestal Center is home to a corporate presence which includes companies such as Bristol-Meyers Squibb, Bank of America Merrill Lynch, Johnson & Johnson, Dow Jones, and BlackRock. Novo Nordisk directly benefits from its relationships with numerous businesses, hospitals, and medical centers, which purchase, use, sell, or collaborate with Novo Nordisk on the development of the pharmaceutical and medicinal products that Novo Nordisk produces and are located within direct proximity to the Novo Nordisk HQ Property. Such institutions include the University Medical Center of Princeton at Plainsboro, a recently completed 231 single patient room facility located approximately 2 miles from the Novo Nordisk HQ Property, which includes a hospital, an education center, a skilled nursing facility, and a park and has been a strong demand driver for medical office space at Princeton Forrestal Village. The Novo Nordisk HQ Property location also offers Novo Nordisk and other employers’ |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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direct access to an educational base of newly graduated talent from universities, such as Princeton University, Rutgers University, TCNJ, and Rider University. The Novo Nordisk HQ Property is equidistant from New York and Philadelphia, allowing Novo Nordisk and other surrounding companies the ability to draw residents from both metropolitan areas, as well as diverse and educated labor pools from Eastern Pennsylvania and Northern and Central New Jersey. The transit-oriented campus is less than one mile from Route 1, less than four miles from the Princeton Junction mass transit center and convenient to Interstates 95 and 295. |
According to the appraisal, the Novo Nordisk HQ Property is located in the Brunswick West office submarket in Northern New Jersey. Over the past ten years the Brunswick West office submarket inventory slightly increased by 2.4% and had positive absorption of 2.4%. Over the same period, there was a 5.9% decrease in the vacancy rate and a 14.6% increase in the average asking rent. As of the second quarter of 2021, the Brunwick West submarket had a total office inventory of approximately 10.0 million SF with a vacancy rate of 21.5%. The average asking rent was $27.14 per SF.
The following table summarizes the comparable office leases in the surrounding market.
Summary of Comparable Office Leases(1) | |||||||||||
Property/Address | Location | Year Built / Renovated | Tenant Name | Lease Start Date | Term (yrs.) | Lease Type | Tenant Size (SF) | Base Rent PSF | Rent Steps | Free Rent (mos.) | |
Novo Nordisk HQ(2) | Plainsboro, NJ | 1985, 1989, 1994 / 2013 | Novo Nordisk | 18 | NNN | 563,289 | $32.81 | 2.0% | 0 | ||
777 Scudders Mill Road | Plainsboro, NJ | 1992/NAP | Croda, Inc. | 6/2020 | 12 | NNN | 225,000 | $31.00 | 3.0% | 6 | |
200 Connell Drive | Berkeley Heights, NJ | 1987/NAP | Hikma Pharmaceuticals | 12/2019 | 10 | MG | 44,267 | $34.50 | 2.0% | 0 | |
445 South Street Ste. 300 | Morristown, NJ | 1984/2007 | Travelers Insurance | 2/2018 | 10 | NNN | 80,642 | $25.50 | 2.0% | 0 | |
1 University Square Ste. 1, 3, 4 | Princeton, NJ | 2006/NAP | Blackrock Financial | 10/2018 | 10 | NNN | 209,809 | $41.62 | 2.0% | 0 | |
9 Roszel Road Ste. 1, 2, 3 | West Windsor, NJ | 1999/NAP | Bristol-Myers Squibb | 3/2021 | 10 | MG | 118,110 | $35.00 | 2.0% | 0 | |
440 Route 22 E, Ste 101 | Bridgewater, NJ | 1990/2019 | PF Compass | 1/2021 | 10 | MG | 199,279 | $27.00 | 2.0% | 0 | |
Total/Wtd. Avg. | 10.4 | $32.84 | |||||||||
(1) | Source; Appraisal |
(2) | Based on the rent roll as of December 6, 2021. |
(3) | Total/Wtd. Avg. does not include the Novo Nordisk HQ Property. |
■ | The Borrower. The borrower is Princeton HD Owner LLC, a Delaware limited liability company and single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Novo Nordisk HQ Loan Combination. There is no non-recourse carveout guarantor or separate environmental indemnitor with respect to the Novo Nordisk HQ Loan Combination. The borrower sponsor is Hana Alternative Asset Management Co., Ltd (“Hana”). The Novo Nordisk HQ Property is indirectly owned by a joint venture between Mirae Asset Securities (27.78%), Hana Financial Investment (22.98%), Hyundai Motor Securities (19.15%), Heung Kuk Fire & Marine Insurance (19.03%) and Seoul Guaranty Insurance (10.05%). The borrower sponsor is ultimately controlled by Hana. |
Hana, a subsidiary of Hana Financial Group, was founded in 2006 as the first asset management company to specialize in commercial real estate in Korea. As of November 2021, Hana had approximately $8.0 billion USD of assets under management of which 67.1% are investments in real estate.
■ | Escrows. At loan origination, the borrower deposited (i) approximately $525,310 into a tax reserve, (ii) approximately $90,983 into an insurance reserve, (iii) approximately $14,146,846 into an expansion reserve for approved leasing expenses in connection with work related to Novo Nordisk electing its expansion option and (iv) $13,000,000 into a seller credit reserve in connection with an agreement (the “Earnout Agreement”) between the prior owner of the Novo Nordisk HQ Property (the “Property Seller”) and the sole member of the borrower (the “Sole Member”), pursuant to which the Sole Member has agreed to pay all or a pro rata portion of such amount to the Property Seller if Novo Nordisk exercises all or a portion of its expansion option for 167,815 additional SF pursuant to its lease (and together with the expansion reserve, the “Expansion Funds”). The Sole Member has pledged its equity interest in the borrower to the Property Seller to secure such obligation as described under “Current Mezzanine and Subordinate Indebtedness”). |
The seller credit reserve will be held by the lender, provided no event of default is continuing and the ARD has not yet occurred, until either (i) the expansion option is exercised, and the obligation is due to the Property Seller, in which case the lender is required to the release to the Property Seller the amount due under the Earnout Agreement, or (ii) if the expansion option has not been exercised on or prior to the earlier of August 11, 2024 and the date of any transfer and assumption of the Novo Nordisk HQ Property, at which time, so long as no Trigger Period (as defined below) 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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continuing and the lender receives reasonably satisfactory evidence that certain conditions relating to the termination of the pledge to the Property Seller are satisfied, the lender is required to release the reserve to the borrower.
Tax Reserve – On each payment date, the borrower is required to deposit into a tax reserve 1/12 of the taxes (initially, approximately $525,310), that the lender reasonably estimates will be payable over the next-ensuing 12-month period.
Insurance Reserve – On each payment date, the borrower is required to deposit into an insurance reserve 1/12 of the insurance premiums (initially, approximately $22,746), that the lender reasonably estimates will be payable over the next-ensuing 12-month period.
Capital Expenditure Reserve – On each payment date, the borrower is required to fund a capital expenditure reserve in the amount of approximately $1,218.
Lease Sweep Reserve – On each payment date during a Trigger Period due to a Lease Sweep Period (as defined below), the borrower is required to deposit excess cash flow into a lease sweep reserve.
■ | Lockbox and Cash Management. The Novo Nordisk HQ Loan Combination is structured with a hard lockbox and springing cash management. The borrower is required to cause all rents to be deposited directly into the lender-controlled lockbox account. All funds received by the borrower or the property manager are required to be deposited in the lockbox account within one business day following receipt. During the continuance of a Trigger Period, funds on deposit in the lockbox account are required to be swept on a daily basis into a lender-controlled cash management account and applied on each payment date (i) to make deposits into the tax and insurance reserves, (ii) to pay debt service on the Novo Nordisk HQ Loan Combination, (iii) to make deposits into the capital expenditure reserve, (iv) to pay (I) the lesser of lender-approved budgeted operating expenses and actual operating expenses, minus (II) the amount by which lender-approved budgeted operating expenses exceeded actual operating expenses in prior months, to the extent not previously deducted pursuant to this clause (II), and (v) to pay lender-approved extraordinary expenses, if any. Prior to the ARD, so long as no event of default exists, all excess cash after such application (“Excess Cash”) is required to be transferred (i) during a Lease Sweep Period, to the lease sweep reserve, and (ii) if any other Trigger Period exists, provided no Lease Sweep Period exists, to a lender-controlled account to be held as additional collateral for the Novo Nordisk HQ Loan Combination during such Trigger Period. If the Novo Nordisk HQ Loan Combination is not paid by the ARD, from and after the ARD, the Novo Nordisk HQ Loan Combination will accrue interest at the Adjusted Interest Rate; however, interest accrued at the excess of the Adjusted Interest Rate over the initial interest rate (“Excess Interest”) will be deferred. |
On or after the ARD, Excess Cash will be required to be applied to the prepayment of the outstanding principal balance of the Novo Nordisk HQ Loan Combination, until the outstanding principal balance has been reduced to zero, then to any Excess Interest until the Excess Interest has been reduced to zero and then to any other indebtedness due under the Novo Nordisk HQ Loan Combination until the other indebtedness has been reduced to zero.
A “Trigger Period” will commence upon (i) the ARD, (ii) the occurrence of an event of default under the Novo Nordisk HQ Loan Combination and end upon acceptance of a cure of such event of default by the lender, (iii) a Low DSCR Period (as defined below) and end upon the expiration of such Low DSCR Period, and (iv) the commencement of a Lease Sweep Period (as defined below) and end upon the expiration of such Lease Sweep Period.
A “Low DSCR Period” will commence if the debt service coverage ratio (“DSCR”) is less than 2.00x based on the Novo Nordisk HQ Loan Combination as of the last day of any calendar quarter, however if any Lease Sweep Tenant (as defined below) is subject to a Tenant Adjustment Event (as defined below), then the underwritten net cash flow as of the most recent calendar quarter may be immediately adjusted downward by the lender and to the extent said adjustment results in a debt service coverage ratio that is below 2.00x, a Low DSCR Period will immediately commence, and will end upon the earliest to occur of (x) the Novo Nordisk HQ Property achieving a DSCR of at least 2.00x for two consecutive calendar quarters, (y) the borrower delivers to the lender funds for deposit into the cash collateral account in an amount equal to the amount which, if applied to repay the then outstanding principal balance, would cause the DSCR to be at least 2.00x, which funds will be held and disbursed in accordance with the Novo Nordisk HQ Loan Combination documents or (iii) the borrower delivers a letter of credit in such amount.
A “Lease Sweep Period” will commence (prior to the ARD), upon any of the following: (a) the earlier to occur of (1) with respect to any Lease Sweep Lease (as defined below), other than the Novo Nordisk HQ lease, 27 months prior to the earliest stated expiration date and (2) upon the date required under a Lease Sweep Lease by which the tenant is required to give notice of its exercise of a renewal option; (b) the date that a Lease Sweep Lease is surrendered,
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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cancelled or terminated or notice is received by the borrower or property manager prior to the stated expiration date of the Lease Sweep Lease of the tenant’s intention to do so; (c) to the extent the tenant under a Lease Sweep Lease is not an investment grade tenant and discontinues its business (i.e., “goes dark”) at its Lease Sweep Lease space or give notice that it intends to discontinue its business (other than in connection with a sublease); provided, that, a tenant under a Lease Sweep Lease will not be deemed to be “dark” if its discontinuation of operations in its applicable space is in connection with any of the following: (x) in order to comply with governmental restrictions which restrict the use or occupancy of the Novo Nordisk HQ Property in connection with the COVID-19 pandemic or any other pandemic or epidemic (a “SIP Order”), and such tenant resumes operations in the entire Lease Sweep Lease space within 90 days after such SIP Order is lifted or (y) such discontinuation occurs in connection with such tenant’s commercially reasonable safety protocols relating to the COVID-19 pandemic; (d) upon a monetary or material nonmonetary default, in each case under a Lease Sweep Lease by the tenant thereunder that continues beyond any applicable notice and cure period; and (e) the occurrence of a Lease Sweep tenant party insolvency proceeding.
A Lease Sweep Period will end upon, (A) in the case of clauses (a), (b) and (c) above, the entirety of the Lease Sweep Lease space is leased pursuant to one or more qualified leases and, in the lender’s judgment, sufficient funds have been accumulated in the lease sweep reserve (during the continuance of the subject Lease Sweep Period) to cover all anticipated approved Lease Sweep Lease space leasing expenses, free rent periods, and/or rent abatement periods and any shortfalls in required payments under the Novo Nordisk HQ Loan Combination 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 subject tenant under the Lease Sweep Lease irrevocably exercises its renewal or extension option with respect to all of its Lease Sweep Lease space, and in the lender’s judgment, sufficient funds have been accumulated in the lease sweep reserve (during the continuance of the subject Lease Sweep Period) to cover all anticipated approved Lease Sweep Lease space leasing expenses, free rent periods and/or rent abatement periods in connection with 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 default under such Lease Sweep Lease occurs for a period of six consecutive months following such cure; (D) in the case of clause (e) above, (x) the applicable Lease Sweep tenant party insolvency proceeding has terminated; (E) in the case of clauses (a), (b), (c), (d) and (e) above, the date on which the Lease Sweep Lease funds in the Lease Sweep reserve 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 Reserve) is equal to the Lease Sweep Deposit Amount (as defined below) applicable to such Lease Sweep Lease space, unless the applicable Lease Sweep Lease space 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 Lease Sweep Lease space (in which case the Lease Sweep Period in question shall continue until the borrower satisfies clause (A) above).
A “Lease Sweep Tenant” means any tenant under a Lease Sweep Lease.
A “Lease Sweep Lease” means the (i) the Novo Nordisk lease or (ii) any replacement lease 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 lease, covers the majority of the applicable Lease Sweep Lease space.
A “Lease Sweep Deposit Amount” means an amount equal to the total rentable SF of the applicable Lease Sweep Lease multiplied by $75.00.
A “Tenant Adjustment Event” will occur when a tenant is (1) not currently in occupancy and paying full rent, (2) affiliated with the borrower, (3) in default or bankruptcy (unless the lease is affirmed or assumed without modification by final non-appealable order of the bankruptcy court), (4) under a month-to-month lease, (5) under a lease where the term is set to expire in the next two succeeding calendar quarters, or (6) has failed to exercise a renewal option within the time period set forth in its lease or has given notice of intent to vacate prior to the stated expiration date of its lease.
■ | Property Management. The Novo Nordisk HQ Property is managed by Ivy Realty Services, LLC. |
■ | Current Mezzanine or Subordinate Indebtedness. At origination the Sole Member of the borrower pledged its 100% equity interest in the borrower to the Property Seller to secure the Sole Member’s obligations under the Earnout Agreement, as described above under “-Escrows.” The lender entered into a recognition agreement with the Property Seller pursuant to which the lender agreed, among other things, (i) to allow the Property Seller to foreclose on the |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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pledge and take control of the borrower so long as a preapproved control party will own/control such borrower after foreclosure and so long as the permitted transfer provisions of the Novo Nordisk HQ Loan Combination documents and recognition agreement are satisfied and (ii) to allow the Property Seller to purchase the Novo Nordisk HQ Loan Combination upon notice to the Property Seller that an event of default under the Novo Nordisk HQ Loan Combination is continuing (at a purchase price equal to the full outstanding amount of the debt, including all default interest, fees and expenses). |
■ | 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 Novo Nordisk HQ Property plus 24 months of rental loss and/or business interruption coverage. For so long as TRIPRA is in effect and continues to cover both foreign and domestic acts, the lender must accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. If TRIPRA is no longer in effect, the borrower is not required to pay terrorism insurance premiums in excess of two times the amount of the insurance premium payable in respect of the property and business interruption/rental loss insurance required under the Novo Nordisk HQ Loan Combination documents (without giving effect to the cost of terrorism and earthquake components of such insurance) at the time that terrorism coverage is excluded from the applicable insurance policy. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
34
LOAN #4: ONE MEMORIAL DRIVE
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
35
LOAN #4: ONE MEMORIAL DRIVE
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
36
LOAN #4: ONE MEMORIAL DRIVE
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
37
LOAN #4: ONE MEMORIAL DRIVE
Mortgaged Property Information | Mortgage Loan Information | ||||||||||||
Number of Mortgaged Properties | 1 | Loan Seller | JPMCB | ||||||||||
Location (City / State) | Cambridge, Massachusetts | Cut-off Date Balance(3) | $63,150,000 | ||||||||||
Property Type | Office | Cut-off Date Balance per SF(3) | $731.03 | ||||||||||
Size (SF) | 409,422 | Percentage of Initial Pool Balance | 4.2% | ||||||||||
Total Occupancy as of 9/1/2021 | 98.5% | Number of Related Mortgage Loans | None | ||||||||||
Owned Occupancy as of 9/1/2021 | 98.5% | Type of Security | Fee | ||||||||||
Year Built / Latest Renovation | 1985 / 2018 | Mortgage Rate | 2.69250% | ||||||||||
Appraised Value | $828,000,000 | Original Term to Maturity (Months) | 120 | ||||||||||
Appraisal Date | 8/31/2021 | Original Amortization Term (Months) | NAP | ||||||||||
Borrower Sponsor(1) | Metropolitan Life Insurance Company and Norges Bank | Original Interest-Only Period (Months) | 120 | ||||||||||
Property Management | MIM Property Management, LLC | First Payment Date | 11/5/2021 | ||||||||||
Maturity Date | 10/5/2031 | ||||||||||||
Underwritten Revenues | $39,738,327 | ||||||||||||
Underwritten Expenses | $9,140,405 | Escrows(4) | |||||||||||
Underwritten Net Operating Income (NOI)(2) | $30,597,922 | Upfront | Monthly | ||||||||||
Underwritten Net Cash Flow (NCF)(2) | $29,697,194 | Taxes | $0 | Springing | |||||||||
Cut-off Date LTV Ratio(3) | 36.1% | Insurance | $0 | Springing | |||||||||
Maturity Date LTV Ratio(3) | 36.1% | Replacement Reserves | $0 | Springing | |||||||||
DSCR Based on Underwritten NOI / NCF(3) | 3.74x / 3.63x | TI / LC | $0 | Springing | |||||||||
Debt Yield Based on Underwritten NOI / NCF(3) | 10.2% / 9.9% | Other | $0 | $0 | |||||||||
Sources and Uses | |||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||
Senior Loan | $299,300,000 | 36.2% | Purchase Price | $825,100,000 | 99.7% | ||||||||
Subordinate Loan | 114,700,000 | 13.9 | Closing Costs | 2,696,468 | 0.3 | ||||||||
Borrower Sponsor Equity | 413,796,468 | 50.0 | |||||||||||
Total Sources | $827,796,468 | 100.0% | Total Uses | $827,796,468 | 100.0% | ||||||||
(1) | There is no separate non-recourse carveout guarantor or environmental indemnitor for the One Memorial Drive Loan Combination (as defined below). |
(2) | Underwritten NOI and Underwritten NCF are inclusive of (i) $394,903 attributable to contractual rent steps through November 1, 2022 and (ii) $624,113 attributable to straight line rent credit for investment grade tenants. |
(3) | Calculated based on the aggregate outstanding balance of the six senior pari passu promissory notes. The One Memorial Drive Mortgage Loan (as defined below) is part of the One Memorial Drive Loan Combination comprised of six senior pari passu promissory notes with an aggregate original principal balance and outstanding principal balance as of the Cut-off Date of $299,300,000 and one subordinate loan with an original principal balance and outstanding principal balance as of the Cut-off Date of $114,700,000. See “Loan Combination Summary” chart herein. |
(4) | See “Escrows” herein. |
▀ | The Mortgage Loan. The mortgage loan (the “One Memorial Drive Mortgage Loan”) is part of a loan combination (the “One Memorial Drive Loan Combination”) comprised of six pari passu senior notes with an aggregate outstanding principal balance as of the Cut-off Date of $299,300,000 (collectively, the “One Memorial Drive Senior Loan”) and one subordinate note, with an outstanding principal balance as of the Cut-off Date of $114,700,000 (the “One Memorial Drive Subordinate Loan”). The One Memorial Drive Loan Combination is secured by a first mortgage encumbering the borrower’s fee interest in a Class A office building located in Cambridge, Massachusetts (the “One Memorial Drive Property”). The One Memorial Drive Mortgage Loan (evidenced by non-controlling Notes A-5 and A-6) having an outstanding principal balance as of the Cut-off Date of $63,150,000, is being contributed to the Benchmark 2021-B31 transaction. The remaining notes that comprise the One Memorial Drive Senior Loan and the One Memorial Drive Subordinate Loan have been contributed to one or more securitization trusts. |
The One Memorial Drive Loan Combination has a term of 120 months, with 118 months remaining as of the Cut-off Date. The One Memorial Drive Loan Combination requires interest-only payments during its entire term and accrues interest at a rate of 2.69250% per annum. On or after November 6, 2023, the borrower may voluntarily prepay the One Memorial Drive Loan Combination in full (but not in part), provided that such prepayment is subject to a yield maintenance charge based upon the greater of a yield maintenance premium or 1.0% of the principal amount prepaid. Defeasance of the One Memorial Drive Loan Combination in whole (but not in part) is permitted on or after two years from the closing date of the Benchmark 2021-B31 securitization transaction.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
38
LOAN #4: ONE MEMORIAL DRIVE
The table below summarizes the promissory notes that comprise the One Memorial Drive Loan Combination. The relationship between the holders of the One Memorial Drive Loan Combination is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Loan Combinations—The Non-Serviced AB Loan Combinations—One Memorial Drive Loan Combination” in the Preliminary Prospectus.
Loan Combination Summary(1) | ||||
Note | Original Balance | Cut-off Date Balance | Note Holder(s) | Controlling Piece |
A-1 | $141,150,000 | $141,150,000 | JPMCC 2021-1MEM | Yes |
A-2 | 35,000,000 | 35,000,000 | Benchmark 2021-B30 | No |
A-3 | 30,000,000 | 30,000,000 | Benchmark 2021-B30 | No |
A-4 | 30,000,000 | 30,000,000 | Benchmark 2021-B30 | No |
A-5 | 35,000,000 | 35,000,000 | Benchmark 2021-B31 | No |
A-6 | 28,150,000 | 28,150,000 | Benchmark 2021-B31 | No |
Senior Loan | $299,300,000 | $299,300,000 | ||
Subordinate Loan | $114,700,000 | $114,700,000 | JPMCC 2021-1MEM | Yes |
Loan Combination | $414,000,000 | $414,000,000 |
(1) | The related notes are currently held by the Note Holder identified in the table above or may otherwise be transferred at any time. |
■ | The Mortgaged Property. The One Memorial Drive Property is a 17-story, Class A, LEED Silver office building at the entrance to Kendall Square at the corner of Memorial Drive and Main Street overlooking the Charles River in Cambridge, Massachusetts. The One Memorial Drive Property is situated on approximately 1.7 acres of land directly adjacent to the Massachusetts Institute of Technology (“MIT”) campus. The One Memorial Drive Property, designed by Huggens & DiMella, was built in 1985 and underwent an approximately $49.0 million capital improvement program completed in 2018, including a full elevator modernization with smart destination dispatch technology, HVAC upgrades, roof replacement and the conversion of a portion of the parking garage into a fully-functioning office suite. The One Memorial Drive Property is located on top of a five-story parking garage with approximately 296 spaces. The One Memorial Drive Property includes several amenities including a fitness center, full-service café, on-site Blue Bike station, EV chargers and bike storage. |
As of September 1, 2021, the One Memorial Drive Property was 98.5% leased. The two largest tenants are InterSystems Corporation (“InterSystems”) (58.5% of net rentable area) and Microsoft Corporation (“Microsoft”) (38.3% of net rentable area; rated Aaa/AAA/AAA by Moody’s/S&P/Fitch). InterSystems is a provider of database management, rapid application development and integration and healthcare information systems. InterSystems is headquartered at the One Memorial Drive Property and has occupied its space since 1987. InterSystems has four, five-year extension options at fair market rent. Microsoft has occupied its space since 2007 and houses critical functions for artificial intelligence development at the One Memorial Drive Property. Microsoft has one, ten-year extension option at fair market rent. In aggregate, the in-place office leases have average underwritten rents of approximately $75.75 per SF, approximately 15.8% below the appraiser’s concluded triple-net market rent of $90.00 per SF.
