Deutsche Bank Securities, Inc has filed a prospectus related to COMM 2014-CCRE20, which is comprised of 64 commercial property loans secured by 101 properties with an aggregate principal balance of approximately $1.18 billion.
Included in the prospectus is information on the Gateway Center Phase II Loan Combination, which was co-originated by German American Capital Corp (GACC) and Wells Fargo Bank, National Association.
The loan is three pari passu notes. The $120.0 million controlling Note A-1 of the fixed rate whole loan for $300.0 million will be included in the COMM 2014-CCRE20 mortgage trust.
The $75 million non-controlling Note A-2 is currently held by Wells Fargo Bank, National Association and is expected to be contributed to a future securitization. The $105 million non-controlling Note A-3 is currently held by German American Capital Corp and is also expected to be contributed to a future securitization.
The Gateway Center Phase II Loan Combination is secured by the borrower’s fee simple interest in the 602,164 square foot, one and two-level, anchored retail power center located at 550 Gateway Drive in Brooklyn, NY. The Gateway Center Phase II Loan Combination has a 10-year term and pays interest-only throughout the term at a fixed rate equal to 4.2770 percent.
The borrower, Gateway Center Properties Phase II Owner, LLC, is a single purpose Delaware limited liability company structured to be bankruptcy-remote with two independent managers in its organizational structure. The sponsor of the borrower and non-recourse carve-out guarantor is The Related Companies, L.P.
Based on the “As Completed” appraised value of $451.0 million as of October 1, 2014, the cut-off date LTV of the Gateway Center Phase II Loan Combination is 66.5% and the remaining implied equity is $151.0 million.
As of September 1, 2014, 18 of the Gateway Center Phase II Property’s 30 tenants are open for business. In addition to the retail space, the Gateway Center Phase II Property includes 2,087 parking spaces, a ratio of 3.5 spaces per 1,000 sq. ft., and three pads leased to JC Penney, Applebee’s and Bank of America.
The 124,168 square foot JC Penney store at the Gateway Center Phase II Property is the only new store the company has opened this year. JC Penney leases its pad from the sponsor and has invested $25.0 million building out its space. ShopRite occupies 89,774 square feet at the property. Burlington Coat Factory leases 73,864 square feet.
The Gateway Center Phase II Property has an average rent of $40.69 PSF, which is approximately 98.3% of the average market rent. The appraiser identified five comparable retail centers within a six-mile radius of the Gateway Center Phase II Property with an average occupancy of 97.6%.
Prior to development, the Gateway Center Phase II Property consisted of undeveloped land located adjacent to Gateway Center Phase I, a retail power center that was also developed by the sponsor. Completed in 2002, Gateway Center Phase I consists of approximately 638,000 square feet and is anchored by Home Depot, Target and BJ’s Wholesale Club. As of July 2014, Gateway Center Phase I was 100.0 percent leased.
The sponsor has also been approved for the development of approximately 2,385 residential housing units known as the Gateway Estates, located adjacent to the Gateway Center Phase II Property
The Gateway Center Phase II Property was 97.1% pre-leased prior to the opening of the first tenant (Applebee’s) on July 23, 2014, and 96.3% of NRA has been turned over to tenants as of September 9, 2014. The top five tenants at the Gateway Center Phase II Property account for 354,321 square feet (58.8% of NRA) and include JC Penney, ShopRite, Burlington Coat Factory, Sports Authority and TJ Maxx.
The proceeds of the Gateway Center Phase II Loan Combination were used to retire existing debt of approximately $230.1 million, fund reserves of approximately $30.8 million, pay closing costs of approximately $3.8 million and give the borrower a return of equity of approximately $35.3 million.
As of October 14, 2014, the Gateway Center Phase II Property was 87.4% physically occupied by 21 tenants. The Gateway Center Phase II Property is expected to be 96.3% physically occupied by November 30, 2014.