Fort Lauderdale Office Tower Moved To Special Servicing Amid Dwindling Cash Flow
The $58.5M loan backing One Financial Plaza in Downtown Fort Lauderdale was moved to special servicing this week after owner Alliance HP failed to secure an extension on the debt.
The collateralized loan obligation covering the 274K SF office building at 100 SE Third Ave. is facing issues with a floating interest rate and didn’t achieve stabilized net operating income assumptions, according to Cred iQ CEO Mike Haas, whose firm first reported the debt’s shift to special servicing.
“The loan was underwritten with a projected stabilized NOI of $5.96 million while the most recent NOI figures only totaled $3.96 million, a $2.0 million deficit,” Haas said in an email. “The latest special servicer commentary for the loan provided by Cred iQ said a modification was ‘likely’ in the form of a principal paydown in exchange for an extension.”
The three-year loan was issued in September 2019 with two one-year extension options. Pennsylvania-based Alliance HP, which also maintains an office at One Financial Plaza, was able to secure one extension but failed to meet the required terms to push maturity for a second year, resulting in a maturity default, per Cred iQ.
The debt had an October 2023 maturity date but was granted a 90-day forbearance before maturing on Jan. 1, according to David Putro, senior vice president at Morningstar Credit. The special servicer is Trimont, a subsidiary of Minneapolis-based Värde Partners, which was the initial issuer of the debt.
Alliance HP didn’t respond to Bisnow’s request for comment, and Trimont declined to comment.
Among the requirements to qualify for the second extension, the property needed to maintain a minimum 9.5% debt yield, a debt service coverage ratio of 1.25 and a maximum loan-to-value ratio of 70%.
“My assumption is they didn’t hit those hurdles, so the contractual extension to 2024 was not available but they were given the short-term extension to try to re-fi it,” Putro said in an email.
The loan’s debt service coverage ratio is 0.74, and the interest rate has risen to 9.02%, up from 3.55% at its 2019 origination, Haas said.
One Financial Plaza was 95% leased as of September, according to Cred iQ, and the special servicer said Alliance HP put the property up for sale in May but hasn't received any offers.
Alliance HP instead shifted its focus to identifying a lender to refinance the property and has seen interest from CMBS lenders offering between $50M and $52M, according to the special servicer. That leaves Alliance HP with around a $10M gap to cover the balance of the loan.
Alliance HP, a vertically integrated real estate investment firm, paid $82M to acquire the property in 2019 along with a separate $35M deal for the land underneath the office tower, property records indicate. The building’s seller was Boca Raton-based Crocker Partners, which paid just under $87M for the property in 2017.
One Financial Plaza’s move to special servicing comes despite relative stability for the South Florida CMBS marketplace compared to the broader U.S. picture.
The Miami MSA, which includes Fort Lauderdale and Palm Beach, has around $23B in total CMBS debt with a 0.8% delinquency rate, according to Morningstar Credit. The national rate is 4.2%.