InterSystems has the right to expand its leased space to any space at the One Memorial Drive Property that (i) is comprised of one, two or three full floors; and (ii) that the borrower anticipates will be available for delivery to InterSystems after July 1, 2024 and prior to June 30, 2025 (the “Potential Expansion Premises”), provided that InterSystems is leasing at least 214,225 rentable square feet. Fixed rent will be set at the fair rental value as determined by the borrower, and if InterSystems does not agree to such rent, as determined pursuant to an appraisal procedure. The current rent under InterSystem’s lease is 15.8% below the appraiser’s concluded market rent. If no Potential Expansion Premises are available, the borrower is required to notify InterSystems of such fact by December 31, 2023, and InterSystems will have the right to terminate its lease in whole or in part upon notice within six months following its receipt of the borrower’s notice that no Potential Expansion Premises are available. The termination date is required to be at least 18 months after the date of InterSystems’ termination notice, during which time the One Memorial Drive Loan would be subject to an excess cash sweep (capped at $50 per SF), and is required to occur during the period beginning July 1, 2025 and ending December 31, 2025. If InterSystems terminates its lease as described in this paragraph, it will be required to pay a termination fee with respect to its premises equal to the unamortized portion of the borrower’s transaction costs in accordance with the lease (or in the event of a partial termination, the terminated premises’ pro rata share of such costs). It is anticipated that Potential Expansion Premises will not be available given the expiration dates of existing leases.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
39
LOAN #4: ONE MEMORIAL DRIVE
■ | COVID-19 Update. As of September 25, 2021, the One Memorial Drive Property is fully open and operational and the One Memorial Drive Loan Combination is not subject to any COVID-19 modification or forbearance request. The One Memorial Drive Loan Combination underwent a note split in a prior securitization, resulting in a modification post origination. No tenant has missed rent payments or requested a deferral of rent and there are currently no COVID-19 related lease modifications in effect. See “Risk Factors—Special Risks—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
The following table presents certain information relating to the tenants at the One Memorial Drive Property:
Largest Tenants Based on Underwritten Base Rent (1)
Tenant Name | Credit Rating (Fitch/MIS/S&P)(2) | Tenant GLA | % of GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent $ per SF | Lease Expiration(3) | Renewal / Extension Options(3) |
InterSystems | NR / NR / NR | 239,417 | 58.5% | $18,833,534 | 62.7% | $78.66 | 3/31/2028 | 4, 5-year options |
Microsoft | AAA / Aaa / AAA | 156,849 | 38.3% | 11,182,248 | 37.2% | 71.29 | 6/30/2028 | 1, 10-year option |
Management Office | 737 | 0.2% | 39,061 | 0.1% | 53.00 | |||
Amenity/Storage Space | 6323 | 1.5% | 0 | 0.0% | 0 | |||
Total Occupied | 403,326 | 98.5% | $30,054,843 | 100.0% | $74.52 | |||
Vacant | 6,096 | 1.5% | ||||||
Total | 409,422 | 100.0% |
(1) | Based on the underwritten rent roll dated as of September 1, 2021. |
(2) | Certain ratings are those of the parent entity whether or not the parent entity guarantees the lease. |
(3) | InterSystems has the right to expand its leased space to any Potential Expansion Premises as described above. If the borrower does not have any Potential Expansion Premises, then InterSystems will have the right to terminate its lease in whole or in part upon notice within six months of receipt of the borrower’s notice that no Potential Expansion Premises are available and upon the payment of a termination fee. The termination date is required to be at least 18 months after the date of InterSystems’ termination notice and to occur during the period beginning July 1, 2025 and ending December 31, 2025. |
The following table presents certain information relating to the lease rollover schedule at the One Memorial Drive Property, based on the initial lease expiration date:
Lease Expiration Schedule (1)(2)
Year Ending December 31 | Expiring Owned GLA | % of Owned GLA(3) | 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 |
2021 | 0 | 0.0% | 0.0% | 0 | 0.0% | 0 | 0 |
2022 | 0 | 0.0% | 0.0% | 0 | 0.0% | 0 | 0 |
2023 | 0 | 0.0% | 0.0% | 0 | 0.0% | 0 | 0 |
2024 | 0 | 0.0% | 0.0% | 0 | 0.0% | 0 | 0 |
2025 | 0 | 0.0% | 0.0% | 0 | 0.0% | 0 | 0 |
2026 | 0 | 0.0% | 0.0% | 0 | 0.0% | 0 | 0 |
2027 | 0 | 0.0% | 0.0% | 0 | 0.0% | 0 | 0 |
2028 | 396,266 | 96.8% | 96.8% | 30,015,782 | 99.9% | 75.75 | 2 |
2029 | 0 | 0.0% | 96.8% | 0 | 0.0% | 0 | 0 |
2030 | 0 | 0.0% | 96.8% | 0 | 0.0% | 0 | 0 |
2031 | 0 | 0.0% | 96.8% | 0 | 0.0% | 0 | 0 |
2032 & Thereafter | 7,060 | 1.7% | 98.5% | 39,061 | 0.1% | 5.53 | 1 |
Vacant | 6,096 | 1.5% | 100.0% | 0 | NAP | NAP | NAP |
Total / Wtd. Avg. | 409,422 | 100.00% | $30,054,843 | 100.00% | $74.52 | 3 |
(1) | Certain tenants may have termination or contraction options (which may become exercisable prior to the originally stated expiration date of the lease) that are not considered in the above Lease Rollover Schedule. |
(2) | Based on the underwritten rent roll dated as of September 1, 2021. |
(3) | Calculated based on the approximate square footage occupied by each tenant. |
The following table presents certain information relating to historical leasing at the One Memorial Drive Property:
Historical Leased %(1)
2018 | 2019 | 2020 | As of 09/1/2021(2) |
98.5% | 98.5% | 98.5% | 98.5% |
(1) | As of December 31, unless specified otherwise. |
(2) | Based on the underwritten rent roll dated as of September 1, 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
40
LOAN #4: ONE MEMORIAL DRIVE
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the One Memorial Drive Property: |
Cash Flow Analysis
2019 | 2020 | U/W(1) | U/W PSF | |
Base Rent | $28,103,717 | $29,361,756 | $29,659,703 | $72.44 |
Contractual Rent Steps(2) | 0 | 0 | 394,903 | 0.96 |
Straight Line IG Rent | 0 | 0 | 624,113 | 1.52 |
Gross Potential Rent | $28,103,717 | $29,361,756 | $30,678,719 | $74.93 |
CAM | 7,847,572 | 8,074,460 | 9,062,581 | 22.14 |
Utilities | 48,000 | 48,000 | 48,000 | 0.12 |
Vacancy & Credit Loss | 0 | 0 | (1,591,572) | (3.89) |
Parking | 1,424,215 | 1,143,249 | 1,500,000 | 3.66 |
Telecom | 76,953 | 55,383 | 40,599 | 0.10 |
Effective Gross Income | $37,500,457 | $38,682,848 | $39,738,327 | $97.06 |
Total Operating Expenses | 8,064,155 | 8,088,398 | 9,140,405 | 22.33 |
Net Operating Income | $29,436,302 | $30,594,450 | $30,597,922 | $74.73 |
TI / LC | 0 | 0 | 818,844 | 2.00 |
Replacement Reserves | 0 | 0 | 81,884 | 0.20 |
Net Cash Flow | $29,436,302 | $30,594,450 | $29,697,194 | $72.53 |
(1) | Based on the underwritten rent roll dated as of September 1, 2021. |
(2) | Contractual Rent Steps underwritten through November 1, 2022 (12 months out from securitization). |
■ | Appraisal. The appraisal concluded an “as is” appraised value of $828,000,000, and the loan-to-value ratios based on such appraised value are 36.1% and 50.0% for the One Memorial Drive Senior Loan and the One Memorial Drive Loan Combination, respectively. |
■ | Environmental Matters. According to a Phase I environmental report dated July 23, 2021, there was no evidence of any recognized environmental conditions at the One Memorial Drive Property. However, the Phase I report identified a controlled recognized environmental condition with respect to elevated levels of chlorinated volatile organic compounds detected in the groundwater underneath the One Memorial Drive Property. The Phase I environmental report did not recommend any further action other than continued compliance with the requirements under the existing Notice of Activity and Use Limitation. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus for additional information. |
▀ | Market Overview and Competition. The One Memorial Drive Property is located in Cambridge, Middlesex County, Massachusetts. The Boston-Cambridge market is the largest life sciences area in the United States and has historically received the largest amount of funding in the nation from the National Institutes of Health. According to the appraisal, more than 50% of Massachusetts residents live within a 35-mile radius of Boston and the Boston region comprises the tenth largest metropolitan statistical area, as of 2019, with a population of over 4.9 million people. The Boston area includes various universities, including Harvard University, MIT, Boston University, Tufts University and Boston College. There are more than 40 colleges located in the greater Boston area alone. The Boston area also has many hospitals and research institutes such as Massachusetts General Hospital, Dana Farber Institute, Beth Israel Deaconess Medical Center, New England Baptist Hospital, Brigham and Women’s Hospital and Children’s Hospital Boston. According to an industry research report, Massachusetts has 79,972 biopharma jobs with an average salary of approximately $169,271 and over 46,000 biotech research and development jobs as of 2019. According to the appraisal, the Boston office market has an average vacancy rate of 9.9%, as of the second quarter of 2021. |
The One Memorial Drive Property is located in the East Cambridge neighborhood bound by Main Street and Memorial Drive in the East Cambridge / Kendall Square submarket of the Boston office market. The East Cambridge/Kendall Square submarket is anchored by the Kendall / MIT MBTA Red Line subway station and the approximately 168-acre MIT campus. According to the appraisal, as of the second quarter of 2021, the East Cambridge/Kendall Square submarket has average asking rents of $88.65 per SF and a vacancy rate of 3.5%. The pharmaceutical industry is the primary industry in the Cambridge area, with 18 of the 20 largest pharmaceutical companies located in the market. The
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
41
LOAN #4: ONE MEMORIAL DRIVE
East Cambridge/Kendall Square submarket comprises nearly 17.7 million SF of office and laboratory space located near a number of apartments, shopping destinations and dining amenities.
■ | The Borrower. The borrower, OMD Owner, LLC, is a Delaware limited liability company structured to be a special purpose entity with two independent directors in its organizational structure. The borrower is indirectly owned by a joint venture between Metropolitan Life Insurance Company, and its affiliates (“MetLife”), and Norges Bank, which are the borrower sponsors, and indirectly controlled by MetLife Investment Management, LLC (“MIM”), the investment advisor to the borrower sponsors. There is no separate non-recourse carveout guarantor or environmental indemnitor for the One Memorial Drive Loan Combination, and the special purpose entity borrower is the sole party responsible for breaches or violations of the non-recourse carve-out provisions in the related One Memorial Drive Loan Combination documents, including the environmental indemnity. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the One Memorial Drive Loan Combination. |
The borrower sponsors’ partnership was established in 2013 with a focus on strategic, long-term investing in office assets located in major market central business districts throughout the United States. Investments are owned in 52.5% / 47.5% joint ventures between MetLife and Norges Bank, respectively. MIM serves as investment advisor and asset manager for the properties owned through this partnership. As of June 30, 2021, the borrower sponsors have invested in six Class A office buildings located in Boston, San Francisco and Washington, DC, with an aggregate gross asset value of approximately $3.7 billion. As of March 31, 2021, MIM’s real estate platform managed a portfolio of $106.0 billion invested in real estate products including commercial mortgages and equities. MIM has over 200 real estate professionals located in seven regional offices in key United States cities in addition to international operations in London, Mexico City, Santiago and Tokyo. Norges Bank Investment Management (“NBIM”) is the asset management division of Norges Bank, the Norwegian central bank. As manager of the Government Pension Fund Global, its mission is to safeguard and build financial wealth for future generations in Norway. The fund is invested globally in equity, fixed income, real estate and renewable energy infrastructure. NBIM had investments worth 11,673 billion kroner, or $1,350 billion as of March 31, 2021. The fund owns direct real estate investments worth approximately $32.0 billion, totaling nearly 800 assets across 13 countries. In the United States, the fund owns direct real estate investments across 22.0 million SF of office and retail properties in New York City, Boston, Washington D.C. and San Francisco.
■ | Escrows. At loan origination, the borrower was not required to deposit any upfront reserves. |
Tax and Insurance Reserve - Commencing at origination of the One Memorial Drive Loan Combination and continuing on a monthly basis, an escrow for taxes, insurance, and other assessments, in an amount equal to 1/12 of the amount that the lender estimates will be necessary to pay taxes and insurance premiums over the then succeeding 12-month period, will be required to be deposited with the lender, provided, however, that (a) the requirement for the borrower to make deposits for the payment of taxes and other assessments will be waived so long as (i) no Cash Sweep Event (as defined below) exists and (ii) the borrower has provided the lender with satisfactory evidence (as reasonably determined by the lender) that taxes and other assessments have been paid prior to the date such taxes and other assessments are due and payable, which evidence will be provided to the lender prior to the date that such taxes and other assessments are due; and (b) the requirement for the borrower to make deposits for the payment of insurance premiums will be waived so long as (i) no event of default has occurred and is continuing and (ii) the borrower has provided the lender with satisfactory evidence (as reasonably determined by the lender) that the One Memorial Drive Property is insured in accordance with the One Memorial Drive Loan Combination documents pursuant to a blanket insurance policy covering the One Memorial Drive Property and other property(ies) owned by affiliates of the borrower that is reasonably acceptable to the lender.
■ | Lockbox and Cash Management. The One Memorial Drive Loan Combination is structured with an in place hard lockbox and springing cash management. All funds in the lockbox accounts will be swept to an account designated by the borrower, unless a Cash Sweep Event is continuing, in which case such funds are required to be swept on each business day into a cash management account controlled by the lender, at which point, following payment of taxes and insurance, debt service, required reserves and operating expenses, all funds are required to be deposited (i) if a Tenant Trigger Event (as defined below) exists, into a lease sweep reserve, and (ii) if no Tenant Trigger Event exists, and any other Cash Sweep Event exists, into the excess cash flow reserve, to be held by the lender as additional security for the One Memorial Drive Loan Combination and disbursed in accordance with the terms of the One Memorial Drive Loan Combination documents. |
A “Cash Sweep Event” means the occurrence of (a) an event of default under the One Memorial Drive Loan Combination documents (b) the bankruptcy or insolvency of the borrower, (c) the debt yield for the One Memorial Drive
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #4: ONE MEMORIAL DRIVE
Loan Combination falling below 5.5% for the immediately preceding trailing three month period annualized for two consecutive quarters or (d) a Tenant Trigger Event
A Cash Sweep Event may be cured as follows: (i) with respect to clause (a) above, the lender’s acceptance of a cure or a waiver of such event of default in the lender’s sole discretion; (ii) with respect to clause (c) above, the achievement of a debt yield of at least 5.5% based on the net operating income for two consecutive calendar quarters in accordance with the One Memorial Drive Loan Combination documents or (iii) with respect to clause (d) above, the achievement of a Tenant Trigger Event Cure (as defined below); provided that in no event will the borrower have the right to cure a Cash Sweep Event caused by a bankruptcy event of the borrower.
A “Tenant Trigger Event” means, with respect to any of the InterSystems lease, the Microsoft lease, or any other lease that covers more than 30% of the total rentable area at the One Memorial Drive Property (each such lease, a “Lease Sweep Lease”), the earliest to occur of any of the following: (a) a monetary default or a material non-monetary default by the tenant under such Lease Sweep Lease has occurred and is continuing beyond any applicable notice and cure periods, (b) the receipt by the borrower or the property manager of notice from any tenant under a Lease Sweep Lease exercising its right to terminate its Lease Sweep Lease or contract any material portion of the leased premises demised under its Lease Sweep Lease prior to its then current expiration date or of its intent to cancel or terminate its Lease Sweep Lease or surrender any material portion of the leased premises demised under its Lease Sweep Lease prior to its then current expiration date, (c) the bankruptcy of a tenant under a Lease Sweep Lease or (d) the later of (i) the date that is 18 months prior to the expiration of such Lease Sweep Lease and (ii) the date on which the tenant under such Lease Sweep Lease must give notice of its intent to renew or extend such Lease Sweep Lease in accordance with the terms of such lease, unless prior to such date the tenant under such Lease Sweep Lease has exercised its right to renew or extend such Lease Sweep Lease in accordance with the terms of such lease; provided, however, the failure of any tenant to renew or extend its Lease Sweep Lease by the date set forth in clause (d)(ii) above solely as a result of the occurrence of a casualty or condemnation affecting the leased premises under such Lease Sweep Lease or a material portion of the common areas of the One Memorial Drive Property will not constitute a Tenant Trigger Event.
A “Tenant Trigger Event Cure” means, among other requirements, (i) more than 70% of the total rentable space at the One Memorial Drive Property is subject to leases that each satisfy the occupancy conditions required under the One Memorial Drive Loan Combination documents and the borrower has (A) caused each tenant under a lease to deliver an estoppel certificate to the lender, or (B) provided other evidence of the occurrence of such Tenant Trigger Event Cure that is reasonably acceptable to the lender; (ii) the achievement of a debt yield of at least 6.5% based on net operating income for two consecutive calendar quarters in accordance with the One Memorial Drive Loan Combination documents; or (iii) the aggregate amount of lease sweep reserve funds as described in the One Memorial Drive Loan Combination documents is not less than the amount equal to the product of the total rentable square feet of the applicable Lease Sweep Lease that resulted in the occurrence of the Tenant Trigger Event multiplied by $50 (the “Lease Sweep Reserve Cap”) or the lender has received a letter of credit with a face amount that, together with the aggregate amount of the lease sweep reserve funds, is equal to the Lease Sweep Reserve Cap in accordance with the One Memorial Drive Loan Combination documents.
■ | Property Management. The One Memorial Drive Property is currently managed by MIM Property Management, LLC, a Delaware limited liability company and an affiliate of the borrower, and sub-managed by Oxford I Asset Management USA Inc., a Delaware corporation. |
■ | Current Mezzanine or Secured Subordinate Indebtedness. The One Memorial Drive Property also secures the One Memorial Drive Subordinate Loan, which has a Cut-off Date principal balance of $114,700,000. The One Memorial Drive Subordinate Loan accrues interest at a rate of 2.69250% per annum. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
■ | Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the One Memorial Drive Property. If TRIPRA or a subsequent statute 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 comprehensive all-risk coverage required on a stand-alone basis. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
43
LOAN #5: MEMPHIS 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
44
LOAN #5: MEMPHIS 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
45
LOAN #5: MEMPHIS INDUSTRIAL PORTFOLIO
Mortgaged Property Information | Mortgage Loan Information | ||||
Number of Mortgaged Properties | 6 | Loan Seller | CREFI | ||
Location (City/State) (1) | Various | Cut-off Date Balance | $58,500,000 | ||
Property Type (1) | Various | Cut-off Date Balance per SF | $25.82 | ||
Size (SF) | 2,265,636 | Percentage of Initial Pool Balance | 3.9% | ||
Total Occupancy as of Various(2) | 98.1% | Number of Related Mortgage Loans | None | ||
Owned Occupancy as of Various(2) | 98.1% | Type of Security | Fee | ||
Year Built / Latest Renovation(1) | Various / Various | Mortgage Rate | 3.24000% | ||
Appraised Value(1) | $100,700,000 | Original Term to Maturity (Months) | 120 | ||
Appraisal Date | Various | Original Amortization Term (Months) | NAP | ||
Borrower Sponsor | Olymbec USA LLC | Original Interest Only Period (Months) | 120 | ||
Property Management(3) | Various | First Payment Date | 1/6/2022 | ||
Maturity Date | 12/6/2031 | ||||
Underwritten Revenues | $9,299,001 | ||||
Underwritten Expenses | $2,682,691 | Escrows (4) | |||
Underwritten Net Operating Income (NOI) | $6,616,310 | Upfront | Monthly | ||
Underwritten Net Cash Flow (NCF) | $5,792,365 | Taxes | $524,435 | $58,271 | |
Cut-off Date LTV Ratio | 58.1% | Insurance | $0 | Springing | |
Maturity Date LTV Ratio | 58.1% | Replacement Reserve(5) | $0 | $42,662 | |
DSCR Based on Underwritten NOI / NCF | 3.44x / 3.01x | TI/LC(6) | $2,000,000 | Springing | |
Debt Yield Based on Underwritten NOI / NCF | 11.3% / 9.9% | Other(7) | $3,803,872 | $0 | |
Sources and Uses | |||||
Sources | $ | % | Uses | $ | % |
Mortgage Loan | $58,500,000 | 100.0% | Return of Equity(8) | $51,622,503 | 88.2% |
Upfront Reserves | $6,328,307 | 10.8 | |||
Closing Costs | $549,190 | 0.9 | |||
Total Sources | $58,500,000 | 100.0% | Total Uses | $58,500,000 | 100.0% |
(1) | See the “Portfolio Summary” chart below for the City, State, Property Type, Year Built / Latest Renovation and Appraised Values of the individual Memphis Industrial Portfolio Properties (as defined below). |
(2) | Based on the rent rolls dated October 1, 2021, November 18, 2021 and December 6, 2021. |
(3) | The five industrial properties included within the Memphis Industrial Portfolio are self-managed by the borrower sponsor. The single office property is managed by CBRE Inc. |
(4) | See “—Escrows” below. |
(5) | Monthly deposits into the replacement reserve account are not required to the extent the balance in the replacement reserve account is more than approximately $1,535,847. |
(6) | Monthly deposits into the TI/LC reserve are not required until the balance on deposit in the TI/LC reserve account are less than $500,000. When the balance in the TI/LC reserve account falls below $500,000, monthly deposits of approximately $18,880 are required to be made into the TI/LC reserve. |
(7) | Other upfront reserve is comprised of a near term rollover reserve ($2,034,708), unfunded obligations reserve ($1,104,585), gap rent reserve (approximately $288,612), immediate repairs reserve (approximately $153,368) and roof work reserve ($222,600). |
(8) | The Memphis Industrial Portfolio Properties were unencumbered prior to this financing, as each property was purchased by the borrower sponsor in separate all-cash transactions from 2012 through 2017. |
■ | The Mortgage Loan. The Memphis Industrial Portfolio mortgage loan (the “Memphis Industrial Portfolio Mortgage Loan”) is secured by the borrower’s fee interest in a portfolio of five industrial properties and one office property comprised of 2,265,636 SF located in Tennessee and Nebraska (the “Memphis Industrial Portfolio Properties”). The Memphis Industrial Portfolio Mortgage Loan was originated by Citi Real Estate Funding Inc. on November 18, 2021, has an outstanding principal balance as of the Cut-off Date of $58,500,000 and represents 3.9% of the Initial Pool Balance. The proceeds of the Memphis Industrial Portfolio Mortgage Loan were used to recapitalize the Memphis Industrial Portfolio Properties, pay closing costs, fund upfront reserves and return equity to the borrower sponsor. The Memphis Industrial Portfolio Mortgage Loan accrues interest at a fixed rate of 3.24000% per annum. |
The Memphis Industrial Portfolio Mortgage Loan has an initial term of 120 months and a remaining term of 120 months as of the Cut-off Date. The Memphis Industrial Portfolio Mortgage Loan requires interest only payments on each due date through the scheduled maturity date in December 2031. Voluntary prepayment of the Memphis Industrial Portfolio Mortgage Loan is prohibited prior to the due date in September 2031. Provided that no event of default under the Memphis Industrial Portfolio Mortgage Loan is continuing, the borrower has the option to defease the entire Memphis Industrial Portfolio Mortgage Loan in whole (but not in part) at any time after the second anniversary of the securitization closing date.
■ | The Mortgaged Properties. The Memphis Industrial Portfolio Properties consist of five industrial properties located in Memphis, Tennessee and one suburban office property located in Bellevue, Nebraska, totaling 2,265,636 SF of net rentable area in aggregate. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
46
LOAN #5: MEMPHIS INDUSTRIAL PORTFOLIO
Portfolio Summary | ||||||||||||
Property Name | City | State | Property | Property Sub-Type | Year Built | Year Renovated | SF(1) | Clear Height | Appraised Value | Occupancy(1) | % of Allocated Loan Amount | % of UW NOI(1) |
5000 East Raines Road | Memphis | TN | Industrial | Warehouse/Distribution | 1968 | 2000 | 1,128,164 | 18’ | $44,900,000 | 100.0% | 47.4% | 49.4% |
6125 Shelby Drive | Memphis | TN | Industrial | Warehouse/Distribution | 1981 | NAP | 466,465 | 23’ | 18,400,000 | 100.0% | 16.7 | 14.2 |
4219 Air Trans Road | Memphis | TN | Industrial | Warehouse/Distribution | 1977 | NAP | 312,000 | 22’ | 12,100,000 | 92.3% | 12.4 | 13.0 |
4502 Maass Road | Bellevue | NE | Office | Suburban | 2006 | NAP | 83,229 | NAP | 11,700,000 | 76.3% | 9.8 | 12.0 |
3615 Lamar Avenue | Memphis | TN | Industrial | Warehouse/Distribution | 1971 | NAP | 157,408 | 16’-32’ | 8,800,000 | 100.0% | 9.0 | 7.4 |
3638-3684 Contract Road | Memphis | TN | Industrial | Warehouse/Distribution | 1975 | NAP | 118,370 | 18’ | 4,800,000 | 100.0% | 4.7 | 4.0 |
Total / Wtd. Avg. | 2,265,636 | $100,700,000 | 98.1% | 100.0% | 100.0% |
(1) | Based on the underwritten rent rolls dated October 1, 2021, November 18, 2021 and December 6, 2021. |
The 5000 East Raines Road property (the “5000 East Raines Road Property”) is a 1,128,164 SF, one-story multi-tenant industrial building located in Memphis, Tennessee. The 5000 East Raines Road Property was originally built in 1968 and most recently renovated in 2000 and is situated on an approximately 62.54-acre site. As of October 1, 2021, the 5000 East Raines Road Property was 100.0% occupied.
The 6125 Shelby Drive property (the “6125 Shelby Drive Property”) is a 466,465 SF, one-story multi-tenant industrial building located in Memphis, Tennessee. The 6152 Shelby Drive Property was built in 1981 and is situated on an approximately 21.47-acre site. As of October 1, 2021, the 6125 Shelby Drive Property was 100.0% occupied.
The 4219 Air Trans Road property (the “4219 Air Trans Road Property”) is a 312,000 SF, one-story multi-tenant industrial building located in Memphis, Tennessee. The 4219 Air Trans Road Property was built in 1977 and is situated on an approximately 12.76-acre site. As of October 1, 2021, the 4219 Air Trans Road Property was 92.3% occupied.
The 3615 Lamar Avenue property (the “3615 Lamar Avenue Property”) is a 157,408 SF, one-story single-tenant industrial building located in Memphis, Tennessee. The 3615 Lamar Avenue Property was built in 1971 and is situated on an approximately 13.41-acre site. As of December 6, 2021, the 3615 Lamar Avenue Property was 100.0% occupied.
The 3638-3684 Contract Road property (the “3638-3684 Contract Road Property”) is a 118,370 SF, one-story multi-tenant industrial building located in Memphis, Tennessee. The 3638-3684 Contract Road Property was built in 1975 and is situated on an approximately 6.18-acre site. As of October 1, 2021, the 3638-3684 Contract Road Property was 100.0% occupied.
The 4502 Maass Road property (the “4502 Maass Road Property”) is an 83,229 SF, two-story multi-tenant office building located in Bellevue, Nebraska. The 4502 Maass Road Property was built in 2006 and is situated on an approximately 6.72-acre site. The largest tenant is Nebraska Defense Research Corporation, and its lease will commence in April 2022. As of November 18, 2021, the 4502 Maass Road Property was 76.3% occupied.
The largest tenant by underwritten base rent is Thyssenkrupp Supply Chain Services NA, Inc. (“Thyssenkrupp”) (725,345 SF; 32.0% of NRA; 30.3% of UW Base Rent). Thyssenkrupp occupies suites 4219 and 4219B at the 4219 Air Trans Road property and suites 110, 116, and 116Flex at the 5000 East Raines Road property. Thyssenkrupp is a subsidiary of Thyssenkrupp AG, an international group of companies comprised primarily of independent industrial and technology businesses. Thyssenkrupp is a provider of warehousing and distribution, asset-based transportation and quality services to the automotive, renewable energy and manufacturing industries. Thyssenkrupp is headquartered in Sterling Heights, Michigan and currently has over 3,000 employees spread across over 40 locations.
The second largest tenant by underwritten base rent is the Premier Packaging, Inc. (“Premier Packaging”) (346,147 SF; 15.3% of NRA; 15.1% of UW Base Rent). Premier Packaging occupies suites 105 and 110A at the 5000 East Raines Road property. Premier Packaging is a manufacturer and distributer of packaging supplies and materials for the E-Commerce, Medical, Manufacturing, Technology, and Food industries. Premier Packaging was founded in 1994 and currently has over 85 locations across the United States, Canada, and Mexico.
The third largest tenant by underwritten base rent is the Neovia Logistics Services, LLC (“Neovia”) (200,672 SF; 8.9% of NRA; 7.6% of UW Base Rent). Neovia occupies suites 114, 114BAL and 115 at the 5000 East Raines Road property. Neovia is a third-party logistics provider, operating in more than 100 facilities in over 20 countries. Neovia was founded in 1987 as Caterpillar Logistics Services to provide logistics support to Caterpillar International and its partner
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
47
LOAN #5: MEMPHIS INDUSTRIAL PORTFOLIO
companies in the construction, mining, automotive, energy and other industries. In 2012, Caterpillar Logistics Services became a standalone company under the Neovia name.
