A quest for a new repayment deadline for the Aspiria project in Overland Park has prompted a bond rating agency to put the $232.5 million loan on “watch downgrade” status and list it as a “loan of concern.”
The Kroll Bond Rating Agency cited a recent decision by the massive project’s Wichita-based developer, Occidental Management, to request “special servicing” that would allow it and lender JPMorgan Chase to take another look at the August 10 maturity date on the commercial mortgage-backed securities loan.
In a press release May 22, the agency also cited the loss of short-term leases by T-Mobile as being partially responsible for bringing the lease rate down to 66.5% from 74.8%, when the loan was issued.
Occidental CEO Gary Oborny said last month that the lease rate on the 17 existing buildings at the site was about 69%.
“The classes placed on watch are susceptible to interest shortfalls from special servicing fees and other expenses and likely to have a heightened risk of potential principal losses, as the special servicer works to resolve the loan,” the release said.
Occidental says project is not in danger of default
Occidental has emphasized that the loan is not in danger of default and there is ample money set aside for expenses related to new and existing tenants.
Instead, the request for special servicing is to find an avenue for negotiating different terms in a market where refinancing is hard to get, Oborny said. The original loan was issued for two years with no extension options.
Oborny reiterated last week that he fully expects a positive resolution to the deadline question.
“We have a good relationship with our lender, and we are confident that we will come to agreement on a new loan extension,” Oborny said in an email.
Kroll may update its analysis in coming months
The former Sprint headquarters campus at 119th Street and Nall Avenue and is being redeveloped into a 207-acre, mixed-use area of apartments, office, retail, green space and water features. It was acquired by Occidental in 2019.
Occidental leased about 2.1 million square feet back to T-Mobile at below-market rent, according to Kroll’s analysis.
About 1 million square feet of that were leased on a ten-year term with the remainder in short-term one- to two-year leases.
Since then, T-Mobile has vacated all the short-term lease space, the analysis said. The decrease in overall occupancy from 2021 is due mainly to T-Mobile’s downsizing, according to the rating agency.
Kroll will continue to monitor the loan performance, with an update or resolution to the watch expected within 90 days.
Roxie Hammill is a freelance journalist who reports frequently for the Post and other Kansas City area publications. You can reach her at roxieham@gmail.com.
