Alarms Ringing for Office Market: When the loan on Philadelphia’s largest stand-alone office building at 1500 Market St. moved to special servicing in August, it didn’t register much alarm at the time, according to a new report by Morningstar Credit Information & Analytics. After all, the property’s performance metrics were significantly below underwritten expectations for a loan securitized in commercial mortgage-backed securities deal JPMCC 2020-MKST.
But then, a loan on Wells Fargo Center at 1700 Lincoln St. in Denver that’s included in CMBS deal MSC 2019-NUGS transferred to special servicing after the borrower decided against seeking an extension in January. And in another case, Brookfield DTLA disclosed it defaulted on loans for two downtown Los Angeles office towers rather than enact an extension option.
Now, capital markets are acutely aware that the office market is coming under new stresses.
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