- Silver Report Uncut
Property values drop 66% leaving commercial real estate property Giant on the verge of failure. In focus is Starwood Property Group which manages several malls and other commercial properties across the US. They had a bond portfolio made up mostly of AAA debt which just had a full spectrum wholesale downgrade of almost the entire portfolio to Junk. The section of their portfolio that was formally AAA is currently trading at $0.69 on the dollar. The reason for the downgrades is mass store closures and bankruptcies has left their revenue stream from rentals in tatters and cut the value of many of their properties crushing the CMBS Giant. The Starwood Retail Property Trust 2014-STAR, a portfolio which is backed by an almost $700 million defaulted loan is collateralized by several malls including The Mall at Wellington Green in Florida owned by Starwood Capital and investors are beginning to take losses.
The Mall at Wellington Green is the core property of the portfolio and saw its taxable value drop 32% in 2019 to $150 million as a result of the Nordstrom departure, according to the Property Appraiser’s Office in Palm Beach. Starwood bought the property in 2014 for $341.1 million, marking the largest real estate deal ever in the county at the time. It has now lost over half it’s value, and that’s before most of its other anchor clients also fled or filed for bankruptcy. The portfolio also includes the MacArthur Center in Norfolk, Virginia, the Northlake Mall in Charlotte, North Carolina, and The Mall at Partridge Creek in Clinton Township, Michigan.