(Bloomberg) -- It was a move that rattled the commercial mortgage-backed securities market: the firm brought in to wind down a deal tied to an ill-fated apartment venture held onto more than $160 million that bondholders were expecting to get back. 

The maneuver threatened to foist losses on even highly rated chunks of the securities. And it drew widespread attention by raising the risk that the tactic would become more common if the commercial real estate industry’s strains push other deals into default.

Now, after more than three months of uncertainty, investors are getting some of what they’re owed.

Midland Loan Services, which came in after the deal defaulted and sold off the underlying loan at a loss, has released $105 million of the funds, according to a report from Kroll Bond Rating Agency. That provided around $40 million that fully paid off the C and D classes of the securities, both of which had been rated investment grade. 

While holdbacks can happen with commercial mortgage bonds, the one in this case drew attention because it was unusually large, big enough to expose multiple classes of securities to possible losses. 

PNC Financial Services Group Inc., which runs Midland, said in a statement that the money was initially retained because of issues raised by subordinate noteholders about the sale of the loan. It said it considered the step appropriate given that the securitization was backed by that single loan, which financed a portfolio of apartment complexes in San Francisco. 

Some investors had raised concern about the sale of the loan for around $513 million, a deep discount to its $675 million face value. Kroll said in its note Monday that Midland indicated the holdback was meant to cover possible losses from any litigation resulting from selling the loan well below face value, though the ratings company is not aware of any lawsuits materializing. 

PNC said the release came after it “obtained agreements from certain co-lenders and investment grade certificate holders that they do not support the claims.”

“As a result, Midland made further distributions consistent with the securitization waterfall,” PNC said in the statement.

There’s still somewhere around $60 million that is being kept back, according to both Kroll and Stav Gaon, a strategist at Academy Securities. It’s not yet clear when it will be released. Meanwhile, the portion of the $105 million that was released but wasn’t distributed to the the class C and D noteholders may be given to creditors in other transactions backed by the same loan, but specifics there aren’t clear either.   

“Bondholders are seeing that holdbacks are getting released pretty quickly, and for them this is likely a big relief,” Gaon said. But, he added, “there are still several unanswered questions.” 

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