A Bahrain-based global alternative investor has defaulted on a loan tied to an assisted living facility in Cobb County, prompting its lender to initiate a foreclosure action.
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CWCapital Asset Management, acting as special servicer for bondholders of a CMBS trust, has moved to foreclose on a $19M mortgage backed by the Arbor Terrace East Cobb in Marietta, according to a foreclosure notice filed in Cobb County Friday.
The borrower is listed as Terrace East Cobb Propco SL-VI LLC, a shell company registered to a corporate service agent in Melville, New York. That entity paid more than $29M in 2016 for the 90-unit property, according to Cobb County records.
The buyer was an affiliate of the U.S. investment arm of Bahrain-based investment firm Arcapita, GlobeSt reported at the time of the sale. CBRE Capital Markets brokered the sale of Arbor Terraces at East Cobb as part of a $77M portfolio transaction that also included the 146-unit Arbor Terrace Peachtree City.
CBRE also originated a $50M loan tied to the buildings before securitizing the debt into a CMBS loan in 2017 to Freddie Mac. The total value of the collateralized debt was in excess of $1.1B with 50 individual multifamily loans, according to S&P Global.
Arcapita didn't pay off the loan when it matured Oct. 1, according to the notice. The loan was transferred to CWCapital nine days after its maturity date, according to commentary in the Morningstar Credit database. The property was 78% occupied as of November.
"The special servicer is evaluating proposals from the Borrower while also reviewing rights and remedies as outlined in the loan documents," CWCapital wrote in April servicer commentary.
Calls to CWCapital and its attorney, Alston & Bird's Eric Berardi, weren't returned.
The foreclosure auction is scheduled for June 4 on the Cobb County Courthouse steps. A spokesperson for Arbor Terrace East Cobb said operations of the senior care facility would continue as usual.
"This is the only Arbor Terrace community that is part of this business matter between the building’s owner and the lender, who are both in ongoing, productive discussions to remedy the situation," the spokesperson said in a statement.
The facility, operated by Atlanta-based senior living firm The Arbor Co., has up to 785 senior living units and 30 units for memory care, according to U.S. News & World Report's best memory care providers list.
Arbor Terrace East Cobb is the latest property in Atlanta struggling to pay off its loan amid elevated interest rates.
Most recently, Arbor Realty Trust moved to foreclose on a $20M loan attached to 41 Marietta St. — a 13-story Downtown Atlanta office tower whose borrowers, a joint venture between Wolfe Investments and Bluelofts, planned to convert it into apartments. LoanCore Capital in March foreclosed on the $48M loan tied to The Optimist apartment complex in the Piedmont Heights neighborhood, seizing the property from Liquid Capital.
More than 8% of KBRA-rated CMBS loans were in special servicing or delinquent as of April, largely driven by $1.5B in multifamily loans transferring to special servicing last month, Morningstar reported.
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