COVID-19 Update. As of November 6, 2021, the Memphis Industrial Portfolio Properties are open and operational. No tenants received rent abatements due to the COVID-19 pandemic. As of November 6, 2021, the Memphis Industrial Portfolio Mortgage Loan is not subject to any modifications or forbearance requests. The first payment date of the Memphis Industrial Portfolio Mortgage Loan is January 6, 2022.
The following table presents certain information relating to the major tenants at the Memphis Industrial Portfolio Properties:
Largest Tenants Based on Underwritten Base Rent(1)
Tenant Name | Credit Rating | Tenant | % of GLA | UW Base | % of Total Base Rent(3) | UW Base | Lease | Renewal / | ||||||||
Thyssenkrupp(4) | NR / NR / NR | 725,345 | 32.0% | $2,531,508 | 30.3% | $3.49 | Various(5) | Various(5) | ||||||||
Premier Packaging | NR / NR / NR | 346,147 | 15.3% | $1,263,437 | 15.1% | $3.65 | 1/31/2023 | None | ||||||||
Neovia (6) | NR / NR / NR | 200,672 | 8.9% | $632,117 | 7.6% | $3.15 | 5/31/2024 | None | ||||||||
Nebraska Defense Research Corporation(7) | NR / NR / NR | 21,373 | 0.9% | $523,638 | 6.3% | $24.50 | 3/31/2027 | 3, 2-year options | ||||||||
Supply Chain Solutions LLC | NR / NR / NR | 180,407 | 8.0% | $488,903 | 5.9% | $2.71 | 12/31/2023 | None | ||||||||
Hood Container Corporation | NR / NR / NR | 157,408 | 6.9% | $487,965 | 5.8% | $3.10 | 12/31/2031 | 2, 5-year options | ||||||||
Blues City Brewery(8) | NR / NR / NR | 96,000 | 4.2% | $432,000 | 5.2% | $4.50 | MTM | MTM | ||||||||
WAR Logistics, Inc. | NR / NR / NR | 142,165 | 6.3% | $404,520 | 4.8% | $2.85 | 6/30/2022 | 1, 1-year option | ||||||||
CNA Freight, LLC | NR / NR / NR | 143,893 | 6.4% | $341,026 | 4.1% | $2.37 | 1/31/2024 | 2, 3-year options | ||||||||
Department of Administrative Services(9) | AAA / Aaa / AA+ | 14,280 | 0.6% | $271,320 | 3.3% | $19.00 | 4/30/2038 | 2, 5-year options | ||||||||
Ten Largest Tenants | 2,027,690 | 89.5% | $7,376,434 | 88.4% | $3.64 | |||||||||||
Remaining Tenants | 194,250 | 8.6% | $970,766 | 11.6% | $5.00 | |||||||||||
Vacant Space | 43,696 | 1.9% | $0 | 0.0% | $0 | |||||||||||
Total / Wtd. Avg. All Owned Tenants | 2,265,636 | 100.0% | $8,347,200 | 100.0% | $3.76 |
(1) | Based on the underwritten rent rolls dated October 1, 2021, November 18, 2021 and December 6, 2021. |
(2) | In certain instances, ratings provided are those of the parent company or government, whether or not the parent company or government guarantees the lease. |
(3) | UW Base Rent, % of Total UW Base Rent and UW Base Rent $ per SF is inclusive of contractual rent steps through November 2022 totaling approximately $93,370. |
(4) | Thyssenkrupp may terminate its lease for 515,106 SF (504,106 SF expiring December 31, 2021 and 11,000 SF expiring July 31, 2023) at the 5000 East Raines Road Property at any time after March 1, 2022 upon 30 days written notice, its leases for 144,000 SF (96,000 SF and 48,000 SF, each expiring on November 30, 2022) at the 4219 Air Trans Road Property upon 90 days written notice. |
(5) | Thyssenkrupp occupies (i) 144,000 SF at the 4219 Air Trans Road Property with a lease expiration date of November 30, 2022, (ii) 570,345 SF at the 5000 East Raines Road Property with a lease expiration of December 31, 2021, and (iii) 11,000 SF at the 5000 East Raines Road Property with a lease expiration of July 31, 2023. Thyssenkrupp has one, one year renewal on its lease of 96,000 SF at the 4219 Air Trans Road Property. |
(6) | Neovia shall have a one time right to terminate its lease effective as of May 31, 2023 upon written notice no later than February 28, 2023. |
(7) | Nebraska Defense Research Corporation shall have the right to terminate its lease effective March 31, 2026 upon six months written notice and payment of a termination fee equal to the unamortized leasing commission paid and unamortized tenant improvement allowance calculated at a 5% interest factor. |
(8) | Blues City Brewery operates at the 4219 Air Trans Property on a month-to-month lease and may renew or terminate its lease upon 30 days written notice to the landlord. |
(9) | Department of Administrative Services and the respective lessor shall each have the right to terminate the lease at the upon 180 days written notice provided if the lessee exercises such right, the lessee shall pay an amount equal to the unamortized costs, fee and expenses for the tenant improvements completed. |
The following table presents certain information relating to the lease rollover schedule at the Memphis Industrial Portfolio Properties, 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(3) | % of Total UW | UW Base Rent | # of Expiring | |||||||
MTM / 2021 | 666,345 | 29.4% | 29.4% | $2,428,208 | 29.1% | $3.64 | 2 | |||||||
2022 | 315,733 | 13.9% | 43.3% | $1,018,379 | 12.2% | $3.23 | 4 | |||||||
2023 | 585,554 | 25.8% | 69.2% | $1,901,239 | 22.8% | $3.25 | 4 | |||||||
2024 | 449,890 | 19.9% | 89.0% | $1,514,642 | 18.1% | $3.37 | 5 | |||||||
2025 | 11,357 | 0.5% | 89.6% | $201,809 | 2.4% | $17.77 | 2 | |||||||
2026 | 0 | 0.0% | 89.6% | $0 | 0.0% | $0.00 | 0 | |||||||
2027 | 21,373 | 0.9% | 90.5% | $523,638 | 6.3% | $24.50 | 1 | |||||||
2028 | 0 | 0.0% | 90.5% | $0 | 0.0% | $0.00 | 0 | |||||||
2029 | 0 | 0.0% | 90.5% | $0 | 0.0% | $0.00 | 0 | |||||||
2030 | 0 | 0.0% | 90.5% | $0 | 0.0% | $0.00 | 0 | |||||||
2031 | 157,408 | 6.9% | 97.4% | $487,965 | 5.8% | $3.10 | 1 | |||||||
2032 & Thereafter | 14,280 | 0.6% | 98.1% | $271,320 | 3.3% | $19.00 | 1 | |||||||
Vacant | 43,696 | 1.9% | 100.0% | $0 | 0.0% | $0.00 | 0 | |||||||
Total / Wtd. Avg. | 2,265,636 | 100.0% | $8,347,200 | 100.0% | $3.76 | 20 |
(1) | Based on the underwritten rent rolls dated October 1, 2021, November 18, 2021 and December 6, 2021. |
(2) | Certain tenants may have termination or contraction options (which may become exercisable prior to the originally stated expiration date of the lease) that are not considered in the above Lease Expiration Schedule. |
(3) | UW Base Rent, % of Total UW Base Rent and UW Base Rent $ per SF is inclusive of contractual rent steps through November 2022 totaling approximately $93,370. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #5: MEMPHIS INDUSTRIAL PORTFOLIO
The following table presents certain information relating to historical leasing at the Memphis Industrial Portfolio Properties:
Historical Leased %(1)
As of Various |
98.1% |
(1) | Based on the underwritten rent rolls dated October 1, 2021, November 18, 2021 and December 6, 2021. |
■ | 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 Memphis Industrial Portfolio Properties: |
Cash Flow Analysis(1)
2019 | 2020 | TTM 8/30/2021 | Underwritten(2) | Underwritten PSF | ||||||
Base Rent | $5,620,714 | $6,162,793 | $7,060,013 | $8,253,829 | $3.64 | |||||
Contractual Rent Steps(3) | 0 | 0 | 0 | 93,370 | 0.04 | |||||
Potential Income from Vacant Space | 0 | 0 | 0 | 556,704 | 0.25 | |||||
Total Reimbursement Revenue | 673,132 | 824,971 | 868,833 | 951,801 | 0.42 | |||||
Vacancy & Credit Loss | 0 | 0 | 0 | (556,704) | (0.25) | |||||
Effective Gross Income | $6,293,845 | $6,987,764 | $7,928,846 | $9,299,001 | $4.10 | |||||
Real Estate Taxes | 814,798 | 831,898 | 831,898 | 1,150,830 | $0.51 | |||||
Insurance | 93,228 | 97,097 | 107,788 | 121,484 | 0.05 | |||||
Management Fees(4) | 188,815 | 209,633 | 237,865 | 278,970 | 0.12 | |||||
Total Other Expenses(5) | 874,967 | 1,043,856 | 1,076,370 | 1,131,407 | 0.50 | |||||
Total Operating Expenses | $1,971,808 | $2,182,485 | $2,253,922 | $2,682,691 | $1.18 | |||||
Net Operating Income | $4,322,038 | $4,805,280 | $5,674,924 | $6,616,310 | $2.92 | |||||
Replacement Reserves | 0 | 0 | 0 | 511,949 | 0.23 | |||||
TI/LC | 0 | 0 | 0 | 311,996 | 0.14 | |||||
Net Cash Flow | $4,322,038 | $4,805,280 | $5,674,924 | $5,792,365 | $2.56 | |||||
Occupancy | NAP | NAP | 98.1%(2) | 94.4%(6) | ||||||
NOI Debt Yield | 7.4% | 8.2% | 9.7% | 11.3% | ||||||
NCF DSCR | 2.25x | 2.50x | 2.95x | 3.01x |
(1) | Certain items such as 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) | Based on the underwritten rent rolls dated October 1, 2021, November 18, 2021 and December 6, 2021. |
(3) | Contractual Rent Steps include rent escalations of approximately $93,370 through November 2022. |
(4) | All five industrial properties included within the Memphis Industrial Portfolio Properties are self-managed by the borrower sponsor. The 4502 Maass Road Property is managed by CBRE Inc., which receives a flat rate monthly management fee of $941.38 subject to 3.0% annual increases. However, in the event that the occupancy of the building changes, the parties agree to modify the flat rate using 1.5% of the gross monthly collections and income from the premises, with rental concessions treated as income. The modified flat rate will then be subject to further 3.0% annual increases. The appraiser`s management fee is slightly below 3.0% due to concluding a 2.0% management fee at the 3615 Lamar Avenue Property. The management fee is underwritten to 3.0%. |
(5) | Total Other Expenses include repairs and maintenance, utilities and general and administrative expenses. |
(6) | Underwritten Occupancy is based on the economic occupancy. |
■ | Appraisal. According to the appraisal, the Memphis Industrial Portfolio Properties have an aggregate “as-is” appraised value of $100,700,000 as of October 18, 2021 and October 19, 2021. In addition, the appraiser concluded that the Memphis Industrial Portfolio Properties had an aggregate hypothetical “as dark” value of $79,100,000 as of October 18, 2021 and October 19, 2021. |
■ | Environmental Matters. As of the Phase I environmental reports dated October 27, 2021, there was no evidence of any recognized environmental conditions at the Memphis Industrial Portfolio Properties. |
■ | Market Overview and Competition. The Memphis Industrial Portfolio Properties are located in Tennessee (96.3% of NRA, 84.5% of UW Base Rent) and Nebraska (3.7% of NRA, 15.5% of UW Base Rent). According to the appraisal dated November 4, 2021, as of the trailing four quarters ended third quarter of 2021, the Memphis market reported total inventory of approximately 288.7 million SF of industrial space with a market vacancy of 5.1% and an average asking rent of $3.54 PSF on a triple-net lease basis. The Memphis market also reported total completions within the same period of approximately 11.3 million SF and a net absorption of approximately 14.0 million SF. The Memphis International Airport, one of the busiest cargo airports in the world due to its proximity to the FedEx global headquarters, has an approximately $20 billion annual economic impact and is the largest economic driver in the state. The Memphis market also has an extensive rail network, served by multiple Class I railroads, and offers access to Interstate-55 and Interstate-40, as well |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #5: MEMPHIS INDUSTRIAL PORTFOLIO
as the fifth-largest inland port in the United States, the Port of Memphis. The wholesale trade, transportation and utilities industry is one of the largest employment sectors in the Memphis market. The industry is more concentrated in Memphis than in many other major metropolitan United States and accounts for over 25% of the local employment. |
According to the appraisal dated November 4, 2021, as of the trailing four quarters ended third quarter of 2021, the Southeast submarket within the Memphis market reported total inventory of approximately 102.4 million SF of industrial space with a market vacancy of 5.0% and an average asking rent of $3.56 PSF on a triple net lease basis. The Southeast submarket also reported total completions within the same period of approximately 1.4 million SF and a net absorption of approximately 5.1 million SF. Approximately half of the Southeast submarket’s development pipeline is tied to an approximately 1.0 million SF project in the Memphis Airport Logistics Center, which is the largest speculative addition in the Southeast submarket in over ten years.
As of the trailing four quarters ended third quarter of 2021, the Omaha / Council Bluffs office market reported total inventory of approximately 47.2 million SF with a market vacancy of 9.2% and an average asking rent of $22.55 PSF. The Omaha / Council Bluffs market also reported total completions within the same period of 965,125 SF and a net absorption of 229,889 SF. Major employers include Nebraska Medical Center, Offutt Air Force Base and CHI Health. Nebraska Medical Center is a private not-for-profit healthcare company that has two hospitals, 39 specialty clinics in and around Omaha, and operates as an independent clinical partner of the University of Nebraska Medical Center.
According to the appraisal dated November 4, 2021, as of the trailing four quarters ended third quarter of 2021, the Southeast Omaha submarket within the Omaha / Council Bluffs office market reported total inventory of approximately 2.6 million SF with a market vacancy of 13.9% and an average asking rent of $17.88 PSF. The Southeast Omaha submarket also reported total completions within the same period of 9,296 SF and a net absorption of 1,398 SF. The Southeast Omaha submarket is located approximately 20 and 25 minutes via car to the central business district of downtown Omaha and the Omaha Airport, respectively.
Memphis Industrial Portfolio Market Summary(1) | ||||
Property Name | Market | Submarket | Submarket Rent Per SF | Submarket Vacancy |
5000 East Raines Road | Memphis | Southeast | $3.56 | 5.0% |
6125 Shelby Drive | Memphis | Southeast | $3.56 | 5.0% |
4219 Air Trans Road | Memphis | Southeast | $3.56 | 5.0% |
4502 Maass Road | Omaha/Council Bluffs | Southeast Omaha | $12.43 | 13.9% |
3615 Lamar Avenue | Memphis | Southeast | $3.56 | 5.0% |
3638-3684 Contract Road | Memphis | Southeast | $3.56 | 5.0% |
(1) | Source: Appraisal. |
■ | The Borrower. The borrower is Olymbec Swoosh LLC, a single purpose Delaware limited liability company. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Memphis Industrial Portfolio Mortgage Loan. |
The borrower sponsor and nonrecourse carve-out guarantor is Olymbec USA LLC (“Olymbec”), a Delaware limited liability company. Olymbec is a full-service, vertically integrated real estate investment firm with its United States headquarters located in Memphis, Tennessee. Olymbec is one of the largest private industrial real estate holders in eastern Canada with branch offices located in key markets across Québec and the United States.
■ | Escrows. At origination of the Memphis Industrial Portfolio Mortgage Loan, the borrower deposited (i) approximately $524,435 into a tax reserve account, (ii) $2,000,000 into a TI/LC reserve account, (iii) approximately $153,368 into an immediate repairs reserve account, and (iv) into a near term rollover reserve ($2,034,708), unfunded obligations reserve ($1,104,585), gap rent reserve ($288,6121.60), and roof work reserve ($222,600). |
Tax Reserve. On a monthly basis, the borrower is required to deposit 1/12 of an amount which would be sufficient to pay taxes for the next ensuing 12 months (currently estimated to be approximately $58,271).
Insurance Reserve. On a monthly basis, the borrower is required to deposit 1/12 of the amount which would be sufficient to pay the insurance premiums due for the renewal of coverage afforded by such policies, unless an acceptable blanket insurance policy is in place. An acceptable blanket policy is currently in place and no monthly insurance reserve deposits are required.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #5: MEMPHIS INDUSTRIAL PORTFOLIO
Replacement Reserve. On a monthly basis, the borrower is required to fund a replacement reserve of approximately $42,662; provided, however, monthly deposits into the replacement reserve account are not required to the extent the balance in the replacement reserve account is more than approximately $1,535,847.
TI/LC Reserve. On each due date at any time the balance then on deposit is less than $500,000 and continuing until such time as the balance on deposit is equal to $500,000, the borrower is required to deposit approximately $18,880 into the tenant improvement and leasing commissions reserve account.
■ | Lockbox and Cash Management. The Memphis Industrial Portfolio Mortgage Loan is structured with a hard lockbox and springing cash management. At origination of the Memphis Industrial Portfolio Mortgage Loan, the borrower was required to deliver a notice to the tenant directing the tenant to remit all payments under its lease directly to the lockbox account. The borrower is required to cause revenue received by the borrower or the property manager (if any) to be deposited into such lockbox immediately upon receipt. All funds deposited into the lockbox are required to be transferred on each business day to or at the direction of the borrower unless a Trigger Period exists. Upon the occurrence and during the continuance of a Trigger Period, all funds in the lockbox account are required to be swept on each business day to a cash management account under the control of the lender to be applied and disbursed in accordance with the Memphis Industrial Portfolio Mortgage Loan documents, and all excess cash flow funds remaining in the cash management account after the application of such funds in accordance with the Memphis Industrial Portfolio Mortgage Loan documents are required to be held by the lender in an excess cash flow reserve account as additional collateral for the Memphis Industrial Portfolio Mortgage Loan. Upon the cure of the applicable Trigger Period, so long as no other Trigger Period exists, the lender is required to return any amounts remaining on deposit in the excess cash flow reserve account to the borrower. Upon an event of default under the Memphis Industrial Portfolio Mortgage Loan documents, the lender may apply funds to the debt in such priority as it may determine. |
A “Trigger Period” means a period commencing upon the occurrence of: (i) an event of default under the Memphis Industrial Portfolio Mortgage Loan documents, (ii) the debt yield falling below 7.50% or (iii) the occurrence of a Specified Tenant Trigger Period (as defined below), and expiring upon (a) with respect to clause (i) above, the cure (if applicable) of such event of default, (b) with respect to clause (ii) above, (x) the date that the debt yield is equal to or greater than 7.75% for two consecutive calendar quarters or (y) the borrower has deposited with lender, and thereafter maintains, an amount, in the form of cash or a letter of credit, equal to the amount by which the outstanding principal balance of the Memphis Industrial Portfolio Mortgage Loan would need to be reduces to result in the debt yield equaling 7.75% (“DY Trigger Cure Condition”; provided, however, any amounts deposited into the excess cash flow account to satisfy the Specified Tenant Trigger Event Cure Condition will count towards satisfaction of the foregoing) and (c) with respect to clause (iii) above, (x) a Specified Tenant Trigger Period ceasing to exist or (y) the satisfaction of the Specified Tenant Trigger Event Cure Condition.
A “Specified Tenant Trigger Period” will commence upon the first to occur of (i) Specified Tenant being in default under the applicable Specified Tenant Lease beyond any applicable notice and cure periods, (ii) during the eighteen (18) months prior to the expiration of the then applicable term of the applicable Specified Tenant Lease, Specified Tenant failing to be in actual, physical possession of the Specified Tenant Space (or applicable portion thereof), failing to be open to the public for business during customary hours and/or “going dark” in the Specified Tenant Space (or applicable portion thereof), except to the extent any of the foregoing is due to a force majeure event, (iii) Specified Tenant giving notice that it is terminating its Lease for all or any portion of the Specified Tenant Space (or applicable portion thereof), (iv) any termination or cancellation of any Specified Tenant Lease (including, without limitation, rejection in any bankruptcy or similar insolvency proceeding) and/or any Specified Tenant Lease failing to otherwise be in full force and effect, (v) any bankruptcy or similar insolvency of Specified Tenant, and (vi) Specified Tenant failing to extend or renew the applicable Specified Tenant Lease on or prior to the applicable specified tenant extension deadline in accordance with the applicable terms and conditions of the Specified Tenant Lease and the Memphis Industrial Portfolio Mortgage Loan documents for the applicable specified tenant renewal[delete period] term; and (B) expiring upon the first to occur of Lender’s receipt of evidence reasonably acceptable to Lender (which such evidence shall include, without limitation, a duly executed estoppel certificate from the applicable Specified Tenant in form and substance acceptable to Lender) of (1) the satisfaction of the applicable Specified Tenant Cure Conditions or (2) Borrower leasing the entire Specified Tenant Space (or applicable portion thereof) for a minimum term of three (3) years, the applicable Tenant under such lease being in actual, physical occupancy of, and open to the public for business in, the space demised under its lease or reasonably expected to be open for business within the following three (3) months, and paying the full amount of the rent due under its lease.
“Specified Tenant Cure Conditions” means each of the following, as applicable (i) the applicable Specified Tenant has cured all defaults under the applicable Specified Tenant Lease, (ii) the applicable Specified Tenant is in actual,
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #5: MEMPHIS INDUSTRIAL PORTFOLIO
physical possession of the Specified Tenant Space (or applicable portion thereof), open to the public for business during customary hours and not “dark” in the Specified Tenant Space (or applicable portion thereof), (iii) the applicable Specified Tenant has revoked or rescinded all termination or cancellation notices with respect to the applicable Specified Tenant Lease and has re-affirmed the applicable Specified Tenant Lease as being in full force and effect, (iv) in the event the Specified Tenant Trigger Period is due to the applicable Specified Tenant’s failure to extend or renew the applicable Specified Tenant Lease in accordance with clause (vi) of the “Specified Tenant Trigger Period”, the applicable Specified Tenant has renewed or extended the applicable Specified Tenant Lease in accordance with the Memphis Industrial Portfolio Mortgage Loan documents, (v) with respect to any applicable bankruptcy or insolvency proceedings involving the applicable Specified Tenant and/or the applicable Specified Tenant Lease, the applicable Specified Tenant is no longer insolvent or subject to any bankruptcy or insolvency proceedings and has affirmed the applicable Specified Tenant Lease pursuant to final, non-appealable order of a court of competent jurisdiction, and (vi) the applicable Specified Tenant is paying full, unabated rent under the applicable Specified Tenant Lease.
A “Specified Tenant Trigger Event Cure Condition” means mean a condition that shall be deemed satisfied when borrower has deposited with lender, and for so long as borrower thereafter maintains, in the excess cash flow account, an amount of funds (in the form of cash or a letter of credit) at all times equal to an amount attributable to one year of such Specified Tenant’s then-current annual gross rent. Any amounts deposited into the excess cash flow account to satisfy the DY Trigger Cure Condition will count towards satisfaction of the foregoing. In addition,
A “Specified Tenant” shall mean, as applicable, (i) any tenant which either (A) accounts for twenty-five percent (25%) or more of the total rental income for the applicable individual Memphis Industrial Portfolio Property, or (B) demises twenty-five percent (25%) or more of the applicable individual Memphis Industrial Portfolio Property’s gross leasable area, (ii) any other lessee(s) of the Specified Tenant Space (or any portion thereof) and (iii) any parent company of any such Specified Tenant, and any affiliate providing credit support for, or guarantor of, any such Specified Tenant Lease(s).
A “Specified Tenant Lease” means, collectively and/or individually (as the context requires), each lease at the Memphis Industrial Portfolio Properties with Specified Tenant (including, without limitation, any guaranty or similar instrument furnished thereunder), as the same may have been or may hereafter be amended, restated, extended, renewed, replaced and/or otherwise modified.
A “Specified Tenant Space” means that a portion of the Memphis Industrial Portfolio Properties demised as of the date hereof to the initial Specified Tenant pursuant to the initial Specified Tenant Lease.
■ | Property Management. The five industrial properties included within the Memphis Industrial Portfolio Properties are self-managed. The 4502 Maass Road Property is managed by CBRE Inc. |
■ | Current Mezzanine or Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
■ | Release of Collateral. Not permitted. |
■ | Terrorism Insurance. The borrower is required to maintain or cause to be maintained an “all-risk” insurance policy that provides coverage for terrorism in an amount equal to the full replacement cost of the Memphis Industrial Portfolio Properties, plus business interruption coverage in an amount equal to 100% of the projected gross income for the applicable Memphis Industrial Portfolio property for 18 months with a 90-day period of extended indemnity. The “all-risk” policy containing terrorism insurance is required to contain a deductible no greater than $25,000. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #6: HALL OFFICE 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #6: HALL OFFICE 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #6: HALL OFFICE PORTFOLIO
Mortgaged Property Information | Mortgage Loan Information | ||||
Number of Mortgaged Properties | 2 | Loan Seller | CREFI | ||
Location (City/State)(1) | Various / Texas | Cut-off Date Balance | $58,000,000 | ||
Property Type(1) | Office | Cut-off Date Balance per SF | $194.49 | ||
Size (SF) | 298,212 | Percentage of Initial Pool Balance | 3.9% | ||
Total Occupancy(2) | 94.9% | Number of Related Mortgage Loans | None | ||
Owned Occupancy(2) | 94.9% | Type of Security | Fee | ||
Year Built / Latest Renovation(1) | Various / NAP | Mortgage Rate | 3.80000% | ||
Appraised Value(1) | $85,670,000 | Original Term to Maturity (Months) | 120 | ||
Appraisal Date | Various | Original Amortization Term (Months) | 360 | ||
Borrower Sponsor | Hall RE Holdco II, LLC | Original Interest Only Period (Months) | 0 | ||
Property Management | Hall Financial Group, Ltd. | First Payment Date | 1/6/2022 | ||
Maturity Date | 12/6/2031 | ||||
Underwritten Revenues | $8,190,936 | ||||
Underwritten Expenses | $2,865,252 | Escrows(3) | |||
Underwritten Net Operating Income (NOI) | $5,325,684 | Upfront | Monthly | ||
Underwritten Net Cash Flow (NCF) | $4,967,852 | Taxes | $101,645 | $101,645 | |
Cut-off Date LTV Ratio | 67.7% | Insurance | $0 | Springing | |
Maturity Date LTV Ratio | 53.4% | Replacement Reserve(4) | $112,000 | $4,970 | |
DSCR Based on Underwritten NOI / NCF | 1.64x / 1.53x | TI/LC(5) | $0 | $24,848 | |
Debt Yield Based on Underwritten NOI / NCF | 9.2% / 8.6% | Other(6) | $278,162 | $0 | |
Sources and Uses | |||||
Sources | $ | % | Uses | $ | % |
Loan Amount | $58,000,000 | 100.0% | Loan Payoff | $53,395,128 | 92.1% |
Return of Equity | 2,537,732 | 4.4 | |||
Closing Costs | 1,575,333 | 2.7 | |||
Upfront Reserves | 491,807 | 0.8 | |||
Total Sources | $58,000,000 | 100.0% | Total Uses | $58,000,000 | 100.0% |
(1) | See the “Portfolio Summary” chart below for the Location, Property Type, Year Built / Latest Renovation and Appraised Values of the individual Hall Office Portfolio Properties (as defined below). |
(2) | Based on the underwritten rent rolls dated September 28, 2021 and December 6, 2021. |
(3) | See “—Escrows” below. |
(4) | Replacement Reserve is subject to a cap equal to approximately $178,926. |
(5) | TI/LC is subject to a cap equal to approximately $1,490,885. |
(6) | Upfront other reserve consists of a free rent reserve of $278,162. |
■ | The Mortgage Loan. The Hall Office Portfolio mortgage loan (the “Hall Office Portfolio Mortgage Loan”) is secured by a first mortgage encumbering the borrowers’ fee interests in two office properties totaling 298,212 SF located in Texas (the “Hall Office Portfolio Properties”). The Hall Office Portfolio Mortgage Loan has an original principal balance and an outstanding principal balance as of the Cut-off Date of $58,000,000 and represents approximately 3.9% of the Initial Pool Balance. The Hall Office Portfolio Mortgage Loan was originated by Citi Real Estate Funding Inc. on November 17, 2021. The proceeds of the Hall Office Portfolio Mortgage Loan were used to refinance the Hall Office Portfolio Properties, pay closing costs, fund upfront reserves and return equity to the borrower sponsor. The Hall Office Portfolio Mortgage Loan accrues interest at a fixed rate of 3.80000% per annum. |
The Hall Office Portfolio Mortgage Loan had an initial term of 120 months and has a remaining term of 120 months as of the Cut-off Date. The Hall Office Portfolio Mortgage Loan requires monthly payments of interest and principal sufficient to amortize the loan over a 30-year amortization schedule. The scheduled maturity date of the Hall Office Portfolio Mortgage Loan is the due date in December 2031. Voluntary prepayment of the Hall Office Portfolio Mortgage Loan is prohibited prior to the due date in September 2031. Provided that no event of default under the Hall Office Portfolio Mortgage Loan is continuing, the borrower has the option to defease the entire Hall Office Portfolio Mortgage Loan in whole (but not in part) at any time after the second anniversary of the securitization closing date.
