Executive says World Market Center current on all loans

The World Market Center in Las Vegas is not in default nor delinquent on any loans and is current on all loan payments, an executive for the $1 billion downtown development said Wednesday.

New York-based Fitch Ratings had reported that a $217.4 million loan secured by more than 1 million square feet of showroom space at World Market Center was transferred to special servicing in September for "imminent default" after the borrower indicated it would no longer be able to cover debt service shortfalls beyond January.

At the time of underwriting the loan by Bear Stearns Commercial Mortgage, the World Market Center was 99 percent occupied, Fitch said in a special report on U.S. commercial mortgage-backed securities. However, performance declined due to lease rollover and year-over-year expenses increased 11 percent in 2008, the report said.

Occupancy was 88 percent at the end of the year and debt-service cover ratio, or the amount of cash flow available to meet annual interest and principal payments on debt, dropped from 1.05 to 0.98, Fitch reported.

The report details the 10 largest delinquent specially serviced loans, the 10 largest performing specially serviced loans and the 10 largest Fitch loans of concern.

But Dana Andrew, vice president of World Market Center, said the report is inaccurate. The loans are neither in default nor delinquent, she said.

"WMC (World Market Center) has sought additional flexibility with respect to new lease agreements to address needs of the tenants," Andrew said in a company statement. "That process in WMC's case requires approval by the special servicer. WMC requested and obtained the transfer of its CMBS loans to the special servicer to reach arrangements that are in the best interests of all stakeholders."

Fitch's loan delinquency index rose to 3.58 percent in September, up 54 basis points from the previous month, primarily driven by an increase in hotel delinquencies.

Hotel delinquencies are now the largest proportion of delinquent loans and represent 5.8 percent of Fitch-rated loans that are more than 60 days delinquent. Nine of the 20 largest specially serviced loans are collateralized by hotels or have a hotel component.

The largest newly delinquent hotel was a $587.7 million note tied to the $4.1 billion Extended Stay America portfolio loan.