CMBS Weekly: Destiny May Be Next SASB Triple-A Loss

Research evidence excerpt

CMBS Weekly: Destiny May Be Next SASB Triple-A Loss

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18 Jun 2026 23:05:21 ET │ 18 pages

CMBS Weekly

Destiny May Be Next SASB Triple-A Loss

CITI'S TAKE

Jeffrey Berenbaum AC

Destiny USA (JPMCC 2014-DSTY) may be the next SASB to see its triple-A +1-212-816-8399

take losses. If so, the regional mall will join Palisades Center (PCT 2016- jeffrey.s.berenbaum@citi.com

PLSD) in that the small, but growing, group of SASBs with high severity

liquidations. The deal’s servicer revised its expected resolution strategy to Aditi Memani

“Note Sale” in the June remittance report. A note sale would appear to be an +1212-723-9356

optimal route for the special servicer. Proceeds from a note sale would flow aditi.memani@citi.com

to the CMBS. In contrast, a foreclosure and REO sale could see proceeds

flow to the more senior PILOT position.

Class A Implication from Potential Note Sale — With appraisal values down 87%

and 69% from securitization across the Phase I and II loans, respectively, vendor

marks on Class A range from approximately $24 to $31-25. We assume that a note

purchaser would size their loan to around 50% LTV on the $133MM total appraised

value, suggesting a note purchase price of $66. We estimate the tranche loss would

be 81% at this sale price and show a note sale price range from $60 to $70 herein.

PILOT Revenue Bonds — The Phase I borrower is a party to a payment-in-lieu-of-

tax agreement under which the Phase I borrower makes PILOT payments instead of

paying real estate taxes. The Phase I mortgage loan is subordinate to the PILOT

payments, as defined in an intercreditor agreement. The PILOT mortgages impose a

lien like liens imposed by taxing authorities, and provide for similar remedies, i.e.,

foreclosure of property and tax lien sale.