■ | The Mortgaged Properties. The Hall Office Portfolio Properties consist of one three-story single-tenant office building located in Irving, Texas (the “Freeport 9 Property”) and one three-story multi-tenant office building located in Frisco, Texas (the “Building E1 Property”), totaling 298,212 SF in aggregate. As of December 6, 2021, the Freeport 9 Property was 100.0% occupied by WageWorks, Inc. As of September 28, 2021, the Building E1 Property was 89.4% occupied. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #6: HALL OFFICE PORTFOLIO
The following table presents certain information relating to the individual Hall Office Portfolio Properties:
Portfolio Summary | ||||||||||||||||||||
Property Name | City | State | Property Type | Year Built/ | Net | Occupancy(1) | Allocated Cut-off Date | % of Portfolio Cut-off Date Balance | Appraised | UW NOI | ||||||||||
Building E1 | Frisco | Texas | Office | 2007/NAP | 144,582 | 89.4% | $30,540,212 | 52.7% | $45,110,000 | $2,818,364 | ||||||||||
Freeport 9 | Irving | Texas | Office | 2014/NAP | 153,630 | 100.0% | 27,459,788 | 47.3 | 40,560,000 | 2,507,320 | ||||||||||
Total / Wtd. Avg. | 298,212 | 94.9% | $58,000,000 | 100.0% | $85,670,000 | $5,325,684 |
(1) | Based on the underwritten rent rolls dated September 28, 2021 and December 6, 2021. |
Built in 2007, the Building E1 Property is a 144,582 SF, Class A-B three-story office mid-rise property located on an approximately 5.34-acre site in Frisco, Texas. The Building E1 Property is located in the southern area of the City of Frisco. Warren Parkway, Dallas North Tollway, Gaylord Parkway and Interstate 35E Express provide access to the Building E1 Property. The Building E1 Property includes 580 surface parking spaces, resulting in a parking ratio of approximately 4.0 spaces per 1,000 SF.
Built in 2014, the Freeport 9 Property is a 153,630 SF, Class A three-story office property located on an approximately 12.28-acre site in Irving, Texas. Regent Boulevard, Freeport Parkway, Lyndon B Johnson Freeway and John W. Carpenter Freeway provide access to the Freeport 9 Property, which also provides access to the Dallas metro area. The Freeport 9 Property includes 1,029 parking spaces, resulting in a parking ratio of approximately 6.7 spaces per 1,000 SF.
The largest tenant based on underwritten base rent, WageWorks, Inc. (“WageWorks”) a subsidiary of Health Equity, Inc. (“HealthEquity”) (Fitch: NR | Moody’s: B1 | S&P: BB-) occupies 153,630 SF (51.5% of the portfolio NRA) and accounts for 43.7% of the Hall Office Portfolio’s underwritten base rent as the sole tenant at the Freeport 9 Property. WageWorks is an on-demand provider of tax-advantaged programs for consumer-directed health, commuter and other employee spending account benefits, or CDBs, in the United States. The company administers and operates a broad array of CDBs, including spending account management programs such as health and dependent care flexible spending accounts, health savings accounts, health reimbursement arrangements, and commuter benefits, such as transit and parking programs. Headquartered in San Mateo, California, WageWorks was acquired by HealthEquity in August 2019.
The second largest tenant based on underwritten base rent, Transplace Texas,(“Transplace”) occupies 39,151 SF (13.1 % of the portfolio NRA) of the Building E1 Property and comprises 19.3% of the portfolio’s underwritten base rent. Transplace, an Uber Freight Company, is a logistics technology and solutions company with around $15 billion of freight under management and 62,000 unique users on its platform. Transplace was acquired from TPG Capital by Uber Freight, a subsidiary of Uber Technologies, Inc. in November 2021. Transplace is headquartered in Frisco, Texas.
The third largest tenant based on underwritten base rent, Garver LLC (“Garver”), occupies 19,625 SF (6.6% of portfolio NRA) of the Building E1 Property and comprises 10.0% of the portfolio’s underwritten base rent. Founded 1919, Garver is an employee-owned multi-disciplinary engineering, planning, architectural, and environmental services firm with nearly 900 employees across the United States. Garver offers a wide range of services focused on aviation, construction, facilities design, federal, survey, transportation, water, and wastewater.
■ | COVID-19 Update. As of November 6, 2021, the Hall Office Portfolio Properties are open and operational. No tenants received rent deferrals or abatements due to the COVID-19 pandemic. As of November 6, 2021, the Hall Office Portfolio Mortgage Loan is not subject to any modifications or forbearance requests. The first payment date of the Hall Office Portfolio Mortgage Loan is January 6, 2022. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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The following table presents certain information relating to the tenants at the Hall Office Portfolio Properties:
Largest Tenants Based on Underwritten Base Rent(1)
Tenant Name | Property Name | Credit Rating (Fitch / MIS / S&P)(2) | Tenant | % of GLA | UW Base | % of Total | UW Base Rent | Lease | Renewal / |
WageWorks | Freeport 9 | NR/B1/BB- | 153,630 | 51.5% | $2,668,367 | 43.7% | $17.37 | 4/30/2030 | 2, 5-year options |
Transplace | Building E1 | NR/B2/B | 39,151 | 13.1% | 1,176,249 | 19.3% | $30.04 | 11/30/2028 | 2, 5-year options |
Garver | Building E1 | NR/NR/NR | 19,625 | 6.6% | 613,208 | 10.0% | $31.25 | 11/30/2023 | 1, 5-year option |
Corepoint Health, LLC | Building E1 | NR/NR/NR | 23,209 | 7.8% | 557,016 | 9.1% | $24.00 | 1/31/2027 | 2, 5-year options |
Haskell | Building E1 | NR/NR/NR | 14,237 | 4.8% | 338,129 | 5.5% | $23.75 | 12/31/2023 | NAP |
Reliance Jio Infocomm USA | Building E1 | BBB/Baa2/NR | 13,258 | 4.4% | 291,676 | 4.8% | $22.00 | 11/30/2027 | 1, 5-year option |
Rockfish | Building E1 | NR/Baa2/NR | 9,711 | 3.3% | 230,636 | 3.8% | $23.75 | 6/30/2024 | NAP |
B1 Bank | Building E1 | NR/NR/NR | 6,609 | 2.2% | 155,312 | 2.5% | $23.50 | 7/31/2027 | 1, 5-year option |
Logistx Capital | Building E1 | NR/NR/NR | 3,478 | 1.2% | 75,647 | 1.2% | $21.75 | 12/31/2026 | NAP |
Largest Tenants | 282,908 | 94.9% | $6,106,239 | 100.0% | $21.58 | ||||
Remaining Tenants | 0 | 0.0 | 0 | 0.0 | 0.00 | ||||
Total Occupied | 282,908 | 94.9% | $6,106,239 | 100.0% | $21.58 | ||||
Vacant Space | 15,304 | 5.1% | NAP | NAP | NAP | ||||
Total / Wtd. Avg. All Owned Tenants | 298,212 | 100.0% | $6,106,239 | 100.0% | $21.58 |
(1) | Based on the underwritten rent rolls dated September 28, 2021 and December 6, 2021. |
(2) | Credit Ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | UW Base Rent, % of Total UW Base Rent, and UW Base Rent $ per SF are inclusive of rent steps. |
The following table presents certain information relating to the lease rollover schedule at the Hall Office Portfolio Properties, based on the initial lease expiration date:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | Expiring Owned GLA | % of Owned GLA | Cumulative % of | UW Base Rent(3) | % of Total UW Base | UW Base Rent $ per | # of Expiring | |||||||
MTM | 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 | 33,862 | 11.4 | 11.4% | 951,337 | 15.6 | 28.09 | 2 | |||||||
2024 | 9,711 | 3.3 | 14.6% | 230,636 | 3.8 | 23.75 | 1 | |||||||
2025 | 0 | 0.0 | 14.6% | 0 | 0.0 | 0.00 | 0 | |||||||
2026 | 3,478 | 1.2 | 15.8% | 75,647 | 1.2 | 21.75 | 1 | |||||||
2027 | 43,076 | 14.4 | 30.2% | 1,004,004 | 16.4 | 23.31 | 3 | |||||||
2028 | 39,151 | 13.1 | 43.4% | 1,176,249 | 19.3 | 30.04 | 1 | |||||||
2029 | 0 | 0.0 | 43.4% | 0 | 0.0 | 0.00 | 0 | |||||||
2030 | 153,630 | 51.5 | 94.9% | 2,668,367 | 43.7 | 17.37 | 1 | |||||||
2031 | 0 | 0.0 | 94.9% | 0 | 0.0 | 0.00 | 0 | |||||||
2032 & Thereafter | 0 | 0.0 | 94.9% | 0 | 0.0 | 0.00 | 0 | |||||||
Vacant | 15,304 | 5.1 | 100.0% | NAP | NAP | NAP | NAP | |||||||
Total / Wtd. Avg. | 298,212 | 100.0% | $6,106,239 | 100.0% | $21.58 | 9 |
(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 the above Lease Expiration Schedule. |
(2) | Based on the underwritten rent rolls dated September 28, 2021 and December 6, 2021. |
(3) | UW Base Rent, % of Total UW Base Rent, and UW Base Rent $ per SF are inclusive of rent steps. |
The following table presents certain information relating to historical leasing at the Hall Office Portfolio Properties:
Historical Leased %(1)
2018 | 2019 | 2020 | Various(2) |
98.5% | 98.5% | 90.8% | 94.9% |
(1) | As of December 31 unless specified otherwise. |
(2) | Based on the underwritten rent rolls dated September 28, 2021 and December 6, 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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■ | Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the Hall Office Portfolio Properties: |
Cash Flow Analysis(1)
2018 | 2019 | 2020 | TTM 6/30/2021 | Underwritten(2) | Underwritten $ per SF | ||||||
Base Rent | $6,189,803 | $6,070,063 | $6,446,133 | $6,258,718 | $5,994,728 | $20.10 | |||||
Contractual Rent Steps(3) | 0 | 0 | 0 | 0 | 111,511 | 0.37 | |||||
Potential Income from Vacant Space | 0 | 0 | 0 | 0 | 502,880 | 1.69 | |||||
Total Reimbursements | 1,836,506 | 1,252,498 | 1,659,281 | 1,555,796 | 2,073,305 | 6.95 | |||||
Other Income | 181,275 | 191,095 | 162,147 | 151,309 | 172,258 | 0.58 | |||||
Gross Potential Rent | $8,207,584 | $7,513,656 | $8,267,562 | $7,965,824 | $8,854,682 | $29.69 | |||||
Vacancy & Credit Loss | (363,040) | (68,682) | (882,579) | (1,144,719) | (663,746) | (2.23) | |||||
Effective Gross Income | $7,844,544 | $7,444,974 | $7,384,983 | $6,821,105 | $8,190,936 | $27.47 | |||||
Real Estate Taxes | 1,262,860 | 1,212,342 | 1,260,822 | 1,292,449 | 1,161,659 | 3.90 | |||||
Insurance | 58,135 | 70,689 | 91,298 | 114,664 | 120,762 | 0.40 | |||||
Management Fee | 235,336 | 223,349 | 221,549 | 204,633 | 245,728 | 0.82 | |||||
Other Operating Expenses | 1,425,208 | 1,418,243 | 1,311,605 | 1,293,647 | 1,337,103 | 4.48 | |||||
Total Expenses | $2,981,540 | $2,924,623 | $2,885,275 | $2,905,393 | $2,865,252 | $9.61 | |||||
Net Operating Income | $4,863,004 | $4,520,351 | $4,499,708 | $3,915,712 | $5,325,684 | $17.86 | |||||
Replacement Reserves | 0 | 0 | 0 | 0 | 59,642 | 0.20 | |||||
TI/LC | 0 | 0 | 0 | 0 | 298,190 | 1.00 | |||||
Net Cash Flow | $4,863,004 | $4,520,351 | $4,499,708 | $3,915,712 | $4,967,852 | $16.66 | |||||
Occupancy | 98.5% | 98.5% | 90.8% | 94.9%(2) | 92.5%(4) | ||||||
NOI Debt Yield | 8.4% | 7.8% | 7.8% | 6.8% | 9.2% | ||||||
NCF DSCR | 1.50x | 1.39x | 1.39x | 1.21x | 1.53x |
(1) | Certain items such as 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) | Based on the underwritten rent rolls dated September 28, 2021 and December 6, 2021. |
(3) | Underwritten Contractual Rent Steps are underwritten out 12-months per the tenant’s leases through November 1, 2022. |
(4) | Underwritten Occupancy is based on the economic occupancy. |
■ | Appraisal. According to the appraisals, the Hall Office Portfolio Properties have an aggregate “as-is” appraised value of $85,670,000 as of September 15, 2021 and October 22, 2021. |
■ | Environmental Matters. According to the Phase I environmental reports dated as of September 21, 2021, there are no recognized environmental conditions or recommendations for further action at the Hall Office Portfolio Properties. |
■ | Market Overview and Competition. The Hall Office Portfolio Properties are located in Frisco, Texas and Irving, Texas, within the Dallas-Fort Worth-Arlington, Texas Metropolitan Statistical Area (“Dallas-Fort Worth-Arlington, TX MSA”). The Dallas-Fort Worth-Arlington, TX MSA has some of the nation’s highest employment growth figures over the last several years and is also one of the fastest growing metro populations in the country. Corporate relocations and expansions continue to drive office demand in the Dallas-Fort Worth-Arlington, TX MSA. A highly-skilled labor force, low business costs relative to coastal markets, and a central location within the United States make the Dallas-Fort Worth Arlington, TX MSA attractive. |
The Building E1 Property is located in Frisco, Texas and is part of the greater Dallas-Fort Worth-Arlington, TX MSA. Major thoroughfares in the area include Warren Parkway, Dallas North Tollway, Gaylord Parkway and Interstate 35E Express. The Dallas-Fort Worth-Arlington, TX MSA is served by Dallas Fort Worth International Airport, located approximately 20.1 miles southwest of the Building E1 Property. According to the appraisal, the Building E1 Property is located in the Frisco/The Colony submarket. As of the second quarter of 2021, the submarket had an inventory of 13,358,026 SF, a vacancy rate of 10.3% and an average office base rent of $28.14 PSF.
The Freeport 9 Property is located in Irving, Texas, and is part of the greater Dallas-Fort Worth-Arlington, TX MSA. Major thoroughfares in the area include Regent Boulevard, Freeport Parkway, Lyndon B Johnson Freeway and John W. Carpenter Freeway. The Dallas Fort Worth International Airport is located approximately 3.1 miles southwest of the Freeport 9 Property. According to the appraisal, the Freeport 9 Property is located in the DFW Freeport/Coppell submarket. As of the second quarter of 2021, the submarket had an inventory of 16,400,770 SF, a vacancy rate of 22.8% and an average office base rent of $19.58 PSF.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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Building E1 Property - Comparable Leases Summary(1)
Property Address / Location | Year Built | Tenant Name | Tenant Leased Space | Lease Date | Lease Term (years) | UW Base Rent Per SF |
3010 Gaylord Parkway Frisco, TX | 2007 | Various | 129,278(2) | Various | Various | Various |
6801 Gaylord Parkway Frisco, TX | 2000 | Premier Health Solutions | 5,736 | Dec-20 | 2.3 | $29.50 |
5601 Granite Parkway Plano, TX | 2006 | Alkami Technology | 34,089 | Nov-20 | 8.0 | $28.00 |
7161 Bishop Road Plano, TX | 2002 | Asset Intertech Inc | 6,793 | Oct-20 | 5.0 | $30.00 |
5800 Democracy Drive Plano, TX | 1998 | Osburn Companies | 26,179 | May-21 | 10.0 | $19.50 |
(1) | Source: Appraisal. |
(2) | Based on the underwritten rent roll dated September 28, 2021. |
Freeport 9 Property - Comparable Leases Summary(1)
Property Address / Location | Year Built | Tenant Name | Tenant Leased Space | Lease Date | Lease Term (years) | UW Base Rent Per SF |
4609 Regent Boulevard Irving, TX | 2014 | WageWorks | 153,630(2) | Nov-15 & Aug-16(2) | 14.2(2) | $17.37(2) |
14460 Varsity Brands Way Farmers Branch, TX | 2012 | BSN Sports, LLC | 135,999 | Jul-20 | 20.0 | $18.98 |
8222 North Belt Line Road Irving, TX | 2000 | NAV | 75,506 | Apr-20 | 15.0 | $18.00 |
6500 Chase Oaks Plano, TX | 2018 | Ribbon Communications | 108,000 | Jan-20 | 10.0 | $22.00 |
5401 North Beach Street Fort Worth, TX | 1995 | Lockheed Martin | 431,579 | May-19 | 6.0 | $16.75 |
14372 Heritage Parkway Fort Worth, TX | 2019 | Mercedes Benz Financial | 200,006 | Feb-19 | 10.3 | $18.94 |
(1) | Source: Appraisal. |
(2) | Based on the underwritten rent roll dated December 6, 2021. |
Market Analysis(1) | ||
Market | Market Rent Per SF | Market Vacancy |
Dallas/Fort Worth | $22.13 | 17.7% |
(1) | Source: Appraisal. |
■ | The Borrowers. The borrowers are Hall 3010 Gaylord Parkway, LLC, Hall Freeport, LTD., and Hall Freeport II, LLC. Hall 3010 Gaylord Parkway, LLC and Hall Freeport II, LLC are Texas limited liability companies whereas Hall Freeport II, LTD. is a Texas limited partnership, all of which are single purpose entities. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination the Hall Office Portfolio Mortgage Loan. |
The borrower sponsor and non-recourse carveout guarantor is Hall RE Holdco II, LLC, an affiliate of the borrower parent entity the Hall Group. The Hall Group is a privately held investment firm founded in 1968 by Craig Hall with active operations in commercial real estate development, ownership and management. The Hall Group also operates a commercial real estate lending business; vineyards and wineries; and focuses on private equity, venture capital and early-stage investments.
■ | Escrows. At origination of the Hall Office Portfolio Mortgage Loan, the borrowers deposited approximately $101,645 into a reserve account for real estate taxes, $278,162 into a reserve account for free rent and $112,000 into a reserve account for replacement reserves. |
Tax Reserve. The borrowers are required to deposit into a real estate tax reserve, on a monthly basis, 1/12 of the taxes that the lender estimates will be payable over the next-ensuing 12-month period (initially estimated to be $101,645).
Insurance Reserve. The borrowers are required to deposit into an insurance reserve, on a monthly basis, 1/12 of the amount which will be sufficient to pay the insurance premiums due for the renewal of coverage afforded by such policies; provided, however, such insurance reserve has been conditionally waived so long as the borrowers maintain a blanket policy meeting the requirements of the Hall Office Portfolio Mortgage Loan 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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Replacement Reserve. The borrowers are required to deposit into a replacement reserve, on a monthly basis, an amount equal to approximately $4,970 (subject to a cap of approximately $178,926).
TI/LC Reserve. The borrowers are required to deposit into a replacement reserve, on a monthly basis, an amount equal to approximately $24,848 (subject to a cap of $1,490,885).
■ | Lockbox and Cash Management. The Hall Office Portfolio Mortgage Loan is structured with a hard lockbox and springing cash management. At origination of the Hall Office Portfolio Mortgage Loan, the borrower was required to deliver a notice to the tenant directing the tenant to remit all payments under its lease directly to the lockbox account. The borrower is required to cause revenue received by the borrower or the property manager (if any) to be deposited into such lockbox immediately upon receipt. All funds deposited into the lockbox are required to be transferred on each business day to or at the direction of the borrower unless a Trigger Period exists. Upon the occurrence and during the continuance of a Trigger Period, all funds in the lockbox account are required to be swept on each business day to a cash management account under the control of the lender to be applied and disbursed in accordance with the Hall Office Portfolio Mortgage Loan documents, and all excess cash flow funds remaining in the cash management account after the application of such funds in accordance with the Hall Office Portfolio Mortgage Loan documents are required to be held by the lender in an excess cash flow reserve account as additional collateral for the Hall Office Portfolio Mortgage Loan. Upon the cure of the applicable Trigger Period, so long as no other Trigger Period exists, the lender is required to return any amounts remaining on deposit in the excess cash flow reserve account to the borrower. Upon an event of default under the Hall Office Portfolio Mortgage Loan documents, the lender may apply funds to the debt in such priority as it may determine. |
A “Trigger Period” means a period commencing upon the occurrence of: (i) an event of default under the Hall Office Portfolio Mortgage Loan, (ii) the debt service coverage ratio being less than 1.25x or (iii) the occurrence of a Specified Tenant Trigger Period (as defined below), and expiring upon (a) with respect to clause (i) the cure (if applicable) of such event of default, (b) with respect to clause (ii) above, the date that the debt service coverage ratio is equal to or greater than 1.30x for two consecutive calendar quarters and (c) with respect to clause (iii) above, a Specified Tenant Trigger Period ceasing to exist as set forth below.
“Specified Tenant Trigger Period” shall mean a period (A) commencing upon the first to occur of (i) Specified Tenant being in default under the applicable Specified Tenant Lease beyond all applicable notice and cure periods, (ii) Specified Tenant failing to be in actual, physical possession of the tenant space (or applicable portion thereof), (iii) Specified Tenant giving notice that it is terminating its lease for all or any portion of the Specified Tenant Space, (iv) any termination or cancellation of any Specified Tenant Lease (including, without limitation, rejection in any bankruptcy or similar insolvency proceeding) and/or any Specified Tenant lease failing to otherwise be in full force and effect, (v) any bankruptcy or similar insolvency of Specified Tenant, and (vi) Specified Tenant failing to extend or renew the applicable Specified Tenant Lease on or prior the applicable Specified Tenant extension deadline in accordance with the applicable terms and conditions of the Specified Tenant Lease and the Hall Office Portfolio Mortgage Loan documents for the applicable Specified Tenant renewal term; and (B) expiring upon the first to occur of Lender’s receipt of evidence reasonably acceptable to Lender (which such evidence shall include, without limitation, a duly executed estoppel certificate from the applicable Specified Tenant in form and substance acceptable to Lender) of (1) the satisfaction of the Specified Tenant Cure Conditions or (2) Borrower leasing no less than 75% of the Specified Tenant Space in accordance with the applicable terms and conditions of the Hall Office Portfolio Mortgage Loan documents (including that the rent due with respect to any such re-leasing is equal to or greater than the then current market rates (as confirmed by Lender in its sole but reasonable discretion)), the applicable Tenant under such Lease being in actual, physical occupancy of the space demised under its Lease and paying the full amount of the rent due under its Lease.
A “Specified Tenant Cure Conditions” means each of the following, as applicable (i) the applicable Specified Tenant (as defined below) has cured all defaults under the applicable Specified Tenant Lease, (ii) the applicable Specified Tenant is in actual, physical possession of the Specified Tenant Space (or applicable portion thereof), (iii) the applicable Specified Tenant has revoked or rescinded all termination or cancellation notices with respect to the applicable Specified Tenant Lease and has re-affirmed the applicable Specified Tenant Lease as being in full force and effect, (iv) in the event the Specified Tenant Trigger Period is due to the applicable Specified Tenant’s failure to extend or renew the applicable Specified Tenant Lease in accordance with clause (vi) of the “Specified Tenant Trigger Period”, the applicable Specified Tenant has renewed or extended no less than 75% of the applicable Specified Tenant Lease in accordance with the terms for the applicable Specified Tenant renewal term, (v) with respect to any applicable bankruptcy or insolvency proceedings involving the applicable Specified Tenant and/or the applicable Specified Tenant Lease, the applicable Specified Tenant is no longer insolvent or subject to any bankruptcy or insolvency proceedings and has affirmed the applicable Specified Tenant Lease pursuant to final, non-appealable order of a court of competent
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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jurisdiction and (vi) the applicable Specified Tenant is paying full, unabated rent under the applicable Specified Tenant Lease.
A “Specified Tenant” means, as applicable, (i) WageWorks, (ii) Transplace, (iii) any other lessee(s) of the Specified Tenant Space (or any portion thereof) and (iv) any parent company of any such Specified Tenant, and any affiliate providing credit support for, or guarantor of, any such Specified Tenant Lease(s).
A “Specified Tenant Lease” means, collectively and/or individually (as the context requires), each lease at the property with Specified Tenant (including, without limitation, any guaranty or similar instrument furnished thereunder), as the same may have been or may hereafter be amended, restated, extended, renewed, replaced and/or otherwise modified.
A “Specified Tenant Space” means that portion of the property demised to the initial Specified Tenant pursuant to the initial Specified Tenant Lease.
