Pimco Lands Extension On $1.7B Office Loan After Appraisal Wiped Away $700M In Value
The borrower behind one of the largest distressed office loans in the country has worked out an extension with its lenders more than a year after its default sent shockwaves across the commercial real estate industry.
Columbia Property Trust, the former office REIT now owned by Pimco, secured an extension on a $1.7B loan tied to seven office buildings in four cities, pushing the maturity to July 2025 with a six-month extension, according to Morningstar.
The 5.5M SF portfolio was appraised at $2.3B when the loan was issued in December 2021, but with the extension, that value was cut to $1.6B in an appraisal conducted in April, according to Morningstar. CXP fell behind on loan payments in February 2023, putting the debt into special servicing.
The original $1.9B loan was originated by Goldman Sachs Group, Citigroup and Deutsche Bank AG. A $485M slice of that debt was packaged into a CMBS loan, and as part of the extension, the interest rates for certain classes of that loan were reduced. Interest on two classes of A notes was reduced to 0.019%, according to Morningstar, and the $160M B note was reduced to 0%. Payments on the $125M in mezzanine debt were deferred.
The portfolio has another $930M in debt still accruing interest. It is unclear if the firm has received a new rate cap on the loan since its last one, at about 2.9%, expired in December 2023, when the loan was originally set to mature, TRD reported.
The portfolio consists of:
- 650 California, a 471K SF tower in San Francisco's financial district.
- 229 W. 43rd St., the historic 16-story, 934K SF office tower in the Theater District of Manhattan that was home to The New York Times until 2007.
- 245-249 W. 17th St., two interconnected buildings totaling 281K SF that are home to X's offices in Manhattan's Chelsea neighborhood.
- 315 Park Ave. S., a 332K SF tower in Manhattan that was home to the first Amazon Go store in the city.
- 201 California St., a 259K SF, 17-story office tower at the corner of California and Front streets in San Francisco.
- 116 Huntington Ave., a 272K SF office building topped with an oculus window in Boston.
- 95 Columbus, a 19-story, 629K SF office tower off Christopher Columbus Drive in Jersey City.
In addition to rising interest rates, the portfolio's tenants have given its owners headaches. Moody's downgraded its rating on the CMBS debt last year, noting that buildings in the deal had exposure to WeWork, the X social media platform and the failed First Republic Bank. WeWork and X stopped paying rent at different points last year, and First Republic's space in Chelsea has gone dark.
