COPT Office Portfolio Loan Value Slashed, Colorado Springs Portfolio Sale Delayed

800 International Dr in Linthicum, MD

The value of the properties behind the $146.5 million COPT Office Portfolio loan, which includes 14 assets in Colorado and Maryland, was cut this month to $104.4 million, according to August remittance data, as reported by Trepp.

The properties were valued at $183.5 million at loan securitization. August servicer notes say the loan is currently past due for its August 6, 2013 payment.

The $146.5 million loan is secured by 9 office properties in Linthicum, MD and 5 office properties in Colorado Springs, CO (see list below). The portfolio totals 1,017,502 square feet, and was 76 percent occupied at the end of the third quarter, 2012.

“Legal counsel was engaged on 5/2/13,” say the servicer notes, which were provided by Trepp. “Loan will be monitored while information is gathered and discussions with the Borrower take place.”

The loan has been with the special servicer since March. The note does not mature until December 2016.

SEE: Fitch: Imminent Default for $146.5M COPT Office Portfolio Loan

During the REIT’s second quarter conference call with analysts, Roger Waesche, COPT’s President and CEO, discussed the firm’s previously announced intentions to divest its holdings in Colorado Springs, saying it is unlikely the sale of those properties will close in the time frame the company previously estimated.

“Unlike the balance of our [Strategic Reallocation Plan] where we didn’t say what assets we were selling, we clearly communicated to the market that we wanted to sell this project and we wanted to sell it in this timeframe,” said Waesche. “That really hurt our leverage. All we’re trying to do now is to take some pressure off the deal so we can have an orderly sale of the project.”

Waesche said the buildings were 77.8 percent occupied when the firm made its decision to monetize the portfolio. The same buildings are now 88.3 percent leased with additional leasing in process that will increase the annual cash NOI from $12 million to $15 million.

“The delay in the disposition process is an acceptable intermediate outcome,” said Waesche. “We remain committed to exiting Colorado Springs but we will do so in an orderly, rational fashion that ensures our shareholders receive fair value.”

Waesche said that treasury yields impacting cost of capital as well as concern over leasing played a part in the delay.

“We were willing to take a discount to exit and then interest rates rose their ugly head, so it gave a buyer a reason to come back and want a different price,” Waesche said. “We just want to walk away for a little bit of time and let things settle down and then move forward either in a block basis or selling it off in pieces.”

In January, reported that COPT executives had told analysts that the sale of its Colorado Springs properties “could fetch $160 million, although it was unclear if that figure also included some assets outside of the Springs.”

SEE: COPT looking to sell most of its Springs properties

The $146.5 million COPT Office Portfolio loan has nine office properties in Linthicum, MD that total approximately 618,541 square feet. They are all within a ten mile radius of the BWI Airport:

Linthicum, MD Property, Loan Amount and Year Built:

  •     96,636 SF Airport Square 20; $18,578,000 (1988)
  •     67,455 SF Airport Square 15: $13,533,000 (2000)
  •     71,076 SF Airport Square 19: $12,012,000 (1983)
  •     73,572 SF Airport Square 10: $11,812,000 (1986)
  •     68,802 SF Airport Square 21: $11,692,000 (1988)
  •     69,072 SF Airport Square 14: $11,291,000 (1987)
  •     57,409 SF Airport Tech 1: $8,488,000 (1986)
  •     57,379 SF Airport Tech 4: $8,408,000 (1988)
  •     57,140 SF Airport Tech 2: $8,008,000 (1986)

Five of the properties behind the loan are located in Colorado Springs, CO and total 400,441 square feet:

Colorado Springs, CO Property, Loan Amount and Year Built:

  •     108,976 SF 5725 Mark Dabling Blvd: $12,882,000 (1984)
  •     109,678 SF 5775 Mark Dabling Blvd: $12,477,000 (1985)
  •     105,895 SF 5755 Mark Dabling Blvd: $10,208,000 (1989)
  •     37,946 SF 1925 Aero Tech: $3,717,000 (1985)
  •     37,946 SF 1915 Aero Tech: $3,394,000 (1985)