Home News Case Studies Suburban Office Buildings in Glen Allen, VA
The collateral was comprised of two suburban office buildings totaling 164,163 SF, constructed in 2001, and one undeveloped parcel located in Glen Allen, Virginia (north of Richmond near the intersection of I-95 and I-295).
The loan transferred to Special Servicing in January 2017 for maturity default. The borrower was unable to refinance due to the pending lease expiration of one of the largest tenants, a national bank with 117,142 SF in April 2019. Workout discussions with the borrower were unsuccessful and the Trust took title through foreclosure in August 2017.
Sold for $15.7 Million
$5.2 Million Above the Appraised Value at Foreclosure.
Scope of Work
Following the foreclosure, the property appraised for $10.5 million in December of 2017, with a contemporary loss projection of $4.5 million. Market feedback was that the bank was looking to vacate the property and re-locate to another market due to a lack of effort by the prior owner to engage in renewal discussions or fund TI/LC costs. Additionally, local brokers had reported that they had expected this outcome for an extended period of time, such that the property suffered from a negative perception within its market.
CWCAM recognized the need to make aggressive efforts to repair the building’s perception within the market and make clear to the bank that the Trust was able and willing to execute a market rate renewal, including the associated TI/LC costs. Renewal negotiations commenced as soon as title was taken and took approximately 12 months from foreclosure, which resulted in the bank executing a 12 year 7 month renewal at a market rental rate, preserving $2 million of EGI at the property.
CWCAM worked closely with the Trust’s Master Servicer to ensure that funds to advance for leasing commissions would be available despite the declining loan base of the 11 year-old pool. Following the execution of the lease, CWCAM rapidly brought the asset to market for sale in order to pass the tenant improvement obligation on to a buyer, preventing further advancing.
CWCAM sold the asset for $15.7 million ($95 psf), which was $5.2 million above the appraised value at foreclosure. This successful sale achieved full recovery for the bondholders of the Trust.