1st Service Solutions Successes

1st Service Solutions has provided a wide range of services for commercial real estate owners since our founding in 2005. A sample of the transactions that we have completed, are featured here:

A multifamily property located in Mesa, AZ had negative cash flow due to the interest rate environment and the floating rate structure of the loan. In addition, the maturity date was quickly approaching. Extension options were built into the loan documents, but the hurdles could not be met. 1^st Service Solutions was able to successfully negotiate a waiver of the hurdles for a 2-year extension of the maturity date and a cash flow mortgage during the extension period.  In a cash flow mortgage, property income is first used to pay the operating expenses with the remainder, if any, going to the lender to pay debt service.

The owner of a 40-property portfolio serving as collateral for one CMBS loan was approached by a potential buyer to purchase only one of the properties in the portfolio. The owner wanted to move forward with the sale of the property, but the loan did not contain release provisions. With the assistance of 1^st Service Solutions, consent to the partial release of collateral was obtained so that the owner could move forward with selling the single property while keeping the loan in place.

A 45,000 square foot retail building located in Colorado Springs; CO is securitized by a CMBS loan. Due to the strict nature of these securitized loans, the servicer’s consent is required to make any changes. The borrower changed property management companies twice and entered into a ground lease without first obtaining approval to do so. Additionally, a Small Business Administration loan was obtained when you CANNOT add more debt to a CMBS loan. With the assistance of 1st Service Solutions, a reinstatement agreement and consent of all events of default with drastically reduced fees was successfully negotiated.

The owner of a single tenant office building in Palo Alto, CA was struggling financially and needed out of their $50MM loan asap. With the help of 1st Service Solutions, a successful assumption of the property including rating agency consent and approval of transition from a warm body to an entity was achieved. All while saving the new buyer money as we negotiated that no additional capital contributions were required at the time of assumption.

Located in Port Richey FL, a retail building of roughly 100,000 square feet that is fully occupied is securitized by a CMBS loan that was set to mature in April 2024. The borrower has been working tirelessly towards finding a refinancing option but it’s taking longer than expected. With the assistance of 1st Service Solutions, the borrower was granted a 120-day forbearance to complete the refinance, for a reduced fee, without ever having to transfer the loan to special servicing!

Multifamily property located in Colorado Springs, CO was performing well until it was faced with some environmental and geographical challenges causing a severe drop in occupancy. This caused a drop in cash flow and the borrower had to start short paying their debt service in March of 2024. The borrower’s re-tenanting efforts paid off as the property is now above 90% occupied but still needed time to get caught up. 1st Service Solutions was able to negotiate a 6-month deferral of payments ($250k) until the maturity date of 01/2024. The borrower has accepted this deal for the time being but with the assistance of 1st Service Solutions market and servicer knowledge will re-evaluate if a modification is possible closer to maturity.

1st Service Solutions was hired to assist with a maturing CMBS loan on a parking structure located in Louisville, KY. After successful negotiations, a 1-year extension was obtained to allow the borrower more time to payoff. 

1st Service Solutions successfully assisted with the assumption of a 276,157 sq ft retail center located in Dallas, TX. The team was able to negotiate the reserve payments to less than half of what the servicer was requesting and was able to reduce the cash management setup to a soft lockbox from a hard lockbox.

1st Service Solutions assisted in closing an assumption on a Walgreens store located in Anchorage, Alaska in less than 70 days to meet their 1031 exchange date. No conditions of consent were placed on the borrower.

• Due to late tenant rent payments, Borrower was late on a few debt service payments during COVID on its anchored retail property in California. Default interest and late fees accrued to approximately $1MM.

• The borrower attempted to negotiate a partial waiver with the servicer and ultimately offered to pay $250k, which was rejected.

• 1st Service Solutions was engaged by the Borrower a year later and were able to negotiate the fees from $1MM to $50,000.

• Borrower owned 3 multifamily properties in Ohio that had deferred maintenance at the time of the assumption.,

• All together the three assumptions were approved and closed within 120 days of purchase and sale agreement and 1st Service Solutions negotiated the reduction of the deferred maintenance reserve by 25% of original lender requirement.

