Finance  ·  CMBS

Brooklyn Office Portfolio Loses More Than Two-Thirds Value in 5 Years: Trepp

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In another sign of the continuing toll from increased hybrid work, four Brooklyn office properties backing a $180 million securitization from 2018 have seen their value plunge 68 percent in the last five years, according to a Trepp alert issued Wednesday.

November servicer data shows the value of collateral behind the Dumbo Heights Portfolio commercial mortgage-backed securities (CMBS) at $207.1 million compared with $640 million when Citi Real Estate Funding originated the debt in August 2018, according to Trepp.

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Owners RFR Holding and Kushner Companies failed to pay off the Dumbo Heights Portfolio loan’s maturity by its Sept. 6, 2023, maturity date and is now in the process of transferring to its special servicer, LNR, according to data from CRED iQ.

The four Brooklyn offices — at 117 Adams Street, 55 Prospect Street, 81 Prospect Street and 77 Sands Street — total more than 750,000 square feet and were all renovated in 2017.

At the time of the CMBS loan, WeWork (WE) was the portfolio’s second-largest tenant with a lease totaling 21.2 percent of the four buildings’ overall net rentable area (NRA). The struggling coworking company filed for Chapter 11 bankruptcy protection last week.

The portfolio’s occupancy at the time of the loan was 94.6 percent, with Etsy as the largest tenant at 29.9 percent of NRA, according to loan documents. Its lease expires on July 31, 2026.

The loan was split into an $80 million piece of the BMARK 2018-B7 deal, $70 million of the CGCMT 2018-C6 deal and $30 million of the BMARK 2018-B8 deal.

Officials at Kushner Companies did not immediately return a request for comment. RFR declined to comment.

Andrew Coen can be reached at acoen@commercialobserver.com.