Noteholders last week voted to replace Hatfield Philips as the master servicer on the €345m of remaining loans in the Windermere XIV CMBS. This will be the first time a master servicing contract has been transferred on any European multi-loan deal.
Class A noteholders including Pimco voted to replace Hatfield Philips International (HPI) with Mount Street, the loan servicer set up nine months ago, on the €30m Baywatch loan, which is in special servicing; the €36m GSI loan, which matures in April; and the €252.2m Fortezza loan, which is in standstill until the end of January.
Mount Street had already taken over from HPI as special servicer of the deal’s €98m SISU loan last July at the request of controlling class investor Lone Star. A fifth loan, the €256.22m Haussmann loan, was repaid this month after the Abu Dhabi Investment Authority bought a portfolio once owned by Docks Lyonnais from the UBS Continental Europe Property Fund for €672m.
The portfolio included 6-8 Boulevard Haussmann, which was securitised by Lehman Brothers in Windermere XIV. Class A noteholders are said to be frustrated with HPI’s lack of communication over the Italian Fortezza loan in particular, which reached both loan and note maturity on 15 January.
HPI held a noteholder call regarding its proposal for the loan’s work-out the day before the interest payment date. Its proposal outlined a loan extension to April 2016, with a couple of paydowns over that period through asset sales, while trying to improve the underlying assets’ lease profiles, based on borrower Fortress’s business plan.
However, proposals for the loan could be affected by a new Italian law allowing government tenants – of which Fortezza has many – to unilaterally disavow their leases without paying any penalties between now and 30 June 2014.
Lone Star tried to replace HPI and bring in its affiliated servicer, Hudson Advisors, in December 2012, but noteholders voted against the idea. This time round Mount Street had the support of the class A noteholders as well as the controlling class investor “who have nominated us as replacement special servicer on several of the loans [SISU & Baywatch]”, said Paul Lloyd, co-founder of Mount Street. “This shows that a choice to replace the existing servicer can be in the interests of the entire debt stack, not just of particular tranches.”
Mount Street is expected to take over the servicing of Morgan Stanley’s legacy CMBS loans shortly, although this has yet to be confirmed.