With Disability RMS vacating One Riverfront Plaza in downtown Westbrook, the property’s owner is struggling to obtain necessary refinancing on its delinquent mortgage loan.

The mortgage has been referred to a debt collector because the property owner, a New Jersey investment firm, failed to make a required balloon payment and is asking for a six-month extension, according to a report by New York-based commercial real estate analysis firm Trepp LLC.

Disability RMS, a disability insurance provider and one of Westbrook’s largest employers, announced in September 2014 that it would relocate to South Portland when its lease at One Riverfront Plaza expires at the end of this month. It employs about 350 workers.

City officials have been working together with the property owner to replace the 140,000-square-foot office building’s sole occupant, but so far they have not signed any new tenants.

Companies such as Trepp follow the repayment progress and prospects of mortgage loans that have been pooled together and sold in pieces, or tranches, to investors in commercial mortgage-backed securities. Information about the health of each loan is used in determining the investment grade of the securities. The report states that One Riverfront Plaza’s owner, Pendleton Westbrook SPE LLC, failed to pay off its $16.4 million mortgage on the property when it was due in full on Dec. 11, 2015. Commercial mortgages generally require the borrower to make interest-only payments until the loan matures, at which time the entire principal must be repaid.

Normally the borrower simply refinances the mortgage at that time, but according to the Trepp report, One Riverfront Plaza faces financial challenges that have prevented Pendleton from obtaining new financing. When it was built in 2004, the going lease rate for tenants was $19 per square foot per year. Since then, office space in downtown Westbrook has gotten cheaper. The most recent online listing for the property quotes a price of $16.50 per square foot.

Pendleton representatives did not respond to emails seeking comment for this story.

When Disability RMS announced its plans to leave Westbrook, city officials said they had done everything possible to prevent the company from departing. Since 2006, Disability RMS has occupied most of the five-story office building alongside the Presumpscot River. It is now moving to the SouthBorough Office Park in South Portland. Founded in 1993, Disability RMS provides underwriting, risk assessment and management services for disability and other types of insurance. According to the company’s website, it has $350 million in premiums and 40,000 claims under management.

Westbrook Assistant City Administrator William Baker has said that the departure was a major blow to city officials, who had worked diligently to help negotiate a new lease agreement between the landlord and tenant. Ultimately, that effort failed.

However, Baker hinted this week that another tenant arrangement may be very close at hand.

“I would expect a major positive announcement soon,” he said.

The property owner’s real estate broker, Dan Greenstein of CBRE|The Boulos Co. in Portland, said company policy prohibits him from disclosing any ongoing negotiations with prospective tenants.

Trepp research analyst Sean Barrie said that as of September, One Riverfront Plaza had only been generating one dollar of cash flow for every dollar that was owed on the loan. Anything below $1.20 of cash flow per dollar owed is considered a red flag to investors, he said.

Barrie said the departure of Disability RMS “would throw a mighty wrench in a possible refinancing effort.”

“Knowing this, the loan borrower has filed for a six-month extension so they may drum up some more time to find refinancing,” he said.


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