Sometimes it is close to impossible to structure for all of the risks of a commercial loan. In one CMBS conduit loan, The Crossings Shopping Center located in Elkins, West Virginia, the loan defaulted due to an unanticipated event. On Thursday, June 23, 2016, several rounds of thunderstorms producing torrential rainfall, mostly in Greenbrier County, to the south of Elkins, West Virginia, resulting in catastrophic flash flooding, historic river flooding, and 23 fatalities in West Virginia.
Among the devastation, the bridge to The Crossings Shopping Center washed out (see photo below). As it turns out, this is the only access to the shopping center. The June 23rd flood left hundreds of shoppers and employees trapped in the plaza. While everyone was safely removed from the center and the stores did not flood, the center was shut down due to lack of access.
Former Bridge to The Crossings Shopping Center, June 24, 2016
It turns out the bridge was owned by the owner of the shopping center, not the municipality. The cost to rebuild the bridge to current standards was $1 million. The sponsor did not have the funds to rebuild the bridge, nor was the rebuilding covered by insurance. As a result, the loan defaulted. In July 2017, the new bridge was completed using funds from the loan servicer, and most of the tenants in the shopping center have reopened for business.