As a result of the COVID-19 pandemic, a popular Regal Cinema anchored retail property known as Shoppes at Magnolia, located in Coral Springs, Florida, failed its quarterly debt coverage cash management trigger test. This was due to business closures and timing of lease expirations, renewals and extensions. Consequently, the borrower was exposed to the implementation of a full cash management sweep and excess cash being withheld by the lender. In the event a cash sweep occurred, approximately $1MM in excess cash annually (~$8MM for the life of the loan) would have been collected by the Servicer and unavailable to the Borrower.
Expert associates at BCA were able to immediately delay the cash flow sweep while reviewing the DSCR calculation. The in-depth analysis saved the borrower over $750,000 in excess cash from being withheld by the Lender. In addition, BCA examined the loan documents and property financials, identifying 20% of Additional Income that was not being applied in accordance with the terms of the loan documents.
BCA was additionally able to guide the servicer to modify the interpretation of the loan documents and facilitate the inclusion of income that was previously omitted from the DSCR calculation, an estimated $200-$300k per year. With their legal and servicing expertise, associates at BCA were able to yield a successful outcome for the Borrower.
As stated by Michael Cohen, BCA Managing Partner, “Concise communication and knowledge of the intricacies of CMBS Servicing led to a successful outcome for our client.”