■ | Property Management. The Hall Office Portfolio Properties are managed by Hall Financial Group, Ltd. |
■ | Current Mezzanine or Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
■ | Release of Collateral. Not Permitted. |
■ | Terrorism Insurance. The borrowers are required to maintain or cause to be maintained an “all-risk” insurance policy that provides coverage for terrorism in an amount equal to the full replacement cost of the Hall Office Portfolio Properties, plus business interruption coverage in an amount equal to 100% of the projected gross income for the applicable Hall Office Portfolio property for 18 months with six months of extended indemnity. The “all-risk” policy containing terrorism insurance is required to contain a deductible no greater than $25,000. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #7: LA ENCANTADA
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #7: LA ENCANTADA
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #7: LA ENCANTADA
Mortgaged Property Information | Mortgage Loan Information | ||||
Number of Mortgaged Properties | 1 | Loan Seller | GSMC | ||
Location (City / State) | Tucson, Arizona | Cut-off Date Principal Balance(2) | $55,000,000 | ||
Property Type | Retail | Cut-off Date Principal Balance per SF(1) | $414.71 | ||
Size (SF) | 245,955 | Percentage of Initial Pool Balance | 3.7% | ||
Total Occupancy as of 9/1/2021 | 89.7% | Number of Related Mortgage Loans | None | ||
Owned Occupancy as of 9/1/2021 | 89.7% | Type of Security | Fee | ||
Year Built / Latest Renovation | 2003 / 2020 | Mortgage Rate | 3.36100% | ||
Appraised Value | $173,700,000 | Original Term to Maturity (Months) | 120 | ||
Appraisal Date | 6/5/2021 | Original Amortization Term (Months) | NAP | ||
Borrower Sponsors | Town West Realty, Inc., Iridius Capital LLC and HSL Properties, Inc. | Original Interest Only Period (Months) | 120 | ||
Property Management | Town West Realty, Inc. | First Payment Date | 11/6/2021 | ||
Maturity Date | 10/6/2031 | ||||
Underwritten Revenues | $13,006,834 | ||||
Underwritten Expenses | $3,560,488 | Escrows(3) | |||
Underwritten Net Operating Income (NOI) | $9,446,346 | Upfront | Monthly | ||
Underwritten Net Cash Flow (NCF) | $9,397,155 | Taxes | $469,915 | $68,011 | |
Cut-off Date LTV Ratio(1) | 58.7% | Insurance | $18,270 | $18,270 | |
Maturity Date LTV Ratio(1) | 58.7% | Replacement Reserves | $0 | $4,099 | |
DSCR Based on Underwritten NOI / NCF(1) | 2.72x / 2.70x | TI / LC | $4,750,000 | Springing | |
Debt Yield Based on Underwritten NOI / NCF(1) | 9.3% / 9.2% | Other(4) | $1,355,389 | $0 |
Sources and Uses | ||||||
Sources | $ | % | Uses | $ | % | |
Loan Combination Amount | $102,000,000 | 59.0% | Purchase Price | $165,250,000 | 95.6% | |
Sponsor Equity | 70,903,480 | 41.0 | Upfront Reserves | 6,593,574 | 3.8 | |
Closing Costs | 1,059,906 | 0.6 | ||||
Total Sources | $172,903,480 | 100.0% | Total Uses | $172,903,480 | 100.0% |
(1) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the La Encantada Loan Combination (as defined below). |
(2) | The Cut-off Date Balance of $55,000,000 represents the controlling Note A-1 of the $102,000,000 La Encantada Loan Combination, which is also evidenced by two additional pari passu notes, Note A-2 of $27,000,000 and Note A-3 of $20,000,000. |
(3) | See “—Escrows” below. |
(4) | Other upfront reserves consist of reserves for unfunded obligations ($729,544) and deferred maintenance ($625,845). |
■ | The Mortgage Loan. The La Encantada mortgage loan (the “La Encantada Mortgage Loan”) is part of a loan combination (the “La Encantada Loan Combination”) secured by the borrowers’ fee interests in a 245,955 square foot retail property located in Tucson, Arizona (the “La Encantada Property”). The La Encantada Loan Combination is comprised of three pari passu notes, with an outstanding principal balance as of the Cut-off Date of $102,000,000. The La Encantada Mortgage Loan is evidenced by Note A-1 with an aggregate outstanding principal balance as of the Cut-off Date of $55,000,000 and represents approximately 3.7% of the Initial Pool Balance. |
The La Encantada Loan Combination was originated on September 17, 2021 by Goldman Sachs Bank USA and accrues interest at an interest rate of 3.36100% per annum. The La Encantada Loan Combination has an initial term of 120 months, has a remaining term of 118 months and is interest-only for the full term. The scheduled maturity date of the La Encantada Loan Combination is the payment date in October 2031.
Voluntary prepayment of the La Encantada Loan Combination in whole (but not in part) is permitted on or after the payment date occurring on July 6, 2031. Defeasance of the La Encantada Loan Combination in whole (but not in part) is permitted at any time after the earlier of (i) September 17, 2024 and (ii) the second anniversary of the date on which the entire La Encantada Loan Combination has been securitized.
The table below summarizes the promissory notes that comprise the La Encantada Loan Combination. The relationship between the holders of the La Encantada 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 Prospectus.
Loan Combination Summary | ||||
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1 | $55,000,000 | $55,000,000 | Benchmark 2021-B31 | Yes |
A-2 | 27,000,000 | 27,000,000 | GSBI(1) | No |
A-3 | 20,000,000 | 20,000,000 | Benchmark 2021-B30 | No |
Total | $102,000,000 | $102,000,000 |
(1) | Held by GSBI and is 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #7: LA ENCANTADA
■ | The Mortgaged Property. The La Encantada Property is a 245,955 square foot anchored retail center located in Tucson, Arizona. Originally constructed in 2003 and renovated in 2020, the La Encantada Property consists of four anchored multi-tenant retail buildings situated on a 29.2-acre site. As of September 1, 2021, the La Encantada Property was 89.7% occupied. Major tenants include AJ's Fine Foods (28,692 square feet leased through January 2024), Crate & Barrel (22,560 square feet leased through January 2024) and Pottery Barn (12,916 square feet leased through January 2026). The La Encantada Property includes a variety of luxury and specialty retail stores including the Apple Store, Tiffany & Co., Anthropologie, lululemon athletica and Madewell. Restaurants at the La Encantada Property include Firebirds Wood Fired Grill, Blanco Tacos + Tequila, North Italia and RA Sushi Bar Restaurant which are all open and operating at full capacity with both indoor and patio dining available. |
AJ's Fine Foods (28,692 square feet, 11.7% of net rentable area (“NRA”), 8.1% of underwritten base rent) AJ’s Fine Foods (“AJ’s”) was created in 1985 as a part of the Bashas chain, and has grown to 11 markets in the metro Phoenix area and Tucson. Each AJ’s provides a range of unique food items and gourmet products and services.
Crate & Barrel (22,560 square feet, 9.2% of NRA, 5.6% of underwritten base rent) Crate and Barrel Holdings is a member of the Otto Group and employs 7,500 associates across Crate and Barrel and CB2. With over 100 stores and franchise partners in 9 countries, Crate and Barrel and CB2 are international destinations for contemporary and modern furniture, housewares and decor.
Pottery Barn (12,916 square feet, 5.3% of NRA, 3.9% of underwritten base rent) Pottery Barn is an American upscale home furnishing store chain and e-commerce company, with retail stores in the United States, Canada, Mexico and Australia. Pottery Barn is a wholly-owned subsidiary of Williams-Sonoma, Inc. Pottery Barn also operates several specialty stores such as Pottery Barn Kids and Pottery Barn Teen. It has three retail catalogues: the traditional Pottery Barn catalogue; Pottery Barn Bed + Bath, to focus on its bed and bath lines; and one for outdoor furniture.
COVID-19 Update. As of November 23, 2021, the La Encantada Property is open and operating. Rent collections for the La Encantada Property were 92.6% and 92.8% for October and November 2021, respectively. As of November 23, 2021, the La Encantada Loan Combination is not subject to any modification or forbearance requests.
The following table presents certain information relating to the tenants at the La Encantada Property:
Largest Tenants Based on Underwritten Based Rent(1)
Tenant Name | Credit Rating (Moody's/Fitch/S&P)(2) | Tenant GLA | % of GLA | UW Base Rent | % of Total UW Base Rent | UW Base Rent | Lease Expiration | Renewal / Extension Options | ||||||||
AJ's Fine Foods | NR / NR / NR | 28,692 | 11.7% | $611,140 | 8.1% | $21.30 | 1/31/2024 | 4, 5-year options | ||||||||
Crate & Barrel(3) | NR / NR / NR | 22,560 | 9.2% | 421,178 | 5.6% | 18.67 | 1/31/2024 | None | ||||||||
Anthropologie | NR / NR / NR | 10,430 | 4.2% | 327,711 | 4.3% | 31.42 | 1/31/2031 | None | ||||||||
Pottery Barn | NR / NR / NR | 12,916 | 5.3% | 292,289 | 3.9% | 22.63 | 1/31/2026 | None | ||||||||
Firebirds Wood Fired Grill | NR / NR / NR | 6,947 | 2.8% | 286,842 | 3.8% | 41.29 | 12/31/2023 | None | ||||||||
West Elm(4) | NR / NR / NR | 11,029 | 4.5% | 264,696 | 3.5% | 24.00 | 1/31/2031 | None | ||||||||
North Italia | NR / NR / NR | 5,500 | 2.2% | 253,550 | 3.4% | 46.10 | 12/31/2023 | None | ||||||||
Williams-Sonoma | NR / NR / NR | 5,500 | 2.2% | 124,465 | 1.6% | 22.63 | 1/31/2026 | None | ||||||||
Rug Gallery(5) | NR / NR / NR | 6,537 | 2.7% | 112,404 | 1.5% | 17.20 | 3/31/2023 | None | ||||||||
Charming Charlie | NR / NR / NR | 4,998 | 2.0% | 75,020 | 1.0% | 15.01 | 4/1/2026 | None | ||||||||
Ten Largest Tenants | 115,109 | 46.8% | $2,769,294 | 36.7% | $24.06 | |||||||||||
Remaining Tenants | 105,628 | 42.9% | 4,785,838 | 63.3% | 45.31 | |||||||||||
Vacant Space | 25,218 | 10.3% | NAP | NAP | NAP | |||||||||||
Total / Wtd. Avg. All Owned Tenants | 245,955 | 100.0% | $7,555,132 | 100.0% | $34.23 |
(1) | Based on the underwritten rent roll dated as of September 1, 2021. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | Crate & Barrell has the one time right to terminate its lease with 90 days’ prior written notice. |
(4) | West Elm has the one time right to terminate its lease if West Elm does not achieve gross sales totaling at least $3,000,000 during its fifth lease year (February 2025 through January 2026) (the "Sales Measuring Period") with prior notice no later than 180 days after the end of the Sales Measuring Period. |
(5) | Rug Gallery is currently in its first extension period from November 1, 2021 to October 31, 2022, and the second extension period will be auto renewed from November 1, 2022 to March 31, 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #7: LA ENCANTADA
The following table presents certain information relating to the lease rollover schedule for the La Encantada Property based on the initial lease expiration dates:
Lease Expiration Schedule(1)
Year Ending December 31 | Expiring Owned GLA | % of Owned GLA | Cumulative % of Owned GLA | UW | % of Total UW Base Rent(2) | UW Base Rent $ per SF(2) | # of Expiring Leases | ||||||||||||||
MTM | 0 | 0.0% | 0.0% | $0 | 0.0% | $0.00 | 0 | ||||||||||||||
2021 | 0 | 0.0% | 0.0% | 0 | 0.0% | $0.00 | 0 | ||||||||||||||
2022 | 19,199 | 7.8% | 7.8% | 789,335 | 10.4% | $41.11 | 7 | ||||||||||||||
2023 | 39,884 | 16.2% | 24.0% | 1,753,748 | 23.2% | $43.97 | 15 | ||||||||||||||
2024 | 74,038 | 30.1% | 54.1% | 1,872,970 | 24.8% | $25.30 | 10 | ||||||||||||||
2025 | 5,679 | 2.3% | 56.4% | 352,039 | 4.7% | $61.99 | 2 | ||||||||||||||
2026 | 37,856 | 15.4% | 71.8% | 1,187,655 | 15.7% | $31.37 | 9 | ||||||||||||||
2027 | 2,558 | 1.0% | 72.9% | 172,742 | 2.3% | $67.53 | 1 | ||||||||||||||
2028 | 6,385 | 2.6% | 75.5% | 345,429 | 4.6% | $54.10 | 3 | ||||||||||||||
2029 | 8,627 | 3.5% | 79.0% | 250,631 | 3.3% | $29.05 | 3 | ||||||||||||||
2031 | 26,511 | 10.8% | 89.7% | 830,584 | 11.0% | $31.33 | 5 | ||||||||||||||
2032 & Thereafter | 0 | 0.0% | 89.7% | 0 | 0.0% | $0.00 | 0 | ||||||||||||||
Vacant | 25,218 | 10.3% | 100.0% | NAP | NAP | NAP | NAP | ||||||||||||||
Total / Wtd. Avg. | 245,955 | 100.0% | $7,555,132 | 100.0% | $34.23 | 55 |
(1) | Based on the underwritten rent roll dated as of September 1, 2021. |
(2) | UW Base Rent, % of Total UW Base Rent and UW Base Rent $ per SF are inclusive of contractual rent steps through October 31, 2022. |
The following table presents certain information relating to historical occupancy for the La Encantada Property:
Historical Leased %(1)
2018 | 2019 | 2020 | TTM 7/31/2021 | As of 9/1/2021(2) |
97.3% | 93.5% | 92.3% | 90.0% | 89.7% |
(1) | As of December 31 unless specified otherwise. |
(2) | Based on the underwritten rent roll dated as of September 1, 2021. |
■ | 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 La Encantada Property: |
Cash Flow Analysis(1)
2018 | 2019 | 2020 | TTM 7/31/2021 | Underwritten(2) | Underwritten $ per SF | |||||||||||||
Base Rental Revenue(2) | $7,591,045 | $7,259,570 | $6,718,826 | $6,261,731 | $7,250,856 | $29.48 | ||||||||||||
Credit Tenant Rent Steps(3) | 0 | 0 | 0 | 0 | 21,633 | 0.09 | ||||||||||||
Vacant Income | 0 | 0 | 0 | 0 | 1,553,346 | 6.32 | ||||||||||||
Reimbursement Income | 4,782,983 | 4,578,625 | 4,407,358 | 4,283,552 | 4,246,886 | 17.27 | ||||||||||||
Vacancy & Credit Loss | (73,580 | ) | (87,871 | ) | (367,530 | ) | (348,712 | ) | (1,553,346 | ) | (6.32 | ) | ||||||
Other Income | 928,502 | 680,443 | 727,918 | 470,495 | 639,611 | 2.60 | ||||||||||||
Percentage Rent | 762,104 | 795,420 | 473,333 | 791,412 | 847,849 | 3.45 | ||||||||||||
Effective Gross Revenue | $13,991,054 | $13,226,187 | $11,959,905 | $11,458,478 | $13,006,834 | $52.88 | ||||||||||||
Real Estate Taxes | $808,577 | $764,175 | $772,735 | $784,704 | $795,469 | $3.23 | ||||||||||||
Insurance | 40,688 | 39,120 | 44,376 | 52,948 | 219,237 | 0.89 | ||||||||||||
Management Fee | 130,095 | 126,773 | 117,975 | 109,109 | 390,205 | 1.59 | ||||||||||||
Other Expenses | 1,950,528 | 1,970,482 | 1,913,983 | 2,021,110 | 2,155,577 | 8.76 | ||||||||||||
Total Operating Expenses | $2,929,887 | $2,900,549 | $2,849,069 | $2,967,871 | $3,560,488 | $14.48 | ||||||||||||
Net Operating Income | $11,061,166 | $10,325,638 | $9,110,836 | $8,490,607 | $9,446,346 | $38.41 | ||||||||||||
Replacement Reserves | 0 | 0 | 0 | 0 | 49,191 | 0.20 | ||||||||||||
Net Cash Flow | $11,061,166 | $10,325,638 | $9,110,836 | $8,490,607 | $9,397,155 | $38.21 | ||||||||||||
Occupancy | 97.3 | % | 93.5 | % | 92.3 | % | 89.7 | %(4) | 89.3 | %(4) | ||||||||
NOI Debt Yield(5) | 10.8 | % | 10.1 | % | 8.9 | % | 8.3 | % | 9.3 | % | ||||||||
NCF DSCR(5) | 3.18 | x | 2.97 | x | 2.62 | x | 2.44 | x | 2.70 | x |
(1) | Certain items such as interest expense, interest income, lease cancellation income, depreciation, amortization, debt service payments and any other non-recurring or non-operating items are not considered for the underwritten cash flow. |
(2) | Based on the underwritten rent roll dated as of September 1, 2021 with rent steps through October 31, 2022. Base Rental Revenue does not include percentage rent attributable to Crate & Barrel and Lucky Brand, who are paying 8% and 12% of sales, respectively. |
(3) | Represents contractual rent steps through October 31, 2022. |
(4) | TTM 7/31/2021 occupancy is based on current occupancy as of September 1, 2021. Underwritten occupancy is based on the underwritten economic occupancy. |
(5) | Based on the aggregate Cut-off balance of the La Encantada 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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■ | Appraisal. According to the appraisal, the La Encantada Property has an “as-is” appraised value of $173,700,000 as of June 5, 2021. |
■ | Environmental Matters. According to the Phase I environmental report, dated June 4, 2021, there was no evidence of any recognized environmental conditions at the La Encantada Property. |
■ | Market Overview and Competition. The La Encantada Property is located within the North Tucson Retail Cluster submarket within the greater Tucson metropolitan statistical area (“Tucson MSA”) market. The La Encantada Property is situated at two major crossroads, Skyline Drive and Campbell Avenue, and the neighborhood is connected to Interstate 10. The La Encantada Property is surrounded by high-income families. The household income within one and three miles of the La Encantada Property is more than double the average income for the Tucson MSA market. The La Encantada Property is six to seven miles away from downtown Tucson and the University of Arizona. There are four major retail developments in close proximity to the La Encantada Property including Paloma Village, Plaza Colonial, Entrada De Oro Shopping Center and Plaza Escondida. |
According to the appraisal, as of the first quarter of 2020, the North Tucson Retail Cluster submarket contains approximately 12.4 million square feet of retail space with a vacancy rate of 5.0% and average asking rents of $18.92 per square foot. The 2020 population and median household income within a one-, three- and five-mile radius of the La Encantada Property was 4,169, 31,672 and 134,872, and $118,872, $84,439 and $52,415, respectively.
■ | The Borrowers. The borrowers are Ft. Lowell View Delaware, LLC, La Encantada Investors, LLC, Iridius La Encantada TIC LLC and HSL La Encantada Investors Delaware LLC, each a Delaware limited liability company, as tenants-in-common. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the La Encantada Loan Combination. The borrower sponsors and non-recourse carveout guarantors under the La Encantada Loan Combination are Town West Realty, Inc., an Arizona corporation, Iridius Capital LLC, an Arizona limited liability company, and HSL Properties, Inc., an Arizona corporation. |
■ | Escrows. At loan origination, the borrowers deposited approximately (i) $4,750,000 into a reserve for general unfunded tenant improvements and leasing commissions, (ii) $729,544 into a reserve for unfunded obligations, (iii) $625,845 into a deferred maintenance reserve, (iv) $469,915 into a tax reserve and (v) $18,270 into an insurance reserve. |
Tax Reserve. On each payment date, the borrowers are required to deposit into a property tax reserve, on a monthly basis, 1/12 of the estimated annual property taxes (initially estimated to be approximately $68,011).
Insurance Reserve. On each payment date, the borrowers are required to deposit into an insurance reserve, on a monthly basis, 1/12 of the estimated annual insurance premiums (initially estimated to be approximately $18,270); provided, however, absent a continuing event of default, such insurance reserve payments will be waived so long as the borrowers maintain a blanket policy meeting the requirements of the related La Encantada Loan Combination documents.
Capital Expenditures Reserve. On each payment date, the borrowers are required to fund a capital expenditure reserve, on a monthly basis, in the amount of approximately $4,099.
TI/LC Reserve. On each payment date, at any time the TI/LC account is less than $1,000,000, the borrowers are required to fund a TI/LC reserve, on a monthly basis, in the amount of $20,500. The borrowers’ obligation to make the monthly deposit would be suspended during any point in time the amount contained in the TI/LC account is equal to or greater than $2,000,000.
■ | Lockbox and Cash Management. The La Encantada Loan Combination is structured with a hard lockbox and in place cash management. The borrowers were required to deliver direction letters to all tenants of the La Encantada Property directing tenants to directly deposit all rents into a lender-controlled lockbox account. Funds in the lockbox account are required to be swept on each business day into a lender-controlled cash management account and applied in accordance with the La Encantada Loan Combination documents, provided no event of default exists, to the payment of (a) basic carrying costs, (b) any default interest, late payment charges or similar amounts, (c) during the continuance of a La Encantada Trigger Period (as hereinafter defined), deposits into an operating expense account, (d) any required payments into the capital expenditure reserve, (e) any required payments into the tenant improvement and leasing commissions reserve and (f) during the continuance of a La Encantada Trigger Period or an event of default, into an excess cash flow reserve account to be held as additional collateral for the La Encantada 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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“La Encantada Trigger Period” means each period when (a) the debt service coverage ratio, determined as of the first day of any fiscal quarter, is less than 1.80x and concludes when the debt service coverage ratio, as of the first day of each two consecutive fiscal quarters thereafter, is equal or greater than 1.80x or (b) the financial reports required under the La Encantada Loan Combination documents are not delivered to the lender when required until the delivery to the lender of such financial reports which must indicate that no La Encantada Trigger Period is continuing.
■ | Property Management. The La Encantada Property is managed by Town West Realty, Inc., an affiliate of the borrowers. |
■ | Current Mezzanine or Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
■ | Release of Collateral. The La Encantada Property includes two non-income producing outparcel pads (“Pad Sites”) which were not attributed any value in the appraisal. On any date after the expiration of the Lockout Period (as defined below), the borrowers may obtain the release of one or more Pad Sites subject to certain conditions including, (i) no event of default has occurred and is continuing, (ii) the Pad Site is conveyed to a third party, (iii) the release of such Pad Site will not have a material adverse effect on the remaining collateral, (iv) the remaining collateral and Pad Site are bound by any necessary declarations or cross-easement agreements, (v) satisfaction of customary REMIC requirements and (vi) the borrowers pay all reasonable out-of-pocket costs and expenses of the lender incurred in connection with such release. If immediately following a release of any Pad Site, the fair market value of the property securing the La Encantada Loan Combination at the time of such determination as calculated under the La Encantada Loan Combination documents is not at least 80% of the La Encantada Loan Combination's adjusted issue price within the meaning of the Internal Revenue Code of 1986 (the “Code”), then the borrowers are required to prepay the La Encantada Loan Combination in an amount equal to either (i) an amount necessary to satisfy the foregoing or (ii) a lesser amount, provided that the borrowers deliver an opinion of counsel that such release does not cause any portion of the La Encantada Loan Combination to cease to be a “qualified mortgage” within the meaning of section 860G(a)(3) of the Code. |
“Lockout Period” means the period from September 17, 2021 to but excluding the first payment date following the earlier to occur of (i) September 17, 2024 and (ii) the second anniversary of the date on which the entire La Encantada Loan Combination has been securitized.
■ | Terrorism Insurance. The borrowers are required to maintain terrorism insurance in an amount equal to the full replacement cost of the La Encantada 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 or a subsequent statute 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 La Encantada Property and business interruption/rental loss insurance required under the related La Encantada Loan Combination 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #8: TLR 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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Mortgaged Property Information | Mortgage Loan Information | |||||
Number of Mortgaged Properties | 3 | Loan Seller(4) | CREFI | |||
Location (City/State) (1) | Various / Florida | Cut-off Date Balance(4) | $48,000,000 | |||
Property Type | Multifamily | Cut-off Date Balance per Unit(3) | $120,639.53 | |||
Size (Units) | 688 | Percentage of Initial Pool Balance | 3.2% | |||
Total Occupancy as of 10/8/2021 | 97.5% | Number of Related Mortgage Loans | None | |||
Owned Occupancy as of 10/8/2021 | 97.5% | Type of Security | Fee | |||
Year Built / Latest Renovation(1) | Various / 2021 | Mortgage Rate | 3.97000% | |||
Appraised Value(1)(2) | $127,000,000 | Original Term to Maturity (Months) | 120 | |||
Appraisal Date | 10/13/2021 | Original Amortization Term (Months) | NAP | |||
Borrower Sponsors | Rudy Nassri and Vincent Chiara | Original Interest Only Period (Months) | 120 | |||
Property Management | TLR Management Inc. | First Payment Date | 1/6/2022 | |||
Maturity Date | 12/6/2031 | |||||
Underwritten Revenues | $9,477,000 | |||||
Underwritten Expenses | $3,353,170 | Escrows(5) | ||||
Underwritten Net Operating Income (NOI) | $6,123,830 | Upfront | Monthly | |||
Underwritten Net Cash Flow (NCF) | $5,951,830 | Taxes | $77,287 | $77,287 | ||
Cut-off Date LTV Ratio(2)(3) | 65.4% | Insurance | $282,923 | $28,292 | ||
Maturity Date LTV Ratio(2)(3) | 65.4% | Replacement Reserve | $0 | $14,333 | ||
DSCR Based on Underwritten NOI / NCF(3) | 1.83x / 1.78x | TI/LC | $0 | $0 | ||
Debt Yield Based on Underwritten NOI / NCF(3) | 7.4% / 7.2% | Other(6) | $2,500,000 | $0 | ||
Sources and Uses | ||||||
Sources | $ | % | Uses | $ | % | |
Loan Combination | $83,000,000 | 100.0% | Loan Payoff(7) | $60,461,084 | 72.8% | |
Return of Equity | 17,185,345 | 20.7 | ||||
Upfront Reserves | 2,860,210 | 3.4 | ||||
Closing Costs | 2,493,361 | 3.0 | ||||
Total Sources | $83,000,000 | 100.0% | Total Uses | $83,000,000 | 100.0% | |
(1) | See the “Portfolio Summary” chart below for the Location, Year Built / Latest Renovation and Appraised Values of the individual TLR Portfolio Properties (as defined below). |
(2) | The Appraised Value represents the “as-portfolio” value of $127,000,000, which includes a diversity premium of 3% based on an assumption that all of the TLR Portfolio Properties would be sold together as a portfolio. The aggregate “as-is” appraised value for the TLR Portfolio Properties is $123,500,000. The Cut-off Date LTV Ratio and the Maturity Date LTV Ratio based on “as-is” appraised value are 67.2 and 67.2%, respectively. |
(3) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the TLR Portfolio Loan Combination (as defined below). |
(4) | The TLR Portfolio Mortgage Loan (as defined below) is part of the TLR Portfolio Loan Combination which is comprised of two pari passu promissory notes with an aggregate original balance of $83,000,000. The TLR Portfolio Loan Combination was co-originated by Citi Real Estate Funding Inc. (“CREFI”) and LMF Commercial, LLC (“LMF”). |
(5) | See “—Escrows” section below. |
(6) | Upfront Other reserves consists of a $2,500,000 holdback reserve. |
(7) | Loan payoff is inclusive of approximately $8.6 million in defeasance costs. |
■ | The Mortgage Loan. The mortgage loan (the “TLR Portfolio Mortgage Loan”) is part of a loan combination (the “TLR Portfolio Loan Combination”) consisting of two pari passu promissory notes in the aggregate outstanding principal balance of $83,000,000 and is secured by a first mortgage encumbering the borrowers’ fee interest in a three-property multifamily portfolio comprised of 688 units in Tampa and Clearwater, Florida (the “TLR Portfolio Properties”). The TLR Portfolio Mortgage Loan, evidenced by the controlling Note A-1, has an outstanding principal balance as of the Cut-off Date of $48,000,000 and represents 3.2% of the Initial Pool Balance. The TLR Portfolio Loan Combination was co-originated by CREFI and LMF on November 9, 2021. The TLR Portfolio Loan Combination has an interest rate of 3.97000% per annum. The borrowers used the proceeds of the TLR Portfolio Loan Combination to pay off prior debt secured by the TLR Portfolio Properties, return equity to the borrower sponsors, fund upfront reserves, and pay closing costs. |
The TLR Portfolio Loan Combination has an initial term of 120 months and has a remaining term of 120 months as of the Cut-off Date. The TLR Portfolio Loan Combination requires payments of interest only for the entire term. The stated maturity date is the due date in December 2031. Voluntary prepayment of the TLR Portfolio Loan Combination is prohibited prior to October 6, 2031. The borrowers have the option to defease the entire $83.0 million TLR Portfolio Loan Combination in whole (or in part as described in “Release of Collateral” herein) at any time after the date that is two years after the closing date of the Benchmark 2021-B31 securitization.
