Hudson’s Bay Company successfully restructured a massive CMBS loan, reportedly ending an 18-month saga that included accusations of undermining the loan and a foreclosure lawsuit.
HBC and Simon Property Group restructured the $846.2 commercial mortgage-backed securities loan at the end of September, according to the Commercial Observer. The restructuring took place at par, with no discounted payoff and no interest forgiveness.
The loan was securitized by HBS, a joint venture between HBC and Simon, in 2015. It was backed by 24 Lord & Taylor stores and 10 Saks Fifth Avenue stores across 15 states, totaling 4.5 million square feet in collateral.
HBS faced trouble in the onset of the pandemic, missing its first loan payment at the beginning of April 2020, according to the Observer. As a result, the loan was transferred to special servicing the following month.
Things turned ugly in May after the special servicer accused HBC of a “clandestine corporate shell game” in taking the department store operator private, allegedly undermining the creditworthiness of the loan.
Situs, the special servicer, filed a federal lawsuit saying HBC “engaged in deliberate and concealed corporate restructurings that stripped assets” as it “transferred them to newly formed, foreign entities” from the original parent company. Situs claimed HBC violated “loan documents and related guarantees.”
An HBC spokesperson dismissed the lawsuit in a response, saying “to suggest that HBC has violated any loan document provisions is categorically false.”
A year ago, Wilmington Trust filed a lawsuit against the joint venture for allegedly failing to make mortgage payments, naming 34 of the CMBS-backed assets in the lawsuit.
The joint venture finally received a reprieve in March, when the Observer reports the special servicing of the loan was transferred again, this time to Green Loan Services. That move helped renew talks of restructuring and led to the successful conclusion for HBS, essentially wiping away the pending litigation against the JV. Ironhound Management negotiated the restructuring.
The outlet reports the CMBS loan is 100 percent current and the October payment on the loan has already been made.
Lord & Taylor was hit hard in the pandemic, seeing its parent company file for bankruptcy and shutter all locations, including the ones involved in the loan.
[CO] — Holden Walter-Warner