The Real Deal Miami

CityPlace loan modification delivers some investors zero interest

January 23, 2012 03:00PM

Related Chairman Stephen Ross and CityPlace

Investors in the mortgage tied to Related Companies’ struggling CityPlace complex, which topped Trepp’s list of delinquent loans in December, were delivered bad news when Chairman Stephen Ross modified the loan last month, according to a Trepp analysis cited by the South Florida Business Journal.

Under the modification, the loan’s maturity date was pushed back to 2018 and split into two groups. The first, $100 million group, had its interest rate reduced to 4.75 percent from 6.27 percent for the next three years. The second group had its interest rate reduced to zero for that same period. Stakeholders get absolutely no return on their investment. “That outcome appears to be worse for investors than an earlier appraisal reduction might have suggested,” Trepp stated in its newsletter.

The good news for investors is that the deal prevents the site from being sold or seized for less than the value of its mortgage — even though CityPlace’s appraised value is $143 million. [SFBJ]