This week’s column examines $16.9 billion in CMBS debt maturing in January, a defaulted office loan resolved in New York and the revived sale of an Oregon mall. Read the entire piece by clicking “read more” below.
Big CMBS loans face January reckoning: The new year kicked off with $16.9 billion in commercial mortgage-backed securities debt maturing in January. The market includes a dozen loans with a current outstanding balance of $100 million or more.
Loan extensions or refinances are the likely outcome for many of the largest loans, according to a CoStar analysis of the data, leaving a handful with unknown outcomes.
Nearly $3 billion of the 12 largest maturing loans are tied to affiliates of Blackstone. Loan servicer notes indicate the private equity giant is planning maturity extensions on three loans totaling about $2.8 billion.
However, Blackstone is planning to sell the 385-unit Westlake Steps & Marina apartment complex in Seattle that has a CMBS loan of $102 million. The company acquired the property in December 2017 for $170 million.
Blackstone declined to comment to CoStar News.
Other CMBS debt maturing this month includes:
- A $173.4 million loan on the 759,000-square-foot Penn Square Mall in Oklahoma City that transferred to special servicing due to imminent default, according to loan servicer notes. The borrower, Simon Property Group, indicated it had unsuccessfully solicited quotes from multiple lenders to refinance the loan. Simon continues to make monthly interest payments on the debt and is in discussions with loan servicers on a workout. Simon did not respond to a request for comment.
- An $835 million loan on Brookfield’s 2.6 million-square-foot One New York Plaza office building that moved to special servicing. Brookfield has no extension options remaining, according to CMBS data. However, Brookfield confirmed to CoStar that it is seeking an additional extension. Performance at the property has declined over the past few years. It was 94% leased as recently as the fourth quarter of 2022, but has seen that figure fall to 35% vacant currently, CoStar data shows.
- A $105 million loan on a Redmond, Washington, office campus that moved to special servicing in September as its largest tenant, Microsoft, planned to vacate the property. A month later, Microsoft reversed plans, pulling about 480,000 square feet off the sublease market at Millennium Corporate Park. The move came as Microsoft called its Seattle-area employees back to the office at least three days a week. That decision has enabled the owner, Vanbarton Group, to initiate loan modification discussions with the special servicer, according to CMBS servicer notes. Vanbarton did not respond to a request for comment.
Clipper resolves office default: Property owner Clipper Realty has reached a settlement with lenders on its troubled $100 million loan secured by 141 Livingston St. in Brooklyn, New York, resolving a default that pushed the CMBS debt into special servicing for more than a year. The loan modification agreement became effective Dec. 30, ending foreclosure proceedings that threatened the office property, Clipper reported in a securities filing.
The settlement requires Clipper to post a $10 million tenant reserve fund. The borrower also paid about $2.2 million in fees to the special servicer and lender's counsel.
The agreement clears the way for a five-year lease extension with the New York City Department of Citywide Administrative Services, which took effect Dec. 28. The Brooklyn Civil Court occupies the entire 206,084-square-foot building under a lease that was set to expire last month.
The case highlights the challenges facing CMBS loans when anchor tenants delay lease decisions. The settlement structure — combining a substantial reserve with fee payments — offers a template for resolving similarly distressed office loans where tenant retention remains viable.
Separately, Clipper, a New York-based real estate investment trust, faces continued pressure at its neighboring 250 Livingston St. building, where a $125 million CMBS loan fell into default in December after the city terminated a major lease. Clipper owes roughly $3.4 million in interest and default interest on that property and is negotiating a consent agreement for its sale, Clipper said in a separate securities filing.
Oregon mall sale revived: Efforts have been relaunched to sell Rogue Valley Mall in Medford, Oregon, as part of a $44.3 million CMBS loan workout. Offers are due this month after previous efforts were postponed.
Spinoso Real Estate Group, a court-appointed receiver, has hired JLL to handle marketing duties. A sale of the 454,000-square-foot mall would satisfy a defaulted loan that matured without paying off in October 2022.
The receiver now captures all revenue and remits excess cash to cover lender-advanced property costs.
The mall's appraisal plummeted 75.6% from $80 million at loan origination in 2012 to $19.5 million in July. Kroll Bond Rating Agency projects a $26.5 million, or 60%, loss on the loan. The dramatic value decline reflects broader challenges facing regional malls nationwide as occupancy drops and tenant bankruptcies mount.
Recent tenant departures at Rogue Valley include American Freight, a retail furniture chain that closed the store in November 2024 as part of a company-wide shutdown, and Rue21, a fast-fashion retailer that shuttered in May 2024 after filing Chapter 11 bankruptcy, according to KBRA.
Brixton Capital purchased the property from GGP in 2016 for $61.5 million, or $135 per square foot, according to CoStar data.
Neither Spinoso nor Brixton responded to requests for comment.