Commercial real estate distress continued to surface across multiple property types and capital stacks in mid-June, with new liquidations, special servicing transfers and bankruptcy filings reported in several major markets.
In Chicago, the 205 West Randolph office asset backing the COMM 2015-CR22 CMBS deal was liquidated, generating a $12.2 million loss, according to Morningstar Credit. The 199,000-square-foot property sold for just under $8.0 million with $3.5 million of expenses, a price above its most recent $5.8 million appraised value, and the loss was fully absorbed by the Class H bond.
Retail distress remained in focus as Trepp reported that the CMBS trust holding the mortgage on the Destiny USA enclosed mall in Syracuse is offering the loan for sale through Newmark. The property, described as the largest mall in New York State and among the largest nationally, is encumbered by a $483.53 million mortgage and obligations tied to a payment-in-lieu-of-taxes program that financed a prior expansion.
In South Florida, the South Florida Business Journal reported that an owner of four industrial condos in Royal Palm Beach filed for Chapter 11 reorganization to halt a foreclosure auction. A $2.56 million foreclosure judgment had previously been awarded in 2025 to JD Investment Group LLC and the Genuine Investments Land Trust against 581 105 Avenue North LLC and its loan guarantors, with the borrower petitioning for bankruptcy protection the day before the rescheduled June 11 auction.
Hospitality assets also featured prominently. In downtown St. Louis, the St. Louis Business Journal reported that the planned sale price of the 88-key Hotel Indigo at 501 Olive St. has been reduced, with La Salle Gateway Partners LLC now expected to acquire the receivership property for $2.3 million after a prior $2.8 million purchase agreement was terminated. In downtown San Antonio, the San Antonio Business Journal reported that the bankrupt office-to-hotel conversion at 145 Navarro St. is expected to trade by July 15, either to Ashford Hospitality Trust for $32 million or to GrayStreet Partners for about $30 million, following a Chapter 11 filing in early 2025 after flood-related cost overruns and delays.
Additional CMBS stress was noted in specialized and lodging assets. Morningstar Credit reported that the $975 million IMC Portfolio, secured by 16 showroom properties serving the High Point Markets in High Point and the Las Vegas Markets in Las Vegas, moved to special servicing at its June 2026 maturity after a prior extension and a $175.0 million principal repayment requirement, with 2025 net cash flow down 30% from issuance. Morningstar also reported that the $430 million CMBS loan on the Fairmont Austin transferred to special servicing less than two years after origination, following a tax dispute in which the borrower used manager-controlled FF&E funds to cover taxes without lender consent.
In Lower Manhattan, Morningstar Credit reported that 26 Broadway, backing multiple CMBS transactions including CMBX.16 exposure, transferred to special servicing for monetary default after the borrower disclosed it could no longer make loan payments. The office property has posted steadily weaker results, with 2025 net cash flow about 30% below underwritten levels and a DSCR of 0.76x, reflecting lower revenues and sharply higher expenses.