The table below summarizes the promissory notes that comprise the TLR Portfolio Loan Combination. The relationship between the holders of the TLR 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 | Controlling Piece |
A-1 | $48,000,000 | $48,000,000 | Benchmark 2021-B31 | Yes |
A-2 | 35,000,000 | 35,000,000 | WFCM 2021-C61 | No |
Loan Combination | $83,000,000 | $83,000,000 |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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■ | The Mortgaged Properties. The TLR Portfolio Properties are comprised of three recently renovated, garden style multifamily properties located in Tampa and Clearwater, Florida. As of October 8, 2021, the TLR Portfolio Properties were 97.5% occupied. |
The following table presents certain information relating to the individual TLR Portfolio Properties:
Portfolio Summary(1)
|
Property Name | City | State | Property Type | Year Built/ Renovated | Total Units | Occupancy | Allocated Cut-off Date Balance | % of Portfolio Cut-off Date Balance | Appraised Value | % of UW Base Rent |
Bahia Apartments | Tampa | Florida | Multifamily | 1972/2021 | 320 | 96.3% | 23,959,518 | 49.9% | $61,500,000 | 46.9% |
Royal Breeze Apartments | Clearwater | Florida | Multifamily | 1973/2021 | 200 | 99.5% | 14,353,735 | 29.9% | $37,200,000 | 32.3% |
Lenox Place Apartments | Tampa | Florida | Multifamily | 1970/2021 | 168 | 97.6% | 9,686,747 | 20.2% | $24,800,000 | 20.7% |
Total / Wtd. Avg. | 688 | 97.5% | $48,000,000 | 100.0% | $123,500,000(2) | 100.0% |
(1) | Based on the underwritten rent rolls dated October 8, 2021. |
(2) | Cut-off Date LTV and Maturity Date LTV are based on the “As-Portfolio” value of $127,000,000, which includes a diversity premium of 3% based on an assumption that all of the TLR Portfolio Properties would be sold together as a portfolio. |
The following table presents certain information relating to the unit mix at the TLR Portfolio Properties:
Unit Mix(1)
|
Property Name | Units | Studio | 1 BR / 1 BA | 2 BR / 1 BA | 2 BR / 2 BA | 3 BR / 2 BA | Average Rent per Unit per Month | Average Market Rent per Unit per Month(2) |
Bahia Apartments | 320 | 16 | 80 | 128 | 64 | 32 | $1,039 | $1,085 |
Royal Breeze Apartments | 200 | 0 | 52 | 0 | 100 | 48 | $1,155 | $1,196 |
Lenox Place Apartments | 168 | 18 | 114 | 0 | 36 | 0 | $899 | $917 |
Total / Wtd. Avg. | 688 | 34 | 246 | 128 | 200 | 80 | $1,039 | $1,076 |
(1) | Based on the underwritten rent rolls dated October 8, 2021. |
(2) | Source: Appraisals. |
The Bahia Apartments property (the “Bahia Apartments Property”) is a 320-unit garden multifamily property located in Tampa, Florida. Renovated in 2021, the Bahia Apartments Property consists of 35, two-story residential buildings, a single-story leasing office and a single-story amenity building situated on an 18.27-acre site. Common area amenities at Bahia Apartments Property include a fitness center, lighted tennis courts, picnic and barbecue area, two swimming pools, playground, dog park, on-site Amazon hub and a business center. Unit amenities include dishwashers, ceramic tile, central heat and air and patios or balconies. Since acquisition, the borrower sponsor has invested capital improvements of approximately $6.8 million or $21,194 per unit for interior renovations, common area renovations, painting, roof repairs, pool renovations and amenities renovations. Onsite parking is provided by 579 surface parking spaces, resulting in a parking ratio of approximately 1.8 spaces per unit. As of October 8, 2021, the Bahia Apartments Property was 96.3% leased.
The Royal Breeze Apartments property (the “Royal Breeze Apartments Property”) is a 200-unit garden multifamily property located in Clearwater, Florida. Renovated in 2021, the Royal Breeze Apartments Property consists of 25, two-story residential buildings, a single-story leasing office and a single-story amenity building situated on a 12.70-acre site. Common area amenities at Royal Breeze Apartments Property include a fitness center, barbecue area, two swimming pools, playground, dog park, and a laundry facility. Unit amenities include an appliance package with microwave, laminate countertops, garbage disposal and washer and dryer connections for select two- and three-bedroom units. Since acquisition, the borrower sponsor has invested capital improvements of approximately $2.8 million or $14,000 per unit for interior renovations, common area renovations, painting, roof repairs, pool renovations and amenities renovations. Onsite parking is provided by 377 surface parking spaces, resulting in a parking ratio of approximately 1.9 spaces per unit. As of October 8, 2021, the Royal Breeze Apartments Property was 99.5% leased.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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The Lenox Place Apartments property (the “Lenox Place Apartments Property”) is a 168-unit garden multifamily property located in Tampa, Florida. Renovated in 2021, the Lenox Place Apartments Property consists of two, three-story residential buildings and a single-story leasing office situated on a 5.24-acre site. Common area amenities at Lenox Place Apartments Property include a gated entry, two swimming pools, playground, and dog walk areas. Unit amenities include an appliance package with microwave, laminate countertops and garbage disposals. Since acquisition, the borrower sponsor has invested capital improvements of approximately $2.8 million or $16,905 per unit for interior renovations, common area renovations, painting, roof repairs, pool renovations and amenities renovations. Onsite parking is provided by 250 surface parking spaces, resulting in a parking ratio of approximately 1.5 spaces per unit. As of October 8, 2021, the Lenox Place Apartments Property was 97.6% leased.
The following table presents certain information relating to historical leasing at the TLR Portfolio Properties:
Historical Leased %(1)
2019 | 2020 | TTM 9/30/2021 | As of 10/8/2021(2) |
95.1% | 97.0% | 97.7% | 97.5% |
(1) | Reflects year end occupancy for the indicated year ended December 31 unless specified otherwise. |
(2) | Based on the underwritten rent roll dated October 8, 2021. |
■ | 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 TLR Portfolio Properties: |
Cash Flow Analysis(1)
2019 | 2020 | TTM 9/30/2021 | Underwritten | Underwritten $ per Unit | |||||||||||
Base Rent | $7,664,374 | $8,051,013 | $8,300,794 | $8,831,130 | $12,836 | ||||||||||
Vacancy, Credit Loss & Concessions | (295,201) | (171,382) | (144,129) | (509,130) | (740) | ||||||||||
Other Income(2) | 858,907 | 843,899 | 1,067,345 | 1,155,000 | 1,679 | ||||||||||
Effective Gross Income | $8,228,080 | $8,723,530 | $9,224,011 | $9,477,000 | $13,775 | ||||||||||
Real Estate Taxes | 772,408 | 843,077 | 885,100 | 883,279 | 1,284 | ||||||||||
Insurance | 276,047 | 337,408 | 293,354 | 323,341 | 470 | ||||||||||
Management Fee | 248,532 | 261,706 | 276,720 | 284,310 | 413 | ||||||||||
Other Operating Expenses | 2,000,978 | 1,843,569 | 1,862,240 | 1,862,240 | 2,707 | ||||||||||
Total Expenses | $3,297,964 | $3,285,759 | $3,317,415 | $3,353,170 | $4,874 | ||||||||||
Net Operating Income | $4,930,116 | $5,437,771 | $5,906,596 | $6,123,830 | $8,901 | ||||||||||
Replacement Reserves | 0 | 0 | 0 | 172,000 | 250 | ||||||||||
TI/LC | 0 | 0 | 0 | 0 | 0 | ||||||||||
Net Cash Flow | $4,930,116 | $5,437,771 | $5,906,596 | $5,951,830 | $8,651 | ||||||||||
Occupancy | 95.1% | 97.0% | 97.7% | 94.2%(3) | |||||||||||
NOI Debt Yield(4) | 5.9% | 6.6% | 7.1% | 7.4% | |||||||||||
NCF DSCR(4) | 1.48x | 1.63x | 1.77x | 1.78x |
(1) | Certain items such as 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) | Other Income is comprised of application fees, laundry income, parking income, storage income, pet fees, late fees, utility reimbursement, miscellaneous income and various other fees. |
(3) | Underwritten Occupancy is based on the economic occupancy. |
(4) | Calculated based on the aggregate Cut-off Date balance of the TLR Portfolio Loan Combination. |
■ | COVID-19 Update. As of November 6, 2021, the TLR Portfolio Properties are open and operating. Collections were 99.7% for September 2021. As of November 6, 2021, the TLR Portfolio Loan Combination is not subject to any modification or forbearance request. The first payment date for the TLR Portfolio Loan Combination is January 6, 2022. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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■ | Appraisals. As of the appraisal valuation date of October 13, 2021, the TLR Portfolio Properties had an “as-portfolio” appraised value of $127,000,000, which is inclusive of a 3% diversity premium based on the assumption the TLR Portfolio Properties are sold together as a portfolio. The TLR Portfolio Properties had an aggregate “as-is” appraised value of $123,500,000. |
Appraisal Summary
|
Property | Appraisal Approach | Value | Capitalization |
Bahia Apartments | Direct Capitalization | $61,500,000 | 4.00% |
Royal Breeze Apartments | Direct Capitalization | $37,200,000 | 4.00% |
Lenox Place Apartments | Direct Capitalization | $24,800,000 | 4.00% |
Total / Wtd. Avg. | $123,500,000(1) | 4.00% |
(1) | Cut-off Date LTV and Maturity Date LTV are based on the “as-portfolio” appraised value of $127,000,000, which is inclusive of a 3% diversity premium based on the assumption the TLR Portfolio Properties are sold together as a portfolio. |
■ | Environmental Matters. According to the Phase I environmental reports dated October 21, 2021 and October 25, 2021, there are no recognized environmental conditions or recommendations for further action at the TLR Portfolio Properties. |
■ | Market Overview and Competition. The TLR Portfolio Properties are located in Tampa and Clearwater, Florida, within the Tampa-St. Petersburg-Clearwater metropolitan statistical area (“Tampa MSA”). The Tampa MSA is the second most populous metropolitan area in Florida, the second most populous area on the Gulf Coast, the fourth most populous area in the southeast, and the 19th-largest metropolitan statistical area in the United States. Tampa Bay is Florida's largest open-water estuary, extending over 1,031 square kilometers. |
The Tampa Central Business District is approximately 30 minutes east of the Gulf of Mexico, and approximately an hour southwest of the Disney and Universal theme parks. In addition to the nearby beaches, other major attractions include: various professional sports stadiums, Busch Gardens and Adventure Island, Tampa Bay Performing Arts Center, Florida Aquarium, Lowry Park Zoo, International Plaza and Westshore Mall, and the downtown Tampa Channelside retail complex.
According to the appraisals, the Bahia Apartments Property and the Lenox Place Apartments Property are located within the University multifamily submarket. As of the second quarter of 2021, the University multifamily submarket had an inventory of approximately 17,386 units, a vacancy rate of approximately 3.7% and effective rents of $1,123 per unit per month. As of the second quarter of 2021, the University multifamily submarket reported positive absorption of 31 units and no new construction.
According to the appraisal, the Royal Breeze Apartments Property is located within the Clearwater multifamily submarket. As of the second quarter of 2021, the Clearwater multifamily submarket had an inventory of approximately 24,777 units, a vacancy rate of approximately 3.0% and effective rents of $1,426 per unit per month. As of the second quarter of 2021, the Clearwater multifamily submarket reported positive absorption of 217 units and 479 units under construction.
The following table presents certain information relating to the appraisals’ market rent conclusion for the TLR Portfolio Properties:
Unit Market Rent Conclusions(1)
|
Property | MSA | Studio | 1 BR / 1 BA | 2 BR / 1 BA | 2 BR / 2 BA | 3BR / 2 BA |
Bahia Apartments | Tampa | $835 | $955 | $1,085 | $1,175 | $1,335 |
Royal Breeze Apartments | Tampa | - | $1,000 | - | $1,175 & $1,275 | $1,350 |
Lenox Place Apartments | Tampa | $725 | 890 | - | $1,100 | - |
(1) | Source: Appraisals |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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■ | The Borrowers. The borrowers are Park Aberdeen Apartments, LLC, a Florida limited liability company, Royal Breeze Apartments, Inc., a Delaware corporation, and Lenox Apartments, Inc., a Delaware corporation (collectively, the “TLR Portfolio Borrowers”), each a single-purpose entity with one independent director. Legal counsel to the TLR Portfolio Borrowers delivered a non-consolidation opinion in connection with the origination of the TLR Portfolio Loan Combination. |
The borrower sponsors and non-recourse carveout guarantors are Rudy Nassri and Vincent Chiara. Rudy Nassri is the founder of the TLR Group. Mr. Nassri has over 25 years of experience in real estate and property management. Vincent Chiara is the president of Groupe Mach, which owns amongst its affiliates more than 24,000,000 SF of real estate including landmark Montreal properties such as the Stock Exchange Tower, CIBC Tower, Sun Life Building, CBC Tower and University Complex.
■ | Escrows. At origination of the TLR Multifamily Loan Combination, the TLR Portfolio Borrowers deposited (i) approximately $77,287 into a real estate tax reserve, (ii) approximately $282,923 into an insurance reserve, and (iii) $2,500,000 into a holdback reserve. |
Tax Reserve. On each due date, the TLR Portfolio Borrowers are required to deposit into a real estate tax reserve 1/12 of an amount reasonably estimated by the lender to be payable over the next-ensuing 12-month period (initially estimated to be approximately $77,287).
Insurance Reserve. On each due date, the TLR Portfolio Borrowers are required to fund 1/12 of the insurance premiums that the lender reasonably estimates will be payable over the next-ensuing 12-month period (initially estimated to be $28,292).
Replacement Reserve. On each due date, the TLR Portfolio Borrowers are required to deposit into a replacement reserve an amount equal to approximately $14,333 for capital expenditures.
Holdback Reserve. At origination, the TLR Portfolio Borrowers deposited $2,500,000 into a holdback reserve account as additional security for the payment of sums past due under the TLR Portfolio Loan Combination notes and as additional security for all of the TLR Portfolio Borrowers’ obligations under the TLR Portfolio Loan Combination documents. On each quarterly monthly payment date from and after the third monthly payment date, at the TLR Portfolio Borrowers’ written request, the lender will calculate the Holdback Debt Yield (as defined below) for purposes of determining whether the Holdback Reserve Funds Release Conditions (as defined below) have been satisfied, and, if so, the lender will disburse the requested amount of holdback reserve funds to the TLR Portfolio Borrowers (or, if a Trigger Period (as defined below) then exists, the lender will disburse the same into the cash management account to be applied pursuant to the TLR Portfolio Loan Combination documents). The TLR Portfolio Borrowers are not entitled to disbursements of the holdback reserve funds more than once in any three month period and in no amount less than $500,000 (unless the total amount of the holdback reserve funds remaining on deposit in the holdback reserve account is less than $500,000). Notwithstanding the above, in the event the TLR Portfolio Borrowers have not qualified for disbursement of all of the holdback reserve funds on or prior to November 9, 2023, then the lender will have the right to, without any notice to the TLR Portfolio Borrowers, in the lenders’ sole discretion, hold the holdback reserve funds thereafter as additional collateral for the TLR Portfolio Loan Combination and as additional security for all of the TLR Portfolio Borrowers’ obligations under the TLR Portfolio Loan Combination documents, and the TLR Portfolio Borrowers will have no further right to obtain a release thereof.
The “Holdback Debt Yield” means, as of any calculation date, a ratio conveyed as a percentage in which, (i) the numerator is the holdback underwrittable cash flow and (ii) the denominator is the then outstanding principal balance of the TLR Portfolio Loan Combination, less the amount of any holdback reserve funds that will remain on deposit, if any, following the disbursement of the applicable amount of holdback reserve funds that have been requested by the TLR Portfolio Borrowers.
The “Holdback Reserve Funds Release Conditions” means, as of the date the lender calculates the Holdback Debt Yield, (i) no event of default has occurred and is continuing and (ii) the lender has received evidence, in form and substance reasonably satisfactory to the lender, that the Holdback Debt Yield equals or exceeds 7.5%.
■ | Lockbox and Cash Management. The TLR Portfolio Loan Combination is structured with a springing lockbox and springing cash management. From and after the first occurrence of a Trigger Period (as defined below), the TLR Portfolio Borrowers are required to establish a lender-controlled lockbox account, and are thereafter required to deposit, or cause the property manager to deposit, all revenue received by the borrower or the property manager into such lockbox. Upon the occurrence and during the continuance of a Trigger Period, all funds in the lockbox account are |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #8: TLR PORTFOLIO
required to be swept each business day to a lender-controlled cash management account, to be applied and disbursed in accordance with the TLR 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 TLR Portfolio Loan Combination documents are required to be held by the lender in an excess cash flow reserve account as additional collateral for the TLR Portfolio Loan Combination. Upon the cure of the applicable Trigger Period, so long as no other Trigger Period exists, the lender is required to return any amounts remaining on deposit in the excess cash flow reserve account to the TLR Portfolio borrowers. Upon an event of default under the TLR Portfolio Loan Combination documents, the lender may apply funds to the debt in such priority as it may determine.
A “Trigger Period” means a period (A) commencing upon the earliest of the following: (i) the occurrence of an event of default; or (ii) the debt yield falling below 5.75%; and (B) expiring upon (x) with regard to any Trigger Period commenced in connection with clause (i) above, the cure (if applicable) of such event of default, and (y) or with regard to any Trigger Period commenced in connection with clause (ii) above, (1) the date the debt yield is equal to or greater than 6.0% for two consecutive calendar quarters, or (2) the satisfaction of the Trigger Period Avoidance Conditions (as defined below).
The “Trigger Period Avoidance Conditions” will occur when (i) the TLR Portfolio Borrowers deposit with the lender an amount that, if applied to the outstanding principal balance of the TLR Portfolio Loan Combination, would cause the debt yield to be equal to or greater than 6.0% (the “Trigger Period Avoidance Deposit Amount”) and (ii) on or prior to each anniversary of the date the deposit describe in clause (i) was made, the TLR Portfolio Borrowers deposit with lender into the same eligible account an amount of funds equal to Trigger Period Avoidance Deposit Amount (it being agreed that upon the expiration of all Trigger Periods then in existence, other than due to the satisfaction of the Trigger Period Avoidance Conditions, all such funds will be promptly disbursed and returned to the TLR Portfolio Borrowers).
■ | Property Management. The TLR Portfolio Properties are managed by TLR Management Inc., an affiliate of the borrower sponsors. |
■ | Current Mezzanine or Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Secured Indebtedness. Not Permitted. |
■ | Release of Collateral. At any time after the earlier to occur of (1) the date that is two years after the closing date of the securitization that includes the last note to be securitized, and (2) November 9, 2024, the TLR Portfolio Borrowers may obtain a release of one or more individual TLR Portfolio Properties from the lien of the mortgage, subject to satisfaction of certain conditions including, but not limited to (i) no event of default has occurred and is continuing, (ii) the amount of the TLR Portfolio Loan Combination defeased will be an amount equal to the greater of (a) 110% of the allocated loan amount for the related TLR Portfolio property being released and (b) 100% of the net sales proceeds applicable to such individual TLR Portfolio property, (iii) the debt service coverage ratio with respect to the remaining TLR Portfolio Properties after the release is not less than the greater of (a) the debt service coverage ratio for all of the TLR Portfolio Properties immediately prior to the date of notice of the partial release or the consummation of the partial release, as applicable and (b) 1.80x, each calculated based on the trailing-6 months financials, (iv) the debt yield with respect to the remaining TLR Portfolio Properties after release is greater than the debt yield for all of the TLR Portfolio Properties immediately prior to the date of notice of the partial release or the consummation of the partial release, as applicable calculated based on the trailing-6 months financials and (v) the lender receives a REMIC opinion. |
■ | Terrorism Insurance. The TLR Portfolio Loan Combination documents require that the “all-risk” insurance policy maintained by the borrowers provide coverage for terrorism in an amount equal to the full replacement cost of the TLR Portfolio Properties, plus business interruption coverage in an amount equal to 100% of the projected gross income for the TLR Portfolio Properties covering a restoration period of up to 15 months, with an extended period of indemnity of up to 6 months. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #9: 40 Gansevoort
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #9: 40 Gansevoort
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #9: 40 Gansevoort
Mortgaged Property Information | Mortgage Loan Information | |||||||||
Number of Mortgaged Properties | 1 | Loan Seller | JPMCB | |||||||
Location (City / State) | New York, New York | Cut-off Date Balance | $45,600,000 | |||||||
Property Type | Mixed Use | Cut-off Date Balance per SF | $734.93 | |||||||
Size (SF) | 62,047 | Percentage of Initial Pool Balance | 3.0% | |||||||
Total Occupancy as of 12/1/2021 | 100.0% | Number of Related Mortgage Loans | None | |||||||
Owned Occupancy as of 12/1/2021 | 100.0% | Type of Security | Leasehold | |||||||
Year Built / Latest Renovation | 2006 / NAP | Mortgage Rate | 3.99000% | |||||||
Appraised Value | $67,000,000 | Original Term to Maturity (Months) | 120 | |||||||
Appraisal Date | 10/1/2021 | Original Amortization Term (Months) | NAP | |||||||
Borrower Sponsors | SK Development and CB Developers | Original Interest Only Period (Months) | 120 | |||||||
Property Management | CBJ Management LLC | First Payment Date | 1/1/2022 | |||||||
Maturity Date | 12/1/2031 | |||||||||
Underwritten Revenues | $6,710,947 | |||||||||
Underwritten Expenses | $3,103,369 | Escrows(2) | ||||||||
Underwritten Net Operating Income (NOI)(1) | $3,607,578 | Upfront | Monthly | |||||||
Underwritten Net Cash Flow (NCF)(1) | $3,533,587 | Taxes | $0 | Springing | ||||||
Cut-off Date LTV Ratio | 68.1% | Insurance | $0 | Springing | ||||||
Maturity Date LTV Ratio | 68.1% | Replacement Reserves | $1,034 | $1,034 | ||||||
DSCR Based on Underwritten NOI / NCF | 1.96x / 1.92x | TI/LC | $0 | Springing | ||||||
Debt Yield Based on Underwritten NOI / NCF | 7.9% / 7.7% | Other(3) | $241,693 | Springing | ||||||
Sources and Uses | ||||||||||
Sources | $ | % | Uses | $ | % | |||||
Loan Amount | $45,600,000 | 100.0% | Loan Payoff | $44,578,215 | 97.8% | |||||
Closing Costs | 708,241 | 1.6 | ||||||||
Reserves | 242,727 | 0.5 | ||||||||
Principal Equity Distribution | 70,817 | 0.2 | ||||||||
Total Sources | $45,600,000 | 100.0% | Total Uses | $45,600,000 | 100.0% | |||||
(1) | Underwritten NOI and Underwritten NCF are inclusive of straight-line rent averaged through the end of the loan term given investment grade tenancy. |
(2) | See “-Escrows” herein. |
(3) | Other upfront reserves represents (i) $141,693 on account of ground lease reserves and (ii) $100,000 on account of rent concessions reserves. Other Monthly Escrows represents a springing reserve for the ground rent. |
■ | The Mortgage Loan. The 40 Gansevoort mortgage loan (the “40 Gansevoort Mortgage Loan”) is secured by a first mortgage encumbering the borrowers leasehold interest in a 62,047 SF mixed-use building located in New York, New York (the “40 Gansevoort Property”). The 40 Gansevoort Property is comprised of 9,293 SF of retail space and 52,754 SF of office space. The 40 Gansevoort Mortgage Loan has an aggregate outstanding principal balance as of the Cut-off Date of $45,600,000 and represents approximately 3.0% of the Initial Pool Balance. The 40 Gansevoort Mortgage Loan was originated by JPMorgan Chase Bank, National Association on November 17, 2021. The proceeds of the 40 Gansevoort Mortgage Loan were used to refinance the 40 Gansevoort Property, pay closing costs, fund upfront reserves and return equity to the sponsors. |
The 40 Gansevoort Mortgage Loan has an initial and remaining term of 120 months as of the Cut-off Date and accrues interest at a rate of 3.99000% per annum. Voluntary prepayment of the 40 Gansevoort Mortgage Loan is permitted in whole (but not in part) on any business day after June 1, 2031 without a penalty or payment of any prepayment premium. Defeasance of the 40 Gansevoort Mortgage Loan in whole (but not in part) is permitted upon the date that is two years after the closing date of the Benchmark 2021-B31 securitization.