• Borrower engaged 1st Service Solutions to assist with a loan extension in September 2023 with a maturity date of November 1st of 2023.

• Borrower had an alternative source to pay off but needed time to complete the transaction.

• Within a week, 1st Service Solutions was able to get a 60-day forbearance from the master servicer, avoiding transfer to special, which allowed the borrower to pay the loan off

• During the tough times of COVID, the borrower had missed 3 payments on his 32,500 sq ft retail building, but eventually, over time made the payments up.

• Unbeknownst to the borrower the loan was transferred to special servicing in July of 2020.

• When the borrower discovered that, they requested the loan be transferred back to the master servicer.

• The borrower eventually started receiving default notices and threats to foreclose.

• When the borrower hired 1st Service Solutions, the amount of default interest that had accrued on the loan was $5.2MM

• 1st Service Solutions was able to get the default interest reduced to $25,000 and got the loan transferred back to the master servicer.

• This CMBS loan, on an office property in Florida, had a DSCR trigger and major tenant trigger at the time of the purchase and sale agreement.

• 1st Service Solutions was not only able to get the assumption approved in 65 days but was also able to get the DSCR trigger waived, and a new lease approved which negated the cash sweep.

• The buyer was able to close with no cash sweep in place.

• $10MM Office building in the northeast
• Occupancy had suffered and borrower subsidized payments to keep loan current for extended period.
• The borrower eventually decided to stop subsidizing and ultimately decided to hand the property back to the lender.
• 1^st Service Solutions assisted borrower with a friendly hand back of the property while avoiding recourse.
• During that process, we were able to facilitate the purchase of the property by a distressed office buyer which resulted in a win – win – win.

• Single Tenant lease had option for tenant to terminate in January 2020, just prior to COVID.
• Tenant exercised that option and vacated and ceased paying January 2020
• Due to COVID, replacing the tenant was virtually impossible.
• In addition, market rates had fallen by 50%
• By yearend 2021, borrower had secured a replacement tenant at market rates.
• 1st Service Solutions was able to secure a modification of the loan that resulted in zero default interest.

• Property was 50% economically vacant and 100% physically vacant.
• The local market did not bear new tenant prospects.
• In addition, the loan was partially recourse to owners.
• 1^st Service Solutions negotiated a discounted payoff while allowing ownership to maintain control of an orderly sale of the property.

• Property was performing well pre COVID.
• Fitness tenant elected to close location after suffering the effects of COVID.
• The borrower wanted to recapitalize and retain the property.
• There was no real way to do this in a CMBS loan, so 1^st Service Solutions negotiated a discounted payoff.

The owner of a retail center in the northeast had a CMBS loan that matured in mid-2021. The appraised value of the property was just under the debt amount. The borrower had to make a tough decision to put additional money into the property with very little potential upside, pay the loan off at significantly less than the loan amount if the servicer would agree to a discounted payoff, or hand the property back to the lender. Borrower engaged 1st Service Solutions for advice and a positive resolution to the situation.

Ultimately, a unique DPO arrangement was agreed to, whereby the property was auctioned off on Ten X, the borrower agreed to pay a minimum DPO amount regardless of the sale amount at auction – but in exchange for that minimum amount – shared in the upside above the minimum DPO amount with the servicer. Due to the abundance of capital in the marketplace, the property sold for significantly more than anticipated, which resulted in a full payoff for the CMBS trust and funds in the borrower’s pocket. 

A 1.5MM sq foot CBD office complex in Pittsburgh, PA had a loan maturing in January of 2023 and was in desperate need of an extension. With the use of lender held reserves to complete the owner’s business plan, 1st Service Solutions was able to negotiate a 2-year loan extension! Even better there was NO paydown required at the time of extension.

• 1^st Service Solutions was engaged in January 2023 to expedite the assumption with a 1031 deadline of 85 days
• Besides the short timeline for approval, the buyer was a Tenant in Common structure. 1^st Service Solutions was able to obtain approvals in 60 days and closed well before the 1031 deadline.

