Republic Plaza’s $134M Loan Becomes Delinquent As Colorado Office Market Sours
A $134M loan on Denver’s Republic Plaza has become delinquent, according to TreppWire’s latest monthly delinquency report, the latest sign that Colorado’s office market is still struggling to shake the economic impacts of the coronavirus pandemic.
Overall, Colorado’s office loan delinquency rate increased from 16.8% in February to almost 18% in March, according to the report. That increase represented the largest month-over-month jump among the top five states with increases of commercial mortgage-backed securities going into default. North Carolina, Kentucky, Illinois and Maryland were the other four states mentioned in the list.
“This loan has been on our radar for several years,” Trepp said, adding that the building’s second- and fifth-largest tenants had moved out of the building since May 2021. “The loan matured in December and failed to pay off, according to servicing commentary. A potential loan workout is in discussion.”
Brookfield Properties, which owns the Republic Plaza along with MetLife, declined to comment when reached by Bisnow Tuesday.
Republic Plaza is a 1.3M SF office building that sits between the 16th Street Mall and 17th Street. It is the tallest building in Colorado at 56 stories.
Like many offices in Denver, the Republic Plaza has struggled to maintain occupancy. Trepp found that the building’s occupancy had dropped from 91% in 2021 to 79% in 2022, with big tenants like energy companies Extraction Oil & Gas and DCP Midstream vacating space.
Trepp projected the building’s occupancy would fall to 67% by June “following the expiration of a large tenant.” Ovintiv USA Inc., an oil exploration company, is the building’s largest tenant and takes up approximately a quarter of the building’s office space, Trepp reported.
Across the U.S., Trepp found that the delinquency rate for CMBS loans decreased to 3.09% in March from 3.12% in February.
But offices and lodging remain weak spots in the overall market. Trepp measured a 22-basis-point increase in delinquencies for office-backed loans between February and March.
