Today In CRE’s Collapse: Philadelphia’s 1515 Market Put Into Special-Servicing With $59.4 Million Left On Mortgage

Another day, another city, another collapse in the commercial real estate market.

This week the property in question is a 20 story building located at 1515 Market St. in Philadelphia, which Philadelphia Business Journal notes has “joined a growing list” of distressed office properties in the city. 

Almost $60 million in debt backed by the building was moved to special servicing in December, the report says. Owner Accesso Partners, based in Florida, has a $59.4 million balance on the building, which it acquired in 2014 for $85 million.

The loan is set to mature in January 2025, the report notes. It was originated by J.P. Morgan and has since been converted into a commercial mortgage backed security (CMBS) and sold.

It is one of several buildings within just blocks of Philadelphia City Hall, located in dead-center city, that have been transferred to special servicing over the last 9 months. 

Accesso told PBJ that it had asked for the loan to be transferred to special servicing so it could negotiate an extension. And if you believe that one, we have some real estate in Alaska we’d like to sell you…

The building houses Temple University’s Center City campus, which has been the building’s flagship tenant since 2001. It extended its lease in 2022 for 5 years, the report notes. It covers more than 130,000 sq. feet and two floors. 

However, no other tenants have more than 16,000 feet. 

The building generated about $6.6 million in net operating income when the loan was written in 2014, however that number has now fallen to under $4.4 million in 2022. Like many other places across the U.S. economy, revenue has fallen while interest expense has risen as a result of rate hikes.