All noteholder classes in the Europrop transaction (EMC IV) could face losses, given the short amount of time until the notes’ legal final maturity next April.
The work-out is further complicated by the fact that the remaining €521.8m loan, Sunrise (seven pre-paid), is syndicated between Europrop and DECO 9, which doesn’t have bond maturity until 2017.
Special servicer Deutsche Bank could therefore be torn by demands from conflicting bondholders. The loan, made to Treveria companies and secured on 60 secondary German retail properties, went into default in July 2010 and was transferred to special servicing.
The special servicer opted to sell the whole portfolio, but dropped this strategy when bids did not cover repayment of all outstanding tranches. In June 2011, Savills valued the properties at €402.3m, down from a DTZ valuation of €515.6m a year earlier.
Since then, five assets have been sold, for their allocated loan amounts. However, Fitch said it did not believe this was a guide to recovery prospects and has downgraded the class A to C notes. Price indications had been received, Fitch said, for 46 assets ranging from €196.6m to €333.9m in total – well short of the €443.4m whole loan amount allocated to these 46.