Maya’s IRR model crumbled. The debt service coverage ratio (DSCR) fell below 1.0x. The senior lender, Continental Bank , issued a default notice. They wanted an additional $30M equity cushion or they’d seize the asset.
Simultaneously, the city announced a new business tax for downtown offices, and three potential anchor tenants backed out. The lease rollover cliff turned into a vacancy rate projection of 58%. real estate finance & investments risks and opportunities
“Don’t save The Pinnacle. Cut it loose. Let Continental take the haircut. Instead, take the $20M we were going to use for the lobby renovation and deploy it as mezzanine debt into The Bend. We get a 12% coupon with a conversion option into equity when the light rail opens. The risk? Political. But the opportunity? We’re first in on a transit-served infill site. The insurance companies will fight over the takeout loan.” Maya’s IRR model crumbled
The risk factors were buried on page 47: single-tenant exposure (a now-bankrupt WeWork clone), a lease rollover cliff in Year 2, and a foundation inspection note marked “Deferred: Geotechnical concerns – minor.” They wanted an additional $30M equity cushion or