Wells Fargo Bank N.A. has filed a prospectus related to its Series 2016-C35 CMBS transaction, which is secured by 102 loans for 140 commercial properties having an aggregate principal balance of $1.02 billion.
Included in the prospectus is information on some of the transaction’s top loans, one of which is a $25.6 million loan secured by a first mortgage encumbering the University Towers multifamily residential cooperative building in New Haven, CT.
The property, which is 2 blocks from The Yale/New Haven Children’s Hospital and 1.1 miles from the main Yale University Campus, is a high-rise residential cooperative apartment building with a two-story garage. The asset has an “as-is” appraised value of $57.8 million.
The borrower, University Towers Owners Corp., has implemented a major façade restoration project that includes window/door and curtain wall replacement in two phases. Phase I renovations were completed in 2015. Phase II of the renovations is funded in part with the proceeds from the mortgage loan.
Prior to the commencement of the facade restoration project, the borrower engaged Hygenix, Inc. to investigate the presence of Polychlorinated Biphenyls (PCBs), a probable carcinogen, at the exterior building surfaces. Samplings conducted by Hygenix in 2009, 2013, and 2014 identified PCBs in the window/door caulk, glazing, and exterior curtain wall with some results indicating PCBs in excess of the United States Environmental Protection Agency limit of 50 parts per million.
The soils surrounding the property were also tested and found to have elevated levels of PCBs. The source of the PCBs in the soil were likely from runoff of rainwater coming into contact with building materials containing PCBs. Based on sample results, the location and extent of the PCB contamination is limited to caulk, glazing, exterior stucco/concrete, and surficial soil at the base of the residential apartment building.
PCB remediation has been underway pursuant to a clean-up plan approved by US EPA. A Post Remediation Indoor Air Sampling Plan was recently submitted to the US EPA and is pending approval. The Phase I environmental site assessment recommended no further actions in this matter other than to continue the PCB remediation including the daily continuous air monitoring as part of the on-going facade restoration capital improvement project. Abatement Industries Group is currently completing the remediation work required by the cleanup plan, under the supervision of Hygenix.
At loan closing the lender obtained an Environmental Liability insurance policy with Great American E & S Insurance Company with a policy limit of $10.0 million per incident and in the aggregate, a self-insured retention of $250,000 and a policy coverage period that extends coverage for 3 years following the maturity date of the University Towers Owners Corp. Mortgage Loan. The policy premium has been paid in full.
University Towers is a 16-story high-rise elevator apartment building with appurtenant cellar space. It was constructed in 1958 and converted to cooperative ownership in 1981. There are 238 residential cooperative units, all of which are owned by tenant-shareholders, located on floors 3 through 16, comprised of 70 studio apartments, 92 one-bedroom apartments, 54 two-bedroom apartments and 22 three-bedroom apartments.
Located on the northwest corner of the intersection of York Street and George Street, the property also contains 13 medical office tenants located on floors 1 and 2. The medical offices, which are used for professional office and clinical-type medical office space, are owned by the borrower and 100 percent leased to third-parties.
The two-story parking garage that comprises a portion of the property is on the southeast corner of the intersection of George Street and Park Street, diagonally across the street from the residential apartment building.
The property features an outdoor in-ground pool, storage units for use by the residential cooperative shareholders, management office, laundry room, community room and janitorial room. Parking is provided via 91 on-site striped surface parking spaces and a covered parking garage that provides an additional 151 parking spaces for a total of 242 parking spaces, resulting in a parking ratio of 1.0 space per unit.
The mortgage loan was originated on June 27, 2016 by National Cooperative Bank, N.A. and matures on July 1, 2026. The University Towers Corp. Mortgage Loan has an original principal balance of $25.6 million and accrues interest at a rate of 4.5 percent per annum. The loan’s initial term of 120 months requires payments of interest-only for the first 12 payments following origination. Thereafter, payments of principal and interest are required based on a 30-year amortization schedule.
The area immediately surrounding the University Towers Owners Corp. Property is developed with a stable residential community that consists of single and multifamily dwellings, apartment buildings, mixed-use properties and local commercial and office uses.
Yale University, which is located approximately 1.1 miles northeast of the University Towers property, is currently New Haven’s largest employer. Yale University is planning many new developments, including the construction of new undergraduate housing and new academic facilities. Recent Yale University developments include a new sculpture and art building along Howe Street, a new high-rise building on York Street, a parking garage behind Ingalis Park, ongoing renovation of the existing colleges and the renovation of the Yale Art Gallery’s Kahn Building.