The $165.6 million commercial loan taken out nearly a decade ago to purchase CA Technologies’ former world headquarters complex in Islandia faces a “higher probability” of default when the loan is due in August, according to credit rating agency Fitch Ratings.
The loan, taken out by affiliates of private investor CA Special Opportunities Fund LLC, was transferred to a special servicer earlier this month, according to Fitch. Special servicers are entities that manage troubled or potentially delinquent loans to mitigate losses to bond holders.
CA Technologies leases the property now, and isn’t the borrower on the loan.
Payments on the interest-only loan are current through this month, according to Trepp LLC, a Manhattan-based tracker of commercial mortgage-backed securities loans such as the CA loan. The interest rate is 6.96 percent.
CA, formerly Computer Associates, sold its 778,000-square-foot complex in 2006 to Islandia Operators LLC and Island Headquarters Operators LLC for $204.3 million, according to Securities and Exchange Commission filings. Trepp says the two entities were affiliates of Gramercy Special Opportunites Fund. That fund changed its name to CA Special Opportunities Fund in 2013, according to Delaware corporate filings.
Since 2007, net operating income from the property has been $15.4 million annually, according to the Trepp documents.
“The CA loan transferred to special servicing because of a potential maturity default,” Christopher Bushart, a senior director at Fitch Ratings said in a statement.
Bushart said that while the reason for the transfer isn’t disclosed, with the loan “set to come due in August of this year, the borrower has likely indicated they do not expect to have financing in place to pay off the existing debt once it matures.”
Bushart said that in general, commercial mortgage-backed securities loans from 2006 through 2008 “have a greater level of unpredictability when it comes to them being paid off, though our ratings already reflect this risk.”
According to documents from Trepp, the borrower contracted Boston-based Corporate Realty Investment Company (CRIC) and Prudential Real Estate Investors, the real estate investment business of Prudential Financial Inc., to manage the property. A spokesman for Prudential said the company is no longer involved with the property’s management or ownership.
Officials with CRIC and the CA Special Opportunities Fund did not respond to requests for comment.
Software maker CA Technologies, founded in 1976, was based in Islandia for years, but moved its headquarters to Manhattan in 2014. The company housed about 1,400 employees there at the time, and holds a lease that expires in 2021.