Its not just gamblers taking big losses at Atlantic City. The Pier Shops at Ceasars, once valued at $210 million and backed by a top-rated commercial-mortgage bond, has been deemed essentially worthless. According to Bloomberg News, no bidders in an auction were willing to pay more than $25 million for the $80 million mortgage on the property, held by loan servicer C-III Capital Partners.
The property was valued at $56.5 million in January 2011, four years after it was estimated to be worth $210 million.
“Most people in the CMBS market have gotten the sense that this asset really is near worthless,” said Lea Overby, a debt strategist at Nomura.
Bloomberg said the auction results signal bondholders are going to take a hit of as much as $68 million on the property, marking the first ever principal loss for a triple-A rated bond. [Bloomberg]