$160M Boston Office Loan Hits Special Servicing After WeWork Exit
A loan tied to an office building in Boston's Back Bay has been moved to special servicing after its landlord lost two major tenants and missed a payment this month.
New York-based Capital Properties had been current on its $160M loan tied to the Park Square Building until it missed this month's payment, and the borrower said it would stop making any capital contributions to fund shortfalls, according to Morningstar Credit. The loan was transferred to special servicing with LNR Securities Holdings LLC.
The CMBS loan is made up of two parts of $100M and $60M. Both pieces were issued in October 2017 and are scheduled to mature in November 2027.
Capital Properties didn't respond to Bisnow's request for comment.
The loan is tied to the landlord's 500K SF Park Square Building at 31 St. James Ave. in the Back Bay. The property had an occupancy of 96% when the loan was underwritten, but it saw two major tenants depart last year.
Coworking operator WeWork exited its 119K SF space in the first quarter of 2023 amid its bankruptcy restructuring. Bay State College vacated its space in the building after the school lost its accreditation due to mismanagement and shut down on Aug. 31, 2023.
The two tenants accounted for one-third of the building's total square footage, and after they vacated, its occupancy fell to 42% as of June, according to Morningstar.
Though Capital Properties' building is facing issues, the Back Bay submarket has fared better than others in the Boston metro area.
The submarket had 18% availability and 13.7% vacancy in the third quarter, lower than the overall Boston office market with 22.7% and 17.8%, respectively, according to CBRE. The submarket saw 647K SF of leases signed last quarter.