■ | COVID-19 Update. As of October 1, 2021, the 40 Gansevoort Property is open and fully operational. As a result of the pandemic, the tenant and borrower sponsor mutually agreed to a $600,000 rent abatement to be applied on a monthly basis beginning in January 2022 and continuing through December 2027. The rent abatement equates to approximately $100,000 per annum. At loan origination the borrower funded a reserve in the amount of $100,000 that represents approximately one year of the aforementioned rent abatement, to be held as additional collateral. The 40 Gansevoort Mortgage Loan is not subject to any modifications or forbearance agreements. |
■ | The Mortgaged Property. The 40 Gansevoort Property is a five-story, 62,047 SF, Class A, office and boutique retail building at the intersection of 12th Street and Hudson Street in the Meatpacking neighborhood of New York, New York. The 40 Gansevoort Property was built in 2006 and became the first building to be approved by the Landmarks Preservation Commission in the newly-designated Gansevoort Market Historic District. In 2004, New York based fashion brand, Theory LLC (“Theory”), signed its lease for 100.0% of the 40 Gansevoort Property to serve as its corporate headquarters and flagship store. The 40 Gansevoort Property features 9,293 SF of retail space on the first floor and 52,754 square feet of office space on the 2nd through 5th floors. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #9: 40 Gansevoort
As of December 1, 2021, the 40 Gansevoort Property was 100.0% leased to a single tenant, Theory. Theory (100.0% of net rentable area), is a contemporary fashion brand for the modern consumer and urban professional with pieces such as jackets, dresses, knitwear and slacks. The Theory luxe brand puts an emphasis on comfort with offerings such as pull-on pants, hoodies, soft tops and jumpsuits. Theory was founded in New York City in 1997 and as of August 31, 2021, has 431 stores. Apart from the 40 Gansevoort Property, there are four Theory stores throughout Manhattan. Theory is headquartered, including their executive management team, at the 40 Gansevoort Property and has leased the property since 2004. Theory renewed their lease in 2019 with a lease expiration date in October of 2031. Theory has two, five-year extension options at the greater of 90.0% of fair market rental value and the fixed rent of the immediately preceding year. Annual fixed rent will then increase by 1% each subsequent year of such extended term. The 40 Gansevoort Mortgage Loan is structured with a full excess cash sweep in the event that, among other things, Theory does not renew their lease within 18 months of expiration.
Theory is owned by Fast Retailing Co, LTD (“Fast Retailing”), a multi-national retail holding company that owns and operates brands such as UNIQLO and GU. Fast Retailing is headquartered in Japan and, as of October 15, 2021, is the third-largest manufacturer and retailer of private-label apparel in the world, operating 2,312 stores across 25 countries. Fast Retailing is rated A by Standard and Poor’s.
The following table presents certain information relating to the sole tenant at the 40 Gansevoort Property:
Sole Tenant Based on Underwritten Base Rent(1)
Tenant Name | Credit Rating (Fitch/MIS/S&P)(2) | Tenant GLA | % of GLA | UW Base Rent | % of Total | UW Base | Lease | Renewal / | ||||||||
Theory | NR / NR / A | 62,047 | 100.0% | $5,861,146 | 100.0% | $94.46 | 10/31/2031 | 2, 5-year options | ||||||||
Total Occupied | 62,047 | 100.0% | $5,861,146 | 100.0% | $94.46 | |||||||||||
Vacant | 0 | 0.0 | 0 | 0.0 | 0.00 | |||||||||||
Total / Wtd. Avg. | 62,047 | 100.0% | $5,861,146 | 100.0% | $94.46 |
(1) | Based on the underwritten rent roll dated as of December 1, 2021, inclusive of straight-line average rent through the end of the loan term. |
(2) | Certain credit ratings are those of the parent entity whether or not the parent entity guarantees the lease. |
The following table presents certain information relating to the lease rollover schedule at the 40 Gansevoort 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 | UW Base Rent | % of Total UW | UW Base Rent | # of Expiring | |||||||||||||
MTM | 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 | 62,047 | 100.0 | 100.0 | % | $5,861,146 | 100.0 | % | $94.46 | 1 | |||||||||||
Vacant | 0 | 0.0 | 100.0 | % | NAP | NAP | NAP | NAP | ||||||||||||
Total / Wtd. Avg. | 62,047 | 100.0 | % | $5,861,146 | 100.0 | % | $94.46 | 1 |
(1) | Based on the underwritten rent roll dated as of December 1, 2021, inclusive of straight-line average rent through the end of the loan term. |
(2) | Certain tenants may have termination or contraction options (which may become exercisable prior to the originally stated expiration date of the lease) that are not considered in the above Lease Expiration Schedule. |
The following table presents certain information relating to historical leasing at the 40 Gansevoort Property:
Historical Leased %(1)
2019 | 2020 | As of 12/1/2021(1) |
100.0% | 100.0% | 100.0% |
(1) | As of December 31 unless specified otherwise. |
(2) | Based on the underwritten rent roll dated as of December 1, 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #9: 40 Gansevoort
■ | Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the 40 Gansevoort Property: |
Cash Flow Analysis(1)
2019 | 2020 | TTM 9/30/2021 | Underwritten(2) | Underwritten $ per SF | |||||||||||
Base Rent(3) | $4,579,373 | $5,672,334 | $5,273,884 | $5,861,146 | $94.46 | ||||||||||
Vacancy Loss & Credit Loss | 0 | 0 | 0 | (353,208 | ) | ($5.69 | ) | ||||||||
Other Income | 917,115 | 1,105,158 | 1,143,516 | 1,203,009 | $19.39 | ||||||||||
Effective Gross Income | $5,496,488 | $6,777,492 | $6,417,400 | $6,710,947 | $108.16 | ||||||||||
Real Estate Taxes | $1,000,232 | $1,090,251 | $840,392 | $1,164,091 | $18.76 | ||||||||||
Insurance | 10,558 | 10,397 | 6,493 | 18,530 | $0.30 | ||||||||||
Management Fee | 176,866 | 233,220 | 210,780 | 117,223 | $1.89 | ||||||||||
Ground Rent | 1,082,687 | 1,728,349 | 1,659,051 | 1,700,320 | 27.40 | ||||||||||
Other Expenses | 92,256 | 182,544 | 103,205 | 103,205 | 1.66 | ||||||||||
Total Operating Expenses | $2,362,599 | $3,244,761 | $2,819,921 | $3,103,369 | $50.02 | ||||||||||
Net Operating Income | $3,133,889 | $3,532,731 | $3,597,480 | $3,607,578 | $58.14 | ||||||||||
TI / LC | 0 | 0 | 0 | 62,047 | $1.00 | ||||||||||
Replacement Reserves | 0 | 0 | 0 | 11,945 | $0.19 | ||||||||||
Net Cash Flow | $3,133,889 | $3,532,731 | $3,597,480 | $3,533,587 | $56.95 | ||||||||||
Occupancy(4) | 100.0 | % | 100.0 | % | 100.0 | % | 95.0 | % | |||||||
NOI Debt Yield | 6.9 | % | 7.7 | % | 7.9 | % | 7.9 | % | |||||||
NCF DSCR | 1.70 | x | 1.92 | x | 1.95 | x | 1.92 | x |
(1) | Historical financials have been adjusted for entity level expenses, including amortization, bank service charges, broker commissions, filling fees, business licenses/permits, depreciation, LLC/PLLC taxes, business improvement district expenses and interest expenses. |
(2) | Based on the underwritten rent roll dated as of December 1, 2021. |
(3) | Inclusive of straight-line average rent through the end of the loan term. |
(4) | Underwritten occupancy is based on the economic occupancy. |
■ | Appraisal. The appraisal concluded an “as-is” appraised value of $67,000,000 for the 40 Gansevoort Property and the loan-to-value ratio based on such appraised value is 68.1%. The appraisal concluded a “hypothetical market value go dark” appraised value of $46,000,000 for the 40 Gansevoort Property and the loan-to-value ratio based on such appraised value is 99.1%. |
■ | Environmental Matters. According to a Phase I environmental report dated October 6, 2021, there was no evidence of any recognized environmental conditions at the 40 Gansevoort Property. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus for additional information. |
■ | Market Overview and Competition. The 40 Gansevoort Property is located within Manhattan, New York which is part of the New York Metropolitan area, the largest metropolitan statistical area by population as of 2019. According to the appraisal, New York City has a population of nearly 8.3 million people. According to a third party market report, the median household income within a five mile radius of the property is $102,409, compared to the national median household income of $62,990. The New York office and retail market vacancy rates are 11.8% and 4.1%, respectively, with average rents of $56.59 and $44.40 per SF, respectively. |
The 40 Gansevoort Property is located in the Hudson Square submarket. As of the third quarter of 2021, the Hudson Square submarket has an office and retail vacancy rate of 8.4% and 4.1%, respectively, with average rents of $73.37 and $162.21 per SF, respectively. The Hudson Square submarket has strong demand from technology firms such as Google which has committed to a $1,000,000,000 investment in the area. Google plans to double the number of its employees in the city to 14,000 and occupy 1,700,000 SF of existing space at 315 and 345 Hudson Street, as well as a redevelopment site at 550 Washington Street. Two of the closest neighboring retailers include Hermès, located at 46 Gansevoort Street, and Christian Louboutin, located at 59 Horatio Street.
The appraisal identified eight comparable retail properties with base rent per SF ranging from $205.34 to $703.13. The appraisal also identified ten comparable office properties in the surrounding area with base rent per SF ranging from $83.00 to $184.00.
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #9: 40 Gansevoort
Comparable Retail Rents(1)
Property | Tenant Name | Lease Start Date | Term (yrs.) | Lease Type | Tenant Size (SF) | Base Rent per SF |
58 Gansevoort | Bally | April 2021 | 10.00 | Modified Gross | 2,950 | $288.46 |
2 Ninth Avenue/1 Little W. 12th Street | Lucid Motors | June 2021 | 10.00 | Modified Gross | 3,200 | $703.13 |
33 Ninth Avenue | Tourneau | January 2021 | 10.00 | Modified Gross | 3,941 | $532.86 |
50 Gansevoort Avenue | Brunello Cucinelli | October 2021 | 10.00 | Modified Gross | 4,383 | $205.34 |
426 West 14th Street | USPS | October 2021 | 10.00 | Modified Gross | 1,800 | $319.44 |
64 Gansevoort Street | Frame Denim | August 2021 | 10.00 | Modified Gross | 1,700 | $427.00 |
62 Gansevoort Street | Belstaff | July 2021 | 10.00 | Modified Gross | 1,700 | $447.00 |
3 Ninth Avenue | Loro Piana | August 2021 | 5.42 | Modified Gross | 3,165 | $224.96 |
(1) | Source: Appraisal. |
Comparable Office Rents(1)
Property | Tenant Name | Lease Start Date | Term (yrs.) | Lease Type | Tenant Size (SF) | Base Rent per SF |
40 Tenth Avenue | Westcap | August 2021 | 15.00 | Modified Gross | 28,495 | $184.00 |
40 Tenth Avenue | Stripes, LLC | July 2021 | 11.00 | Modified Gross | 13,921 | $155.00 |
414 West 14th Street | Davis Shapiro Lewit & Grabel | June 2021 | 6.83 | Modified Gross | 6,885 | $93.00 |
512 West 22nd Street | Capricorn Investment Group | March 2021 | 10.50 | Modified Gross | 11,912 | $98.00 |
40 Tenth Avenue | RTW Investments | February 2021 | 10.00 | Modified Gross | 13,815 | $130.00 |
348 West 14th Street | GR Affinity, LLC | November 2021 | 4.00 | Modified Gross | 2,970 | $83.00 |
414 West 14th Street | Inscape | July 2021 | 12.00 | Modified Gross | 6,525 | $100.00 |
809 Broadway | AllianceBernstein | June 2021 | 5.00 | Modified Gross | 2,623 | $138.00 |
60-74 Gansevoort Street | Match.com | June 2021 | 10.00 | Modified Gross | 40,000 | $118.00 |
860 Washington Street | Expa, LLC | August 2021 | 7.25 | Modified Gross | 4,743 | $146.45 |
(1) | Source: Appraisal. |
Market Rent Summary(1)
Suite | Type | Square Feet | Annual Base Rent (psf) | Market Rent (psf) |
Floor 1 | Retail | 9,293 | $113.69 | $310.00 |
Floor 2 | Office | 12,816 | $113.69 | $100.00 |
Floor 3 | Office | 12,782 | $113.69 | $100.00 |
Floor 4 | Office | 12,782 | $113.69 | $100.00 |
Floor 5 | Office | 12,738 | $113.69 | $120.00 |
Floor PH | Office | 1,636 | $113.69 | $120.00 |
Total / WAV | 62,047 | $113.69 | $136.09 |
(1) | Source: Appraisal |
■ | The Borrower. The borrower is 40 Gans Lessee LLC, a Delaware limited liability company structured to be a special purpose bankruptcy-remote entity, having one independent director in its organizational structure. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the 40 Gansevoort Mortgage Loan. The borrower is indirectly owned in whole by 40 Gansevoort Development LLC, which is owned, in part by Charles Blaichman of SK Development and Abram Shnay of CB Developers (collectively, the “Borrower Sponsors”), a long-term partnership that has resulted in a portfolio of projects in Manhattan, Brooklyn, Queens and the Hudson Valley. Notable developments include 40 Gansevoort Street, 10 Bond Street and 173-176 Perry Street. The Borrower Sponsors also own 1228 Madison Avenue and The West, located at 547 West 47th Street, which are currently under development. Abram Shnay and Charles Blaichman are the non-recourse carveout guarantors for the 40 Gansevoort Mortgage Loan. |
SK Development is a developer, builder and manager of real estate, founded by Abram Shnay, who has over fifty years of related experience. SK Development projects range from ground-up construction to adaptive re-use and the conversion and expansion of existing structures. Projects include mixed-use condominiums, rental apartment buildings, office buildings and lifestyle hotels. SK Development is currently developing projects totaling over $500,000,000. SK Development recently completed 363 Lafayette Street, Corte (21-30 44th Drive - Long Island City) and The Lindley (591 Third Avenue).
CB Developers is a New York City-based developer led by Charles Blaichman, who has more than 35 years of experience in the real estate industry. Charles Blaichman has a track record of successful partnerships with other
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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developers, hotel operators, managers and investors. CB Developer’s portfolio includes developmental projects consisting of boutique hotels, residential and commercial condominiums and rental properties.
■ | Escrows. At origination of the 40 Gansevoort Mortgage Loan, the borrower deposited $141,693 to fund a ground lease reserve and $100,000 into a rent concession reserve, representing approximately one year of the related rent abatement on the Theory lease, to be released upon the later of the rent abatement period and January 1, 2028. The borrower also funded $1,034 in an upfront replacement reserve. |
Tax and Insurance Reserve - On each payment date, the borrower is required to fund 1/12 of the taxes that the lender reasonably estimates will be payable over the next-ensuing 12-month period, provided, however, that the requirement for the borrower to make monthly deposits of taxes and other assessments will be waived so long as no event of default occurred and is continuing and, among other conditions, (i) Theory occupies one or more parcels which constitute a separate tax lot or lots and does not constitute a portion of any other tax lot not a part of the 40 Gansevoort Property, (ii) Theory is required under lease to pay all taxes and other charges directly to the applicable governmental authority, Theory makes timely payments of all taxes and other charges, and the borrower has provided the lender with satisfactory evidence that such timely payments of taxes have been made and (iii) Theory is not included in any bankruptcy action. On each payment date, the borrower is required to fund 1/12 of the insurance premiums that the lender estimates will be payable for the renewal of the coverage afforded by the policies, provided however, the requirement for the borrower to make monthly deposits of insurance premiums will be waived so long as no event of default has occurred and is continuing and, among other conditions, the borrower has provided the lender with satisfactory evidence that the 40 Gansevoort Property is insured in accordance with the 40 Gansevoort Mortgage Loan documents pursuant to an acceptable blanket insurance policy.
Replacement Reserve – On each payment date, the borrower is required to pay to the lender approximately $1,034.
Ground Lease Reserve – During the occurrence of a Cash Sweep Event (as defined below) or if any of the following conditions fail to be met: (i) the borrower is timely paying all amounts due under the ground lease and is not otherwise in default thereunder, (ii) borrower provides evidence of all such payments not less than two business days prior to the date due, and (iii) no event of default exists, then on each payment date, the borrower is required to pay to the lender, 1/12 of the rents and other charges due under the ground lease that the lender estimates will be payable by the borrower as lessee under the ground lease during the next ensuing 12 months.
Rollover Reserve – Commencing 24 months prior to the earliest stated expiration of the Lease Sweep Lease (as defined below), the borrower is required to make monthly of approximately $5,170.
■ | Lockbox and Cash Management. The 40 Gansevoort Mortgage Loan is structured with a hard lockbox and springing cash management. All funds in the lockbox accounts will be swept to an account designated by the borrower, unless a Cash Sweep Event (as defined below) is continuing, in which case such funds are required to be swept on each business day into a cash management account controlled by the lender, at which point, following payment of ground rent, taxes and insurance, debt service, bank fees, required reserves and operating expenses, all funds are required to be deposited into the excess cash flow reserve, to be held by the lender as additional security for the 40 Gansevoort Mortgage Loan and disbursed in accordance with the terms of the 40 Gansevoort Mortgage Loan documents. |
A “Cash Sweep Event” means the occurrence of (a) an event of default under the 40 Gansevoort Mortgage Loan documents (b) the bankruptcy or insolvency of the borrower, (c) the bankruptcy or insolvency of the manager, or (d) the commencement of a Lease Sweep Period (as defined below).
A “Cash Sweep Event Cure” means (i) with respect to clause (a) above, the acceptance by the lender of a cure of such event of default, (ii) with respect to clause (c) above, if borrower replaces the manager with a qualified manager under a replacement management agreement within 60 days, (iii) with respect to clause (d) above, the Lease Sweep Period has ended or (iv) with respect to clause (b) above, provided the applicable bankruptcy action is involuntary and was not consented to by any borrower party, the applicable bankruptcy action has been dismissed without possibility of appeal; provided, however, that, such Cash Sweep Event Cure set forth in this definition is subject to the following: (A) no event of default has occurred and is continuing under the 40 Gansevoort Mortgage Loan documents, (B) a Cash Sweep Event Cure may occur no more than a total of two times in the aggregate during the term of the 40 Gansevoort Mortgage Loan, but a Cash Sweep Event Cure may occur an unlimited number of times with respect to a Lease Sweep Period and (C) the borrower has paid all of the lender’s related reasonable expenses. Except as set forth in clause (iv) above, in no event may the borrower be entitled to cure a Cash Sweep Event caused by a bankruptcy action of the 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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A “Lease Sweep Period” means a period commencing on the first monthly payment date following the occurrence of any of the following: (a) with respect to Theory’s lease or any replacement lease (each, a “Lease Sweep Lease”), the earlier to occur of: (i) 18 months prior to the earliest stated expiration (including the stated expiration of any renewal term), and (ii) the date by which the tenant is required to give notice of its exercise of a renewal option thereunder; (b) the receipt by the borrower or the manager of written notice from any tenant under a Lease Sweep Lease exercising its right to terminate its Lease Sweep Lease; (c) the date that a Lease Sweep Lease is surrendered, cancelled or terminated prior to its then current expiration date or the receipt by the borrower or the manager of written notice from any tenant under a Lease Sweep Lease of such intent, (d) the date that any tenant under a Lease Sweep Lease discontinues its business (other than a temporary discontinuance of business (i) for up to 60 days as the result of the performance of standard and customary renovations at the 40 Gansevoort Property or (ii) as a result of a government-mandated shutdown of the 40 Gansevoort Property related to the COVID-19 pandemic or any similar pandemic which may occur after the loan origination date) at the space demised under the applicable Lease Sweep Lease (the “Lease Sweep Space”) at the 40 Gansevoort Property or give notice of such intent, (e) upon a monetary default or material non-monetary default under a Lease Sweep Lease by the tenant thereunder that continues beyond any applicable notice and cure period, (f) the occurrence of a Lease Sweep Tenant Party Insolvency Proceeding (as defined below), or (g) upon a decline in the credit rating of the tenant or any guarantor under a Lease Sweep Lease below “BBB-” or equivalent by any rating agency.
A “Lease Sweep Period Cure” means, (A) in the case of clauses (a), (b), (c), and (d) above, the entirety or the applicable portion of the Lease Sweep Space is leased pursuant to qualified lease(s) and sufficient funds have been reserved to cover all anticipated approved Lease Sweep Space leasing expenses, free rent periods and/or rent abatement periods set forth in all such leases and any shortfalls in required payments under the 40 Gansevoort Mortgage Loan documents or operating expenses as a result of any anticipated down time prior to the commencement of payments under such leases; (B) in the case of clause (a) above, the date on which the subject tenant under the Lease Sweep Lease irrevocably exercises its renewal or extension option with respect to all of its Lease Sweep Space, and sufficient funds have been reserved to cover all anticipated Lease Sweep Space leasing expenses, free rent periods and/or rent abatement in connection with such renewal or extension; (C) in the case of clause (b) above, if such termination option is not validly exercised by the tenant under the applicable Lease Sweep Lease by the latest exercise date specified in such Lease Sweep Lease or is otherwise validly and irrevocably waived in writing by the related tenant; (D) in the case of clause (e) above, the date on which the subject default has been cured, and no other monetary or material non-monetary default under such Lease Sweep Lease occurs for a period of six consecutive months following such cure; (E) in the case of clause (f) above, either (1) the applicable Lease Sweep Tenant Party Insolvency Proceeding has terminated and the applicable Lease Sweep Lease has been affirmed, assumed or assigned or (2) the applicable Lease Sweep Lease has been assumed and assigned to a third party; and (F) in the case of clause (g) above, if the credit rating of the tenant or any guarantor under a Lease Sweep Lease has been restored to at least “BBB-” or equivalent by the relevant rating agencies.
A “Lease Sweep Tenant Party Insolvency Proceeding” means, among other actions as fully described in the 40 Gansevoort Mortgage Loan documents, (i) the admission in writing by any tenant under a Lease Sweep Lease or its direct or indirect parent company (a “Lease Sweep Tenant Party”) of its inability to pay its debts generally, the making of a general assignment for the benefit of creditors, or the instituting by any Lease Sweep Tenant Party of any proceedings under the applicable insolvency law or (ii) the instituting of any proceeding against or with respect to any Lease Sweep Tenant Party seeking liquidation of its assets or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of it or the whole or any substantial part of its properties or assets or the taking of any corporate, partnership or limited liability company action in furtherance of any of the foregoing.
■ | Property Management. The 40 Gansevoort Property is currently managed by CBJ Management LLC, a New York limited liability company and an affiliate of the borrower. |
■ | Release of Collateral. Not permitted. |
■ | Current Mezzanine or Secured Subordinate Indebtedness. None. |
■ | Permitted Future Mezzanine or Subordinate Indebtedness. Not permitted. |
■ | Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the 40 Gansevoort 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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Mortgaged Property Information | Mortgage Loan Information | ||||||||||||
Number of Mortgaged Properties | 4 | Loan Seller | CREFI | ||||||||||
Location (City/State)(1) | Various | Cut-off Date Balance | $43,500,000 | ||||||||||
Property Type(1) | Various | Cut-off Date Balance per SF | $67.78 | ||||||||||
Size (SF) | 641,784 | Percentage of Initial Pool Balance | 2.9% | ||||||||||
Total Occupancy as of 10/1/2021 | 78.9% | Number of Related Mortgage Loans | None | ||||||||||
Owned Occupancy as of 10/1/2021 | 78.9% | Type of Security | Fee | ||||||||||
Year Built / Latest Renovation(1) | Various | Mortgage Rate | 3.24000% | ||||||||||
Appraised Value(1) | $62,000,000 | Original Term to Maturity (Months) | 60 | ||||||||||
Appraisal Date | Various | Original Amortization Term (Months) | 360 | ||||||||||
Borrower Sponsors | Charles Stein, Dennis Udwin, The Charles | Original Interest Only Period (Months) | 12 | ||||||||||
Stein Trust, The Dennis Udwin Trust, The Charles Stein 2015 Family Trust I and The Dennis Udwin 2015 Family Trust | First Payment Date | 12/6/2021 | |||||||||||
Maturity Date | 11/6/2026 | ||||||||||||
Property Management | In-Rel Properties North, LLC | ||||||||||||
Underwritten Revenues | $8,952,960 | ||||||||||||
Underwritten Expenses | $3,372,474 | Escrows(2) | |||||||||||
Underwritten Net Operating Income (NOI) | $5,580,486 | Upfront | Monthly | ||||||||||
Underwritten Net Cash Flow (NCF) | $4,882,661 | Taxes | $102,003 | $51,001 | |||||||||
Cut-off Date LTV Ratio | 70.2% | Insurance | $0 | Springing | |||||||||
Maturity Date LTV Ratio | 64.4% | Replacement Reserve(3) | $0 | $13,371 | |||||||||
DSCR Based on Underwritten NOI / NCF | 2.46x / 2.15x | TI/LC(4) | $1,165,642 | $37,437 | |||||||||
Debt Yield Based on Underwritten NOI / NCF | 12.8% / 11.2% | Deferred Maintenance Reserve | $140,128 | $0 | |||||||||
Sources and Uses | |||||||||||||
Sources | $ | % | Uses | $ | % | ||||||||
Loan Amount | $43,500,000 | 99.6% | Loan Payoff | $40,760,574 | 93.3% | ||||||||
Principal New Cash Contribution | 165,000 | 0.4 | Closing Costs | 1,496,654 | 3.4 | ||||||||
Upfront Reserves | 1,407,773 | 3.2 | |||||||||||
Total Sources | $43,665,000 | 100.0% | Total Uses | $43,665,000 | 100.0% | ||||||||
(1) | See the “In-Rel 4 Portfolio Summary” chart below for the Location, Property Type, Year Built / Latest Renovation and Appraised Values of the individual In-Rel 4 Portfolio Properties (as defined below). |
(2) | See “—Escrows” below. |
(3) | The replacement reserve is subject to a cap equal to approximately $320,892. |
(4) | The TI/LC reserve is subject to a cap equal to approximately $898,798. |
■ | The Mortgage Loan. The In-Rel 4 Portfolio mortgage loan (the “In-Rel 4 Portfolio Mortgage Loan”) is secured by a first mortgage encumbering the borrowers’ fee interest in a portfolio of three office properties and one mixed use (office/retail) property located in Oklahoma and Alabama containing an aggregate of 641,784 SF (the “In-Rel 4 Portfolio Properties”). The In-Rel 4 Portfolio Mortgage Loan has an original principal balance and an outstanding principal balance as of the Cut-off Date of $43,500,000 and represents approximately 2.9% of the Initial Pool Balance. The In-Rel 4 Portfolio Mortgage Loan was originated by Citi Real Estate Funding Inc. on November 5, 2021. The proceeds of the In-Rel 4 Portfolio Mortgage Loan were used to refinance the In-Rel 4 Properties, pay closing costs and fund upfront reserves. The In-Rel 4 Portfolio Mortgage Loan accrues interest at a fixed rate of 3.24000% per annum. |
The In-Rel 4 Portfolio Mortgage Loan has an initial term of 60 months and a remaining term of 59 months as of the Cut-off Date. The In-Rel 4 Portfolio Mortgage Loan requires interest only payments on each payment date through and including the payment date in November 2022 and thereafter requires monthly payments of interest and principal sufficient to amortize the In-Rel 4 Portfolio Mortgage Loan over a 30-year amortization schedule. The scheduled maturity date of the In-Rel 4 Portfolio Mortgage Loan is the payment date in November 2026. Voluntary prepayment of the In-Rel 4 Portfolio Mortgage Loan is prohibited prior to the payment date in August 2026. Provided that no event of default under the In-Rel 4 Portfolio Mortgage Loan is continuing, defeasance with direct, noncallable obligations of the United States of America is permitted at any time on or after the first due date following the second anniversary of the securitization closing date.
