CMBS Weekly: A Destiny with Liquidation Lane

Research evidence excerpt

CMBS Weekly: A Destiny with Liquidation Lane

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02 Jul 2026 16:50:19 ET │ 26 pages

CMBS Weekly

A Destiny with Liquidation Lane

CITI'S TAKE

Jeffrey Berenbaum AC

We follow up on a potential note sale of the Destiny Phase I & II loans. +1-212-816-8399

Following our previous article, we’ve had discussions with several parties jeffrey.s.berenbaum@citi.com

regarding how the waterfall allocation would pay certificate holders with

any available funds. We look back on realized liquidations of 1740 Broadway Aditi Memani

and 600 California as case studies as to how liquidation expenses and final +1212-723-9356

distributions may look. The servicer’s interpretation of the language in the aditi.memani@citi.com

deal’s documents will ultimately determine any payout amounts for the

Destiny certificate holders.

Destiny Scenario Analysis — We provide a few payout scenarios based on a $60MM

sale price as a base case, a $70MM moderate upside case, and an optimistic case

that has the sale equal the $133MM appraised value. Under these scenarios,

certificate holders would receive interest shortfall recoveries down the stack, and

Class A principal recovery would range from zero to about 25%.

1740 Broadway Prioritized Interest Shortfall Recovery — One key element dictates

the payout analysis: the priority of interest shortfall recoveries versus principal

depends on the underlying cause of the interest shortfalls in older deal documents.

In the case of 1740 Broadway, the interest recovery came from unpaid interest that

the servicer had deemed non-recoverable. All certificates received prior interest

shortfalls in the final distribution.

600 California Closed Loophole — The 600 California language, which evolved over