Transaction closed within 90 days of submission of assumption request, which included rating agency approval/confirmation.

The issues present with the assumption were (a) empty building, (b) LTV went from 60% at origination to almost 90% at sale, (c) there were tremendous tenant improvement and leasing commission needs to replace Walmart, (d) a 1031 looming deadline, and (e) the loan documents only allowed for one assumption, which had already taken place. Needless to say, the servicer had extensive requirements to move forward with the assumption. 1^st Service Solutions was able to get the deal closed in time for the 1031 deadline, remove the majority of the conditions, allow for a second assumption, and waiver of cash management.

• Student housing facility in New York

• DSCR is below breakeven and there had been a non-permitted transfer previously on the seller’s side that had to be cured

• Conditions were negotiated and the deal closed smoothly

•  

• Anchored retail center in California

• Even though there is significant tenant roll over in the next few years, 1^st Service Solutions was able to negotiate much lower rollover reserves than anticipated

• In addition to the TIC structure approval, 1st Service Solutions was also able to negotiate a reasonable cap on TI, LC reserves for buyer

• Getting TIC structures approved is difficult, let alone to have it done in 45 days

• Megan White, Asset Mgr. at 1st Service Solutions did an outstanding job

• Property was 50% economically vacant and 100% physically vacant

• The local market did not bear new tenant prospects

• In addition, loan was partially recourse to owners

• Douglas Scott, SR Director of workouts at 1st Service Solutions negotiated a discounted payoff while allowing ownership to maintain control of an orderly sale of the property

• Hotel was negatively affected by COVID

• COVID relief was requested and received and substantially all the default interest was waived

• In addition, borrower required consent for change of sponsor which was also promptly approved

• Loan is now current and performing

• Hotel in Kansas was negatively affected by oil and gas and then hit with COVID

• Loan matured in mid 2023

• Anticipated recovery of the property was well beyond the maturity date

• Douglas Scott, SR Director of workouts at 1st Service Solutions negotiated a discounted payoff for the borrower allowing the borrower to recapitalize

• Property was performing well pre COVID

• Fitness tenant elected to close location after suffering the effects of COVID

• Borrower wanted to recapitalize and retain the property

• There was no real way to do this in a CMBS loan, so 1st Service Solutions negotiated a discounted payoff

• $10MM CMBS loan on unanchored retail in NC
• Existing borrower had trigger recourse due to unauthorized transfer of interest
• We worked with the special servicer to get the default and recourse cured and a complete waiver of default interest

• $13MM CMBS loan on 2 hotels in DE
• COVID relief consisting of 2 years of no payments, waiver of seasonality reserves, and all default interest

• $10MM Office building in the northeast
• Occupancy had suffered and borrower subsidized payments to keep loan current for extended period
• Borrower eventually decided to stop subsidizing and ultimately decided to hand the property back to lender
• 1st Service Solutions assisted borrower with a friendly hand back of the property while avoiding recourse
• During that process, we were able to facilitate a purchase of the property by a distressed office buyer which resulted in a win – win – win

• Borrower had triggered various technical defaults, including an unauthorized flag change
• Borrower attempted to resolve the defaults with the special servicer over an extended period without success
• 1st Service Solutions was engaged and within 60 days all issues were resolved

• Buyer had no CMBS debt experience, which makes it difficult to get approved at all
• 1st Service Solutions got approvals in 70 days with no added conditions of consent

• In addition to the buyer having a Tenant in Common (TIC) structure, the property was involved in a 1031 exchange with a deadline 10/31
• 1st Service Solutions received approvals in 100 days and the closing occurred much earlier than 1031 deadline
• The property had just under half the tenancy rolling over prior to maturity and therefore, the servicer was requiring a substantial amount of TI/LC reserves at closing
• We were able to negotiate a large reduction of the reserves required at closing

• Buyer also took out supplemental loan as part of purchase
• 1st Service Solutions received approvals in less than 70 days with no additional conditions for approval

• Even though this was the buyer’s first securitized loan assumption, we were able to get all conditions waived

• Buyer and seller worked on the assumption on their own for about six months and were stuck. They engaged us and we got full consent in less than 60 days after engagement

• The property was underperforming at time of assumption and as a result, the servicers placed heavy conditions on the approval. Through extensive negotiations, we were able to significantly reduce the conditions. Without the conditions being reduced, the deal would not have closed.

