VIZZDA—August 10th, 2012 – A thirty one-property
portfolio purchased by a co-venture between DDR and Macquarie on September 26th,
2005 for approximately $396.2m from the now-defunct Mervyn’s Department Stores
reverted to Wells Fargo Bank at Trustee’s Auction. Wells Fargo was acting in
its capacity as trustee for the registered holders of the GE Capital Commercial
Mortgage Corp. Commercial Pass-Through Series 2005-C4, with Kevin C. Donahue of
CW Capital Asset Management as special servicer. These properties represented
less than 20% of the operating assets of Mervyn’s Department Stores at the time
of sale and are located in Arizona, Nevada, California and Texas.
The Maricopa County portion of the portfolio was comprised
of three properties built from 1988 to 1991 and were acquired for a total of
$33.44m. They are as follows:
Address
|
Ft2
|
Price
|
Price/ Ft2
|
2994 N Alma School
Rd
|
75,804
|
$8.556m
|
$112.87
|
4225 W Thunderbird
Rd
|
86,877
|
$14.66m
|
$168.74
|
6505 E Southern Ave
|
81,883
|
$10.428m
|
$127.43
|
The portfolio was secured with a $265,687,500 line of credit
comprised of a fixed rate note of $212,550,000 and a variable rate note of
$53,137,500 with German American Capital Corporation. German American Capital
Corporation securitized the debt and assigned it to Wells Fargo Bank on January
26th, 2012. Wells Fargo selected CW Capital Asset Management as the
special servicer and noticed the CMBS debt on February 13th, 2012.
The Maricopa County portion of the portfolio reverted at Trustee’s Auction on
August 9th, 2012 with an $11m credit bid or approximately $44.98/ Ft2.
At the time of purchase, all of the properties were leased
to Mervyn’s for 15 years firm with a ten-year option to extend. In August 2008,
Mervyn’s declared Chapter 11 Bankruptcy and had vacated all sites following
Chapter 7 Liquidation by December 31st, 2008. In early 2010, the
Mervyn’s Joint Venture adjusted its holding period projections for the
remaining properties triggering $37.6m in impairment charges. In June 2010, the
Mervyn’s Joint Venture was served a Notice of Default for failing to make
scheduled debt service payments. The properties were placed in court-ordered
receivership in August 2010. Due to the non-recourse nature of the loans, this
event represents the termination of both obligation and entitlement for DDR
from an accounting standpoint, though the resolution remains ongoing.
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BY:
Paul Dionne
Director of Anayltics
pdionne@vizzda.com
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