One AT&T Center had been encumbered by a $107.1 million loan that was securitized through Bear Stearns Commercial Mortgage Securities Trust, 2007-TOP26, and was offered through Mission Capital Advisors, which conducted an online auction on the RealINSIGHT Marketplace platform.
The offering marks the second time the property has been brought to market. It was offered nearly two years ago and received a $21 million offer from St. Louis developer Bob Clark. That was rejected, and special servicer C-III Asset Management then chose to try leasing up the property before offering it for sale again. The building was taken through a deed-in-lieu of foreclosure in August 2017, after its then sole tenant, AT&T, had vacated it. It had been owned by Highlands REIT Inc., which was spun off from the former Inland American Real Estate Trust.
In the meantime, the CMBS deal has been hammered as the AT&T loan was hit with a $107.1 million appraisal reduction amount, which allowed the loan's servicer to reduce the amount it was advancing against it. That's resulted in $10.7 million of appraisal subordinate entitlement reductions, or ASERs, that represent the difference between what had been advanced and what was advanced after the reduction. ASERs typically result in certain bondholders getting shorted their expected interest payments.
So, the CMBS deal has a $118.9 million exposure to the asset, meaning bondholders could see $100 million or more in losses from its resolution.
The BSCMS 2007-T26 transaction has absorbed $123.8 million of losses - not including the potential loss resulting from the One AT&T loan - which amounts to 5.9 percent of the deal's original $2.1 billion balance. It has also accumulated $17.3 million of interest shortfalls, which eat into the junior-AAA bond class. In fact, that class very well could see losses as only three bonds with a total balance of $73.7 million are junior to it. It has a balance of $160.6 million.