### Return to Lender: Week of Feb. 20, 2025
A foreclosure auction is scheduled for March 20 for one of Boston’s largest office buildings, One Lincoln Street, according to the *Boston Business Journal*. The tower’s owner, Fortis Property Group, has struggled to recover from the departure of State Street Corp., the building’s former namesake tenant. This marks the first time a foreclosure auction of this magnitude has occurred locally. The property is currently assessed at $588 million, though Fortis had secured a $1-billion refinancing three years ago.
A South Natomas office building, spanning over 80,000 square feet, will go to auction in late March after falling into receivership, reports the *Sacramento Business Journal*. The property at 2750 Gateway Oaks Drive, also known as Crown Plaza II, is currently about 50% occupied. Online bidding is set for March 31, with a starting bid of $1.75 million.
Fannie Mae has taken legal action to potentially seize a Miami Beach apartment building over a $2.27-million foreclosure lawsuit, according to the *South Florida Business Journal*. The lender filed a foreclosure complaint on February 13 against Noble Florida Property LLC regarding an 8-unit, 5,860-square-foot apartment complex at 2822 Pine Tree Drive. Fannie Mae is also seeking court approval to appoint a receiver to manage the property.
The Hilton Garden Inn on West 54th Street in Midtown Manhattan, backed by a $175-million loan, has been transferred to a special servicer ahead of its March 2025 maturity, as reported by Morningstar Credit. The hotel had previously been placed in special servicing during the pandemic but returned to the master servicer in 2022. However, performance continued to lag, mainly due to rising expenses. The financing package includes a $25-million mezzanine loan.
Duane Morris Plaza at 30 South 17th Street in Philadelphia, backed by a $105.3-million loan, has moved to special servicing. Morningstar Credit did not specify a reason but noted that the namesake tenant’s lease will expire in March 2026. While cash flow has declined by approximately 11% compared to underwriting, debt service coverage remains strong at 2.11x, albeit on an interest-only basis.
Aspen Lake Business Center, backed by a $65-million loan, transferred to special servicing after a major tenant, Zimmer Biomet, vacated in December 2024, pushing cash flow below breakeven. Morningstar Credit reported that Zimmer Biomet occupied 43% of the gross leasable area in one of the three Austin office properties securing the loan, which collectively make up 23% of the total space. Prior to the departure, net cash flow for 2023 had already fallen 18% below initial projections. Additionally, two smaller tenants have leases expiring in February 2025, though their renewal status remains uncertain.
Morningstar Credit also reported that the cross-collateralized and cross-defaulted loans for Chicago Business Center and Chicago Marketplace, totaling $51.1 million, have transferred to special servicing due to payment default and non-compliance with the lockbox account. The Chicago industrial properties have performed steadily, but a lockbox was activated after the largest tenant, READ Production Studios, announced its intent to vacate Chicago Business Center ahead of its April 2027 lease expiration.
About the Publisher:
Steve Griffin is based in sunny Palm Harbor, Florida. He’s an accountant by profession and the owner of GRIFFIN Tax (www.griffintax.com) and REVVED Up Accounting (www.revvedupaccounting.com). In addition, Steve founded Madison Avenue Technology (www.madisonave.tech). With a strong passion for commercial real estate, he’s also dedicated to keeping you up to date with the latest industry news.