• This retail center had significant tenant roll-over through 2023. As a result, the servicer required a large amount of tenant improvement and leasing commission reserves be placed at time of assumption in addition to the implementation of a hard lockbox. We were able to get the total amount of TI, LC reserves reduced as well as a waiver of the hard lockbox. 

• Single Tenant lease had option for tenant to terminate in January 2020, just prior to COVID
• Tenant exercised that option and vacated and ceased paying January 2020
• Due to COVID, replacing the tenant was virtually impossible
• In addition, market rates had fallen by 50%
• By yearend 2021, borrower had secured a replacement tenant at market rates
• 1st Service Solutions was able to secure a modification of the loan that resulted in zero default interest

• Borrower originally approached 1st Service Solutions in 2020 for COVID relief
• During the process of obtaining COVID relief, it was determined that there were other serious technical defaults that needed to be addressed
• 1st Service Solutions and borrower successfully satisfied technical defaults
• COVID relief was obtained, and most of the default interest and other fees were waived

Hospitality

• Performing hotel pre COVID

• Revenue largely dependent on nearby amusement park

• CMBS loan = $65MM

• Due to government mandates, the hotel closed in March and remains closed as of October 2020

• Loan modified by deferring all 2020 payments

• No relief in 2021, due to expectation at the time that the amusement park would reopen in fall 2020. To date that has not happened

• All default fees and late fees were waived

• All deferred amounts to be paid back in 12 months starting in 2021

Hospitality

• Performing hotel pre COVID
• Revenue largely dependent on tourist
• CMBS loan = $105MM
• Total anticipated shortfall for 2020 and 2021 = $5MM
• Loan modified by deferring all 2020 payments and adjusting the payments in 2021 to 2% IO
• All default fees and late fees were waived
• All deferred amounts to be paid back in 12 months starting in 2022
• Maturity date extended 1 year

Industrial

• Houston Distribution Center Loan Assumption Closed
• $90 Million Loan
• Total Time for assumption process was 70 days
• Completed September 2019

Retail Center

• Summit Marketplace Loan Assumption Closed
• Loan was in special servicing and receiver was in place
• Total Time for assumption process was 90 days
• No conditions of consent imposed on buyer

Hotel in Mill Valley, California

• $18 Million Loan

• Assumption Facilitation

Retail Center in Vacaille

• Coffee Tree Plaza
• $4MM Loan
• Assumption Facilitation

3 Multifamily Complexes

• 2 CMBS Loans

• 1 FNMA Loan

• Portfolio Assumption Facilitation

Office Property

• 1031 Exchange
• Loan Balance: $8 Million
• Assumption Facilitation

Retail Center

• Texas
• Loan Balance: $5.8 Million
• Reversal of Cash Sweep

Southwood Office

• Loan Balance: $3.6 Million
• Assumption Facilitation

Office Building

• Loan Balance: $18 Million
• Assumption Facilitation

Self Storage Portfolio

• Loan Balance: $5 Million
• Assumption Facilitation

California Industrial Property

• Loan Balance: $8,000,000
• Assumption Facilitation
• Master Servicer: Midland
• Special Servicer: CWCapital

Full Service Hotel

• 90 Unit Full Service Hotel
• Located in Texas

Office Park

• Loan Balance: $10 Million
• Master Servicer: Wells Fargo
• Special Servicer: Rialto
• Assumption Facilitation

Office Park

• Loan Balance: $ 9,000,000
• Assumption Facilitation of non-performing loan
• Closing: April 2018

Corporate Center

• Loan Balance: $ 10,000,000
• Assumption Facilitation
• Master Servicer: Wells Fargo
• Special Servicer: Rialto
• Closing: April 2018