$67.2 Million UPB Non-Performing Loan | Secured by 5-Property Portfolio in Michigan

Investment Highlights

• Non-Performing CMBS Loan – the Loan is due the November 2020 debt service payment.
• Value-Add Opportunity via Loan Workout or Foreclosure
• Attractive Distribution & Showroom Collateral Properties – the Loan is secured by two distribution/warehouse and three standalone showroom/retail assets located in the Grand Rapids and Detroit MSAs. The Properties are well-located with visibility and accessibility to trafficked commercial arteries, providing access to major highways and linkage to the surrounding region.
• Sizable Capital Deployment Potential – acquisition of the Loan provides a prospective purchaser the ability to acquire a large non-performing loan secured by more than 1.4mm SF of commercial real estate.    

Investment Summary

Jones Lang LaSalle, in conjunction with NAI Farbman and RealINSIGHT Marketplace are pleased to offer for sale a $67.2 million UPB non-performing loan (the “Loan”) secured by first-lien mortgages on the fee-simple interests in an 1,407,911-SF, five-property warehouse and showroom portfolio located in Michigan (the “Collateral Properties”, “Properties”).

The 10-year, fixed-rate Loan in the original amount of $68,750,000 was originated in March 2017 as part of a sale-leaseback transaction. The Loan was subsequently split into five (5) pari-passu notes.

The former primary tenant leasing the Collateral Properties filed for chapter 11 bankruptcy in March 2020, which was subsequently converted into a Chapter 7 liquidation resulting in four of the five Properties becoming vacant and consequentially causing a payment default on the Loan. As of June 1st, two of the five Collateral Properties are leased, producing an overall occupancy rate of 12.5% based on square footage.

The largest property is a 1,056,890-SF distribution center located in suburban Detroit that also served as the former tenant’s headquarters and showroom. The property features 212 dock high doors and 12 grade level doors in the main building that also includes approximately 175,875-SF of showroom and office space. A standalone one-story, 39,200-SF office building is located on the site as well. The property is currently 100% vacant.

The two leased properties consist of a 46,388-SF single-tenant showroom and a 129,021-SF distribution warehouse also located in the Detroit MSA.The remaining two vacant standalone showrooms are both located along well trafficked retail corridors in the Grand Rapids MSA.

NNN and industrial real estate is the hot real estate asset class and demand for this asset class has only increased due to the uncertainty in the office and retail markets brought on by COVID-19. The Collateral Properties are heavily weighted in NNN and industrial space making the underlying real estate valuable.