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AUSTIN-Mission Capital Advisors LLC is working on behalf of a national financing company to dispose of a $140 million defaulted commercial real estate mortgage loan. The loan, set to mature in about a year, is secured by 15 multifamily assets in Austin and Houston.

Peter Tobin, director with the New York City Mission Capital Advisors declined to name the borrower. He did say, however, that the loans had originally been made by the borrower to acquire and stabilize the class B and C multifamily portfolio. “Like most deals you see these days, the loans were originated at a time during which valuations were a bit higher and cap rates lower,” Tobin says. “This put some pressure on the borrower’s exit strategy.”

Though one of the assets is in Austin, the bulk of the portfolio is in the Houston area, with most spread throughout the Westchase and Clear Lake submarkets. The properties were built during the 1970s and 1980s. Tobin tells GlobeSt.com that the borrower invested approximately $7.5 million during the past year into the properties in capital improvements.

Still, some upside remains for a would-be buyer. “There’s a bit of hurricane damage that needs to be remedied,” Tobin explains. “There’s upside through further capital improvements, and also in stabilizing occupancy and rent rates.” The portfolio’s occupancy is approximately 86%.

The loan, which matures in February 2010, has an adjustable rate at LIBOR plus 1.7% and a floor of 6.5%. Tobin says the borrower wants to complete the loan sale by the end of February, and his company is targeting real estate operators and investors. Because the properties are collateralized as one loan, the loan needs to be sold in its entirety, Tobin adds.

Tobin also believes the current loan offering could be the start of a plethora of future loan sales. “We’ll be seeing deals that either need to be recapitalized or ending up in default because they can’t support the debt levels put on them in 2006 and 2007,” he adds.

Similarly, KDX Ventures in Boston is disposing of a $144 million of HUD loans for a 15-property multifamily and four-property health care portfolio. The loans can be bid upon either as a whole or individually.

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