11.06.10

By James Whitmore

Standard & Poor’s report shows only two of nine loans repaid in full in April

Only two out of the nine loans in European CMBS (commercial mortgage-backed securities) transactions scheduled to mature in April were repaid in full, a report from rating agency Standard & Poor’s has found.

Loans in European CMBS transactions due to mature over the next 12 months
In its latest European CMBS Monthly Bulletin published last week, the agency found that four of the nine loans were now in default, two had the benefit of a standstill agreement and one had been extended by a month.

April experienced the largest monthly concentration of loan maturities since the global recession began. Only 13 of the 52 loans that have reached maturity since the beginning of 2009 have been repaid in full.

The two loans that were repaid in full in April were the single loan in Pan-European Industrial Properties Series IV, which is secured on distribution warehouses across Europe, and the Apollo portfolio loan, which is one of 13 loans in the Taurus CMBS (Pan-Europe) 2007-1, and is secured on a mixed-use property in Switzerland.

The loan term of the Alpha Real Estate loan in Talisman 1 Finance was extended by one month to facilitate the borrower’s discussion of refinancing options. Additionally, the creditors of two loans – the Project Christie loan secured on retail centres in Germany, in the Titan Europe 2007-2 CMBS, and the Grays Shopping Centre loan, secured on the Essex shopping centre in the European Prime Real Estate No 1 CMBS – have agreed to a standstill period, thereby giving the borrowers time to find refinancing.

The Snowhill loan, secured on an industrial property in the Midlands in Indus (Eclipse 2007-1) went into default on its maturity date in April. The borrower of that loan is in discussion with lenders to agree heads of terms for a refinancing. The AMG portfolio mortgage loan, secured on London properties in Windermere VIII and the Normandy House loan, secured on UK secondary offices in European Prime Real Estate No 1 are also in default for failure to meet maturity payments.

“Servicers are adopting a range of remedies for loans that don’t meet maturity payments, among them extending loan terms to a later maturity date,” said Standard & Poor’s. “This remedy can be a sensible one, in our opinion, particularly at a time of stressed values.”

The agency expects the trend of an increase in loan extensions and defaults to continue in 2010 and into 2011. April 2011 is the month of highest loan maturity concentration (see graph).

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Source: Property Week (www.propertyweek.co.uk)