■ | The Mortgaged Properties. The In Rel 4 Portfolio Properties consist of three office properties located in Birmingham, Alabama and one mixed use (office/retail) property located in Oklahoma City, Oklahoma. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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The following table presents certain information relating to the individual In-Rel 4 Portfolio Properties:
Portfolio Summary
Property Name |
City |
State | Property Type | Year Built/ Renovated | Net Rentable Area (SF) | Occupancy(1) | Allocated Cut-off Date Balance | % of Portfolio Cut-off Date Balance | Appraised Value | UW NOI(1) |
50 Penn Place | Oklahoma City | Oklahoma | Mixed Use | 1974/2019 | 317,043 | 84.4% | $19,250,000 | 44.3% | $27,400,000 | $2,609,777 |
Beacon Ridge Tower | Birmingham | Alabama | Office | 1983/NAP | 153,287 | 64.4% | 10,800,000 | 24.8 | 15,400,000 | 1,212,436 |
100 Concourse | Birmingham | Alabama | Office | 1989/NAP | 125,597 | 75.2% | 10,225,000 | 23.5 | 14,600,000 | 1,226,564 |
800 Concourse | Birmingham | Alabama | Office | 1990/NAP | 45,857 | 100.0% | 3,225,000 | 7.4 | 4,600,000 | 531,709 |
Total / Wtd. Avg. | 641,784 | 78.9% | $43,500,000 | 100.0% | $62,000,000 | $5,580,486 |
(1) | As of underwritten rent rolls dated October 1, 2021. |
The 50 Penn Place property (“50 Penn Place”) is a mixed-use, 16-story office/retail building located in Oklahoma City, Oklahoma with a total of 317,043 SF of net rentable area. 50 Penn Place is located on an approximately 10.27-acre site. 50 Penn Place currently has 75 tenants with an average base rent of approximately $14.91 per SF. 50 Penn Place offers 989 parking spaces, resulting in a parking ratio of approximately 3.1 spaces per 1,000 SF of net rentable area. Office space makes up 54.2% of net rentable area, and retail space makes up the remaining 45.8%. Renovated in 2019, 50 Penn Place includes a parking garage, loading dock, and outdoor cafe seating.
The Beacon Ridge Tower property (“Beacon Ridge Tower”) is a suburban office building in Birmingham, Alabama consisting of 153,287 SF. Built in 1983, Beacon Ridge Tower is located on an approximately 11.91-acre site and currently has 10 tenants with an average base rent of approximately $18.09 per SF. Beacon Ridge Tower offers 600 parking spaces, resulting in a parking ratio of approximately 3.9 spaces per 1,000 SF of net rentable area.
The 100 Concourse property (“100 Concourse”) is a suburban office building in Birmingham, Alabama consisting of 125,597 SF. Built in 1989, 100 Concourse is located on an approximately 9.75-acre site and currently has 28 tenants with an average base rent of approximately $18.97 per SF. 100 Concourse offers 474 parking spaces, resulting in a parking ratio of approximately 3.8 spaces per 1,000 SF of net rentable area.
The 800 Concourse property (“800 Concourse”) consists of two suburban office buildings in Birmingham, Alabama consisting of 45,857 SF. Built in 1990, 800 Concourse is located on an approximately 4.71-acre site and currently has three tenants with an average base rent of approximately $18.83 per SF. 800 Concourse offers 183 parking spaces, resulting in a parking ratio of approximately 4.0 spaces per 1,000 SF of net rentable area.
The largest tenant by underwritten base rent is PRA Holding, LLC/Portfolio Recovery (“PRAA”) (33,900 SF; 5.3% of NRA; 7.6% of UW Base Rent). PRAA occupies suites 201 and 700 at Beacon Ridge Tower and is a subsidiary of PRA Group Inc. (NASDAQ: PRAA), an outsourcing receivables management company focused on purchasing, collecting, and managing portfolios of non-performing loans and defaulted consumer receivables. The company purchases non-performing loans and obligations of individuals owed to credit originators on discount. PRAA works with banks and other types of consumer, retail and auto finance companies to attempt collection of unpaid obligations through call center operations, legal recourse and insolvency proceedings. Founded in 1996, PRA Group, Inc. went public in 2002 and is one of the largest acquirers of nonperforming loans with operations in 18 countries. PRAA has the right terminate its lease upon providing at least nine months’ notice to the landlord.
The second largest tenant by underwritten base rent is the Sinclair Television Stations, LLC (“Sinclair”) (26,357 SF; 4.1% of NRA; 5.3% of UW Base Rent). Sinclair occupies suites 130, 140, 200 and 201 at 800 Concourse. Sinclair is a subsidiary of the Sinclair Broadcast Group, Inc. (NASDAQ: SBGI) a diversified media company founded in 1986 and a provider of regional and national sports and news. Sinclair Broadcast Group, Inc. owns and/or operates 21 regional sports network brands and owns, operates and/or provides services to 185 television stations in 86 markets. Additionally, Sinclair Broadcast Group, Inc. also owns multiple national networks and has TV stations affiliated with the major broadcast networks. Sinclair has no early termination provisions under its lease
The third largest tenant by underwritten base rent is the Community Strategies, Inc. (“Community Strategies”) (39,696 SF; 6.2% of NRA; 5.0% of UW Base Rent). Community Strategies occupies suites R300 and R301 at 50 Penn Place. Community Strategies, Inc. is doing business as Epic Charter School, a fully accredited school that combines the convenience of online learning with the support of one-on-one instruction from an Oklahoma certified teacher. Epic Charter School’s activities are reported for federal and Oklahoma tax purposes by Community Strategies under the provisions of Internal Revenue Code Section 501(c)(3) and is generally exempt from income taxes. Community
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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Strategies was founded in 2005 and began reporting activity in 2009. Community Strategies has no early termination provisions under its lease.
■ | COVID-19 Update. As of November 6, 2021, all of the In-Rel 4 Portfolio Properties are open and operational. According to the borrower sponsors, two tenants representing approximately 1% of total NRA received rent abatements due to the COVID-19 pandemic. As of November 6, 2021, the In-Rel 4 Portfolio Mortgage Loan is not subject to any modifications or forbearance requests. The first payment date of the In-Rel 4 Portfolio Mortgage Loan is December 6, 2021. |
Largest Tenants Based on Underwritten Based Rent(1)
Tenant Name | Credit Rating (Fitch/MIS/S&P)(2) | Tenant GLA | % of GLA | UW Base Rent(3) | % of Total UW Base Rent(3) | UW Base Rent | Lease Expiration | Renewal / Extension Options |
PRAA(4) | BB+ / Ba2 / NR | 33,900 | 5.3% | $638,865 | 7.6% | $18.85 | 3/31/2026 | 3, 3-year options |
Sinclair | NR / Ba2 / B | 26,357 | 4.1 | 448,063 | 5.3 | $17.00 | 9/30/2027 | 2, 5-year options |
Community Strategies | NR / NR / NR | 39,696 | 6.2 | 420,753 | 5.0 | $10.60 | 7/31/2028 | 2, 6-year options |
iHeartMedia + Entertainment, Inc. | NR / NR / B | 22,095 | 3.4 | 373,626 | 4.4 | $16.91 | 8/31/2025 | 2, 5-year options |
Employers Mutual Casualty Company/ EMC Insurance(5) | NR / NR / NR | 16,930 | 2.6 | 371,929 | 4.4 | $21.97 | 11/30/2022 | None |
MuniServices, LLC | BB+ / Ba2 / NR | 16,964 | 2.6 | 320,442 | 3.8 | $18.89 | 12/31/2023 | None |
Clear Channel Broadcasting, Inc./iHeartMedia | NR / NR / B | 17,081 | 2.7 | 312,558 | 3.7 | $18.30 | 3/31/2025 | 2, 5-year options |
Highland Treatment Center, LLC | NR / NR / NR | 14,954 | 2.3 | 309,912 | 3.7 | $20.72 | 3/31/2028 | Various(6) |
Executive Office Services | NR / NR / NR | 16,964 | 2.6 | 302,807 | 3.6 | $17.85 | 2/28/2026 | None |
Aerotek, Inc. | NR / NR / NR | 11,977 | 1.9 | 244,577 | 2.9 | $20.42 | 12/31/2022 | 2, 3-year options |
Ten Largest Tenants | 216,918 | 33.8% | $3,743,533 | 44.4% | $17.26 | |||
Remaining Tenants | 289,604 | 45.1 | 4,685,148 | 55.6 | 16.18 | |||
Vacant Space | 135,262 | 21.1 | NAP | NAP | NAP | |||
Total / Wtd. Avg. All Owned Tenants | 641,784 | 100.0% | $8,428,681 | 100.0% | $16.64 |
(1) | Based on the underwritten rent roll dated as of October 1, 2021. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | UW Base Rent, % of Total UW Base Rent, and UW Base Rent $ per SF are inclusive of contractual rent steps |
(4) | PRAA has the right to terminate its lease effective upon at least nine months prior notice to the termination date. |
(5) | Employers Mutual Casualty Company/ EMC Insurance may terminate its lease upon an interruption of service continuing for 30 consecutive days effective as of the beginning date of the service interruption. |
(6) | Highland Treatment Center, LLC has one, five year renewal option on Suite 296 and five, one year renewal options on Suite 340. |
The following table presents certain information relating to the lease rollover schedule at the In-Rel 4 Properties, 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(3) | % of Total UW Base Rent(3) | UW Base Rent $ per SF(3) | # of Expiring Leases | |||||
MTM | 22,053 | 3.4% | 3.4% | $232,361 | 2.8% | $10.54 | 14 | |||||
2021 | 0 | 0.0 | 3.4% | 0 | 0.0% | $0.00 | 0 | |||||
2022 | 86,772 | 13.5 | 17.0% | 1,566,554 | 18.6% | $18.05 | 26 | |||||
2023 | 94,905 | 14.8 | 31.7% | 1,629,453 | 19.3% | $17.17 | 26 | |||||
2024 | 51,040 | 8.0 | 39.7% | 926,888 | 11.0% | $18.16 | 19 | |||||
2025 | 65,021 | 10.1 | 49.8% | 1,048,387 | 12.4% | $16.12 | 10 | |||||
2026 | 68,267 | 10.6 | 60.5% | 1,235,475 | 14.7% | $18.10 | 8 | |||||
2027 | 47,035 | 7.3 | 67.8% | 830,918 | 9.9% | $17.67 | 5 | |||||
2028 | 65,379 | 10.2 | 78.0% | 894,762 | 10.6% | $13.69 | 4 | |||||
2029 | 0 | 0.0 | 78.0% | 0 | 0.0% | $0.00 | 0 | |||||
2030 | 3,192 | 0.5 | 78.5% | 63,884 | 0.8% | $20.01 | 2 | |||||
2031 | 0 | 0.0 | 78.5% | 0 | 0.0% | $0.00 | 0 | |||||
2032 & Thereafter | 2,858 | 0.4 | 78.9% | 0 | 0.0% | $0.00 | 2 | |||||
Vacant | 135,262 | 21.1 | 100.0% | NAP | NAP | NAP | NAP | |||||
Total / Wtd. Avg. | 641,784 | 100.0% | $8,428,681 | 100.0% | $16.64 | 116 |
(1) | Based on the underwritten rent roll dated as of October 1, 2021. |
(2) | 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. |
(3) | UW Base Rent, % of Total UW Base Rent, and UW Base Rent $ per SF are inclusive of contractual rent steps. |
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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #10: IN-REL 4 PORTFOLIO
The following table presents certain information relating to historical leasing at the In-Rel 4 Portfolio Properties:
Historical Leased %(1)(2)
2018 | 2019 | 2020 | As of 10/01/21(3) |
76.1% | 75.5% | 78.5% | 78.9% |
(1) | Historical occupancies are as of December 31 of each respective year. |
(2) | Occupancy is reflective of the weighted average occupancy of the In-Rel 4 Portfolio Properties. |
(3) | Based on the underwritten rent rolls dated October 1, 2021. |
■ | 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 In-Rel 4 Portfolio Properties: |
Cash Flow Analysis(1)
2018 | 2019 | 2020 | TTM 8/31/2021 | Underwritten(2) | Underwritten $ per SF | ||||||
Base Rent | $8,231,679 | $7,853,687 | $7,834,672 | $8,186,545 | $8,272,191 | $12.89 | |||||
Contractual Rent Steps(3) | 0 | 0 | 0 | 0 | 156,490 | 0.24 | |||||
Potential Income from Vacant Space | 0 | 0 | 0 | 0 | 2,220,070 | 3.46 | |||||
Reimbursements | 553,252 | 496,510 | 437,072 | 452,232 | 435,934 | 0.68 | |||||
Gross Potential Rent | $8,784,930 | $8,350,198 | $8,271,743 | $8,638,776 | $11,084,685 | $17.27 | |||||
Total Other Income | 43,840 | 71,191 | 39794 | 44,965 | 44,965 | $0.07 | |||||
Vacancy & Credit Loss | 0 | 0 | 0 | 0 | (2,220,070) | (3.46) | |||||
Parking | 51,660 | 46,870 | 46,410 | 43,380 | 43,380 | 0.07 | |||||
Effective Gross Income | $8,880,430 | $8,468,259 | $8,357,948 | $8,727,122 | $8,952,960 | $13.95 | |||||
Real Estate Taxes | 685,020 | 570,512 | 565,483 | 586,030 | 585,526 | $0.91 | |||||
Insurance | 87,306 | 92,277 | 77,689 | 77,689 | 99,150 | 0.15 | |||||
Management Fee | 266,413 | 254,048 | 250,738 | 261,814 | 268,589 | 0.42 | |||||
Other Operating Expenses(4) | 2,606,964 | 2,523,069 | 2,438,145 | 2,408,861 | 2,419,210 | 3.77 | |||||
Total Expenses | $3,645,703 | $3,439,906 | $3,332,056 | $3,334,394 | $3,372,474 | $5.25 | |||||
Net Operating Income | $5,234,728 | $5,028,352 | $5,025,892 | $5,392,728 | $5,580,486 | $8.70 | |||||
Replacement Reserves | 0 | 0 | 0 | 0 | 160,446 | 0.25 | |||||
TI/LC | 0 | 0 | 0 | 0 | 537,379 | 0.84 | |||||
Net Cash Flow | $5,234,728 | $5,028,352 | $5,025,892 | $5,392,728 | $4,882,661 | $7.61 | |||||
Occupancy | 76.1% | 75.5% | 78.5% | 78.9%(2) | 80.0%(5) | ||||||
NOI Debt Yield | 12.0% | 11.6% | 11.6% | 12.4% | 12.8% | ||||||
NCF DSCR | 2.31x | 2.22x | 2.22x | 2.38x | 2.15x |
(1) | Certain items such as 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) | Based on the underwritten rent rolls dated October 1, 2021. |
(3) | Represents rent steps through August 1, 2022 for the Beacon Ridge Tower Property and October 1, 2022 for the remaining In-Rel 4 Portfolio Properties. |
(4) | Other operating expenses consists of repairs and maintenance, cleaning, utilities, and general and administrative expenses. |
(5) | Underwritten Occupancy is based on the economic occupancy. |
■ | Appraisal. According to the portfolio appraisals, the In-Rel 4 Portfolio Properties have an aggregate “as is” appraised value of $62,000,000 as of September 24, 2021 and October 1, 2021. |
■ | Environmental Matters. According to Phase I environmental reports, dated October 6, 2021, there are no recognized environmental conditions or recommendations for further action at any of the In-Rel 4 Portfolio 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #10: IN-REL 4 PORTFOLIO
■ | Market Overview and Competition. 50 Penn Place is located in Oklahoma City, Oklahoma within the Oklahoma City metropolitan statistical area (“Oklahoma City MSA”). 50 Penn Place borders the North Oklahoma City and Northwest Oklahoma City submarkets. Major connections to the area include Lake Hefner Parkway, the Northwest Expressway and I-44 which is adjacent to 50 Penn Place. As of 2021, the Oklahoma City MSA has a population of 1,421,923 and a median household income of $60,428. As of the trailing four quarters ended Q2 2021, the office market vacancy for the North Oklahoma City and Northwest Oklahoma City submarkets was 6.7% and 14.9%, respectively. As of the trailing four quarters ended Q2 2021, the North Oklahoma City and Northwest Oklahoma City submarkets have an average base rent per SF of $18.64 and $17.02, respectively. |
The following table displays five comparable office properties for the 50 Penn Place property.
Summary of Comparable Leases(1)
Property Name | Tenant Name | Tenant Leased Space (SF) | Lease Sign Date | Lease Term (years) | Base Rent Per SF |
50 Penn Place | Relx Inc. | 12,315(2) | Jul 2002(2) | 19.5(2) | $17.00(2) |
The Tower | Weaver | 3,990 | Aug 2021 | 7.0 | $22.00 |
Oil Center | Oklahoma Housing Finance | 10,414 | Sep 2021 | 1.0 | $15.50 |
Union Plaza | Whelan Security | 2,120 | Sep 2021 | 6.0 | $20.00 |
Lakeside Shops | The Shower Door Source | 5,130 | Jul 2021 | 4.0 | $13.00 |
Landmark Towers | OK Expansion | 1,102 | Jun 21 | 3.0 | $16.50 |
(1) | Source: Appraisal. |
(2) | Based on the underwritten rent roll dated October 1, 2021. |
Beacon Ridge Tower is located in Birmingham, Alabama within the Birmingham-Hoover, Alabama metro statistical area (“Birmingham-Hoover MSA”) and is a part of the Vulcan / Oxmoor submarket. According to the appraisal, the surrounding area is considered to be in its growth stage, with several new developments being constructed within a five-mile radius. Primary access to Beacon Ridge Tower includes Beacon Parkway West, which connects to the major highway Alabama 149. Other connections include U.S. Route 31 and I-65. As of 2021, the Birmingham-Hoover MSA has a population of 1,112,085 and a median household income of $57,658. The office market vacancy for the Vulcan / Oxmoor submarket is 33.1% with an average base rent of $17.19 per SF.
100 Concourse and 800 Concourse are located in Birmingham, Alabama within the Birmingham-Hoover MSA and are a part of the I-65 Corridor / S Shelby County submarket. Primary access to the properties is provided by Concourse Parkway, which connects to Valleydale Road, a major residential and commercial linkage. Other major connections include U.S. Route 31 and I-65. The office market vacancy for the I-65 Corridor / S Shelby County submarket is 7.2% with an average base rent of $15.43 per SF.
The following table displays five comparable office properties for Beacon Ridge Tower, 800 Concourse and 100 Concourse.
Summary of Comparable Leases(1)
Property Name | Tenant Name | Tenant Leased Space (SF) | Lease Sign Date | Lease Term (years) | Base Rent Per SF |
Beacon Ridge Tower | Clear Channel Broadcasting, Inc./iHeartMedia | 17,081(2) | Apr 2005(2) | 20.0(2) | $18.30(2) |
800 Concourse | Sinclair Television Stations, LLC | 26,357(2) | May 1996(2) | 31.3(2) | $17.00(2) |
100 Concourse | Highland Treatment Center, LLC | 14,954(2) | Jan 2021(2) | 7.2(2) | $20.72(2) |
500 Office Park | NAV | 1,094 | Oct 2021 | 5.0 | $20.00 |
Meadow Brook South 2500 | NAV | 23,792 | Oct 2021 | 5.0 | $18.75 |
Colonnade Corporate | Eversource | 6,987 | Apr 2021 | 5.3 | $26.38 |
361 Summit Blvd. | Gaines, Gault & Hendrix | 9,403 | Sep 2020 | 5.1 | $23.50 |
Meadowbrook 100 | Weinberg Wheeler Hudgins | 7,063 | Apr 2020 | 5.0 | $21.50 |
(1) | Source: Appraisals. |
(2) | Based on the underwritten rent rolls dated October 1, 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #10: IN-REL 4 PORTFOLIO
■ | The Borrowers. The borrowers are Concourse 100, LLC, 800 Building Owner, LLC, Beacon Ridge, LLC and 50 Penn Building Owner, LLC, each a single purpose Delaware limited liability company. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the In-Rel 4 Loan. |
The sponsors and non-recourse carveout guarantors are Charles Stein and Dennis Udwin, each an individual. The borrower sponsors also include The Charles Stein Trust, The Dennis Udwin Trust, The Charles Stein 2015 Family Trust I and The Dennis Udwin 2015 Family Trust. Charles Stein is a founding principal of In-Rel Properties and is currently responsibly for the company’s treasury functions, financial and tax planning and sourcing and underwriting of new transactions. Dennis Udwin is a founding principal of In-Rel Properties and oversees In-Rel Properties’ leasing, property management, construction functions, and due diligence on new acquisitions.
■ | Escrows. At loan origination, the borrowers deposited (i) approximately $102,003 into a tax reserve, (ii) approximately $1,165,642 into a TI/LC reserve and (iii) approximately $140,128 into a deferred maintenance reserve. |
Tax Reserve. On a monthly basis, the borrowers are required to deposit 1/12 of an amount which would be sufficient to pay taxes for the next ensuing 12 months (currently equivalent to approximately $51,001).
Insurance Reserve. On each due date, the borrowers are required to deposit 1/12 of the insurance premiums that the lender estimates will be payable for the renewal of coverage afforded by such policies into an insurance reserve; provided, however, such insurance reserve has been conditionally waived so long as the borrower maintain a blanket policy meeting the requirements of the In-Rel 4 Portfolio Mortgage Loan documents. An acceptable blanket policy is currently in place.
Replacement Reserve. On each due date, the borrowers are required to deposit approximately $13,371 into a replacement reserve, subject to a cap of $320,892.
TI/LC Reserve. On each due date, the borrowers are required to deposit approximately $37,437 into a TI/LC reserve, subject to a cap of $898,798.
▀ | Lockbox and Cash Management. The In-Rel 4 Portfolio Mortgage Loan is structured with a soft lockbox and springing cash management. The borrowers are required, upon the occurrence of a Trigger Period (as defined below), to deliver a tenant direction letter to the existing tenants at the In-Rel 4 Portfolio Properties, directing them to remit their rent checks directly to the lender-controlled lockbox. Prior to a Trigger Period, The borrowers are required to cause revenue received by the borrowers or any applicable property manager from the In-Rel 4 Portfolio Mortgage Loan Properties to be deposited into such lockbox promptly upon receipt. All funds deposited into the lockbox are required to be transferred on each business day to or at the direction of the borrowers unless a Trigger Period exists. Upon the occurrence and during the continuance of a Trigger Period, all funds in the lockbox account are required to be swept on each business day to a cash management account under the control of the lender to be applied and disbursed in accordance with the In-Rel 4 Portfolio Mortgage Loan documents, and all excess cash flow funds remaining in the cash management account after the application of such funds in accordance with the In-Rel 4 Portfolio Mortgage Loan documents are required to be held by the lender in an excess cash flow reserve account as additional collateral for the In-Rel 4 Portfolio Mortgage Loan. Upon the cure of the applicable Trigger Period, so long as no other Trigger Period exists, the lender is required to return any amounts remaining on deposit in the excess cash flow reserve account to the borrowers. Upon an event of default under the In-Rel 4 Portfolio Mortgage Loan documents, the lender will apply funds to the debt in such priority as it may determine. |
A “Trigger Period” means a period (A) commencing upon the earliest to occur of (i) an event of default, and (ii) and the debt service coverage ratio falling below 1.15x; and (B) expiring upon (1) with respect to clause (A)(i), the cure (if applicable) of such event of default, and (2) with respect to clause (A)(ii), the debt service coverage ratio remains equal to or greater than 1.20x for two consecutive calendar quarters.
■ | Property Management. The In-Rel 4 Portfolio Properties are managed by In-Rel Properties North, LLC, an affiliate of the borrower sponsors. |
■ | Ground Lease. None. |
■ | Current Mezzanine or Subordinate Indebtedness. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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LOAN #10: IN-REL 4 PORTFOLIO
■ | Permitted Future Mezzanine or Subordinate Secured Indebtedness. Not Permitted. |
■ | Release of Collateral. So long as no event of default has occurred and is continuing, and the Release Price (as defined below) is paid, the borrowers may at any time release an outparcel at the 50 Penn Place Property provided (i) borrowers provide a written request no less than 45 days prior to intended release date; (ii) the individual property is legally divided from the remaining property and assigned separate tax identification; (iii) evidence of effective property release, title insurance policy and an updated survey of the remaining property, all under legal compliance are provided to Lender within 20 days and (iv) 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. |
“Release Price” shall mean, with respect to any individual property, an amount equal to the greater of (a) 115% of the allocated loan amount with respect to such individual property and (b) the net sales proceeds applicable to such individual property.
Provided that no event of default is continuing, at any time after the date that is two years after the closing date of the securitization that includes the last note to be securitized, the borrowers may deliver defeasance collateral and obtain release of one or more individual In-Rel 4 Portfolio Properties, in each case, provided that, among other conditions, (i) the defeasance collateral is in an amount equal to the greater of (a) 115% of the allocated loan amount for the individual In-Rel 4 Portfolio Property, and (b) 100% of the net sales proceeds applicable to such individual Mortgaged Property, (ii) the borrower delivers a REMIC opinion, (iii) the borrowers delivers a rating agency confirmation, (iv) as of the date of notice of the partial release and the consummation of the partial release after giving effect to the release, the debt service coverage ratio with respect to the remaining In-Rel 4 Portfolio Properties is greater than the greater of (a) 2.05x, and (b) the debt service coverage ratio for all of the In-Rel 4 Portfolio Properties immediately prior to the date of notice of the partial release or the consummation of the partial release, as applicable, (v) as of the date of notice of the partial release and the consummation of the partial release, after giving effect to the release, the loan-to-value ratio with respect to the remaining In-Rel 4 Portfolio Properties is no greater than the lesser of (a) 70.2% and (b) the loan-to-value ratio for all of the In-Rel 4 Portfolio Properties immediately prior to the date of notice of the partial release or the consummation of the partial release, as applicable, and (vi) as of the date of notice of the partial release and the consummation of the partial release, after giving effect to the release, the debt yield with respect to the remaining In-Rel 4 Portfolio Properties is greater than the greater of (a) 11.2%, and (b) the debt yield for all of the In-Rel 4 Portfolio Properties immediately prior to the date of notice of the partial release or the consummation of the partial release, as applicable.
■ | Terrorism Insurance. The borrowers are required to maintain or cause to be maintained an “all-risk” insurance policy that provides coverage for terrorism in an amount equal to the full replacement cost of the In-Rel 4 Portfolio Properties, plus business interruption coverage in an amount equal to 100% of the projected gross income for the applicable In-Rel 4 Portfolio property for 18 months with six months of extended indemnity. The “all-risk” policy containing terrorism insurance is required to contain a deductible no greater than $25,000 unless lender consents to a higher deductible. 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., J.P. Morgan Securities LLC, Goldman Sachs & Co. 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.
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