**Return to Lender: Week of April 24, 2025**
Several commercial real estate properties across the U.S. continue to face financial challenges, resulting in ownership changes, bankruptcies, and transfers to special servicing. Here is a roundup of notable developments from the past week:
– **Martin Selig Real Estate Transfers Seattle Properties**
Martin Selig Real Estate (MSRE) has finalized a deal to transfer ownership of two Seattle office buildings—400 Westlake and the Federal Reserve building downtown—to lender Acore Capital. This follows the firm’s default last year on a $240 million loan tied to the properties. The 230,000-square-foot 400 Westlake is approximately 94% vacant, and the Federal Reserve building encompasses 215,567 square feet.
– **UBS Realty Reclaims Orion Apartments in Oakland**
An affiliate of UBS Realty Investors has taken back ownership of the Orion apartment complex in Oakland, California, through a deed in lieu of foreclosure. The property’s original developer, Signature Development Group, defaulted on a $118.8 million loan secured in 2017.
– **Baltimore’s Comfort Inn & Suites Fails to Sell at Auction**
The 97-room Comfort Inn & Suites in downtown Baltimore failed to meet its reserve price during an online auction conducted through Ten-X in partnership with Colliers. The vacant hotel, located at 120 E. Lombard Street, drew bids close to $6 million and is currently inoperable due to a non-functioning elevator system.
– **DC Office Property Sale Approved in Bankruptcy Proceedings**
Morningstar Community Development is moving forward with the purchase of 2626 Pennsylvania Avenue NW in Washington, DC. The office building, formerly regional headquarters of the Salvation Army, was slated for redevelopment into luxury condos before its owners filed for Chapter 11 bankruptcy. The authorized purchase price is $12.7 million.
– **Canopy Real Estate Enters Arizona Market with Acquisition**
Denver-based Canopy Real Estate Partners, along with TBBG Investments, has acquired the ParkView Townhomes in Surprise, Arizona. The distressed multifamily property was bought in an all-cash $8.8 million deal, below the loan basis, through a lender-assisted sale.
– **Aventura Office Project Files for Bankruptcy**
Aventura Eco-Offices Property Owner has filed for Chapter 11 bankruptcy in an effort to stop a foreclosure auction scheduled for April 22. The Miami company is behind an unfinished office development at 21291 N.E. 28th Avenue in Aventura, situated on a 1.63-acre site.
– **Florida Developers Seek Bankruptcy Protection Ahead of Foreclosures**
Two planned developments in Florida, Lake Bennett Village-Ocoee LLC and Maine Boulevard II LLC, filed for Chapter 11 bankruptcy on April 7. The filings activated automatic stays and postponed foreclosure actions, according to court records in the Middle District of Florida.
**Properties Transferred to Special Servicing**
Morningstar Credit has reported several commercial mortgage-backed securities (CMBS) loans have been moved to special servicing due to financial distress:
– **Oak Street Net Lease Portfolio**
This $425 million portfolio across multiple securitizations is in special servicing due to lease rejections tied to tenant bankruptcies. The 42-property portfolio was fully leased under triple-net terms to tenants including Save Mart, Big Lots, Badcock, NAICO, Nation Safe Driver, and Big Y.
– **Westfield Wheaton Mall (Wheaton, MD)**
The $234.6 million loan secured by this regional mall transferred to special servicing after missing its March 2025 maturity. The property’s cash flow in 2024 was 12% below underwriting due to rising expenses. Workouts are underway with the borrower.
– **Waterfront at Port Chester (Port Chester, NY)**
This $133.5 million retail center entered special servicing after failing to pay off its loan at the April 2024 maturity. As of September 2024, the debt service coverage ratio dropped to 0.87x, with occupancy down to 87% from 96% at issuance.
– **Campbell Technology Park (Campbell, CA)**
The 280,864-square-foot office complex backed by a $60 million CMBS loan transferred to special servicing as occupancy has steadily declined in recent years. The loan is due for maturity in June 2025.
These developments underscore the continued volatility in commercial real estate debt markets as properties face economic and operational challenges.
