PROPERTY SITUATION

• The property is a low-rise suburban office campus consisting of one multi-story building and seven single story buildings, constructed in phases between 1986 and 1998 and totaling 293,548 square feet.
• The single-story buildings are occupied by state, county and local government agencies, while the multi-story building is occupied by private businesses.
• Since the onset of the COVID-19 pandemic, the occupancy of the multi-story building has steadily declined due to market conditions and the building's layout. Tenants have either fully vacated or substantially downsized, resulting in a current occupancy rate of 46%. The two remaining major tenants in the building are expected to vacate in the near term, which would further reduce occupancy to approximately 16%.Based on the reduction in rents and the cost of operating the multi-story building, the increased vacancy will result in a negative cash flow for the property overall. A sale of the multi-story building would significantly improve the property’s financial metrics, with anticipated improvements to the debt service coverage ratio, debt yield, and loan basis, thereby better positioning the asset for refinance at maturity.
• The borrower marketed the building twice; the first time the seller received one offer, and the sale fell through when the building use could not be changed and the second time, the borrower received a $5.5 million purchase offer from the county, which is already a tenant in several of the single-story buildings.
• The loan documents provide for a partial defeasance of the loan and release prices for each building based on values established when the loan closed. The release price for the multiple-story building was $13 million. Based on the $5.5 million purchase price, the loan documents prevented the borrower from selling the multi-story building.

BCA RESOLUTION

• Brighton Capital Advisors (“BCA”) prepared a proposal for the master/special servicer that detailed the status of the property, specifically the impact of the multi-story building on cash flow, and how, even at a sale price below the release price, a disposition of the multi-story building would substantially increase the financial metrics of the property. The special servicer was receptive to BCA’s proposal and a modification to the loan documents was negotiated