Workspace Property Trust Wins Extension Of $1.3B Loan For Office And Industrial Portfolio
Workspace Property Trust obtained a two-year extension for a $1.3B CMBS loan associated with a portfolio of about 10M SF of suburban office and industrial space, which represents roughly half of its holdings.
The loan is tied to 146 properties in 14 markets nationwide. WPT also owns another 9M SF of office space in 59 other properties. Iron Hound Management Co., which specializes in loan restructuring and debt/equity placement, was involved in overseeing the refinancing process.
In May, the loan was transferred to special servicing, and it was scheduled to mature this month, without any extension options.
“An important part of the deal was that the existing investors made a significant amount of new investment into the company,” WPT CEO Thomas Rizk told Bisnow, referring to equity investors in the privately held WPT. “Some of those funds were used for a paydown. Some were used to increase leasing reserves for growth and some for working capital.”
The extension was possible, Rizk said, because there are opportunities to restore occupancy and increase cash flow in the portfolio.
“If we owned office towers in a city that didn't have those kinds of prospects, I don't think this deal would have been available,” he said, stressing the strength of suburban office properties compared with downtown assets in the current business climate, but also of the portfolio.
“Historically, our average lease size was 10K SF,” Rizk said. “Now it is closer to 20K SF, and our leasing pipeline is in the millions of square feet, which is probably the strongest pipeline we've had in years. The other part of it is that we are also getting more credit for our industrial portfolio.”
The loan was originated in 2018, before the pandemic struck the office market. In 2022, the portfolio was 81% occupied, down from 88.6% when the loan was originated. Boca Raton, Florida-based WPT acquired the properties in two separate sales in 2016, both from Liberty Property Trust.
WPT is one of a number of office landlords seeking loan extensions in an office market riven by lower occupancies and a capital market beset by high interest rates. Other loan extensions have been successful as well. Last month, the special servicer for 601W, a major office property in Downtown Chicago, approved a four-year extension of the property’s $536M senior loan ahead of its July maturity date.
Other office owners have essentially been paying to extend their loans.
RFR Realty, for example, reached an extension in May with holders of the $783M mortgage for 300 Park Ave. in Midtown Manhattan. The company agreed to pay down $15M of the principal, as well as to pay off a further $40M over the next two years, and cover all special servicing and other lender expenses.
Also in New York, Tishman Speyer paid $30M into a reserve fund for leasing costs as part of an extension deal in June for a loan backed by 300 Park Ave. The extension in both of those cases was for one year with an option to extend for another.
