This week’s return-to-lender activity spans multiple markets and property types, with courts, special servicers, and bankruptcy processes driving outcomes. In Philadelphia, a judge has approved the $70 million sale of the largely vacant Centre Square office complex in Center City. U.S. District Court Judge Nitza Quiñones Alejandro directed the transfer of the 1.76 million-square-foot, two-tower property to affiliates of local developer PMC Property Group and investor Dean Adler. The sale, which must close by an October 16 deadline, will resolve a foreclosure case that has been ongoing since January 2023 and is expected to enable a significant redevelopment effort.
Near Chicago, a long-running horse racing venue is set to change hands through the bankruptcy courts. Digital Realty Trust has agreed to acquire the 108-acre Hawthorne Race Course in Stickney, Illinois, for $90 million. The data-center REIT is expected to close on the purchase early next month following a Chapter 11 sales process. The property held its final horse race last month, and Digital Realty submitted the only qualifying bid out of 70 groups that engaged with brokers during marketing.
In Washington, D.C., a prominent Anacostia office building is headed back to the foreclosure auction block. The Anacostia Gateway office property at 1800 Martin Luther King Jr. Ave. SE, totaling 63,000 square feet, is scheduled for a new foreclosure auction on September 28. The building, previously at the center of Chapter 11 proceedings involving an affiliate of a local healthcare provider, is owned by Hermes Investments LLC, an affiliate of District HealthCare Services LLC. Hermes reportedly owes $16.2 million on a note held by SSR 1800 MLK LLC.
Distress is also emerging in the securitized loan universe. The $26.5 million CMBS loan on Elevate at the Pointe, a multifamily property in Marietta, Georgia, has transferred to special servicing, according to Morningstar Credit. The move was attributed to failure to comply with cash management provisions, failure to meet debt yield requirements, and non-payment of insurance premiums. Property performance has been described as middling, with net cash flow underperforming underwritten expectations and debt service coverage falling below breakeven as of March 2026.
In Jacksonville, Florida, the Summit at Southpoint office property has similarly moved into special servicing. The $24.6 million CMBS loan, secured by a 265,000-square-foot office asset and representing 2.8% of a broader conduit deal, was transferred after the borrower informed the servicer it would no longer cover operating shortfalls, Morningstar Credit reported. Although the loan had remained current through most of its term, its debt service coverage ratio dipped below breakeven this year. Servicer commentary notes at least one positive factor: the building’s largest tenant has signed a 10-year lease extension, offering some income visibility despite the loan’s distressed status.
