CMBS Loan Backed by Moinian Group’s 2 Washington Street Sent to Special Servicing
The 345-unit New York City building’s master tenant was short-term rental company Sonder, which entered bankruptcy last year
By Brian Pascus June 30, 2026 12:14 pm
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One of the Moinian Group’s premier properties is now in the hands of special servicing.
A $131.5 million commercial mortgage-backed securities (CMBS) loan was secured by 2 Washington Street, a 483,000-square-foot, 22-story mixed-use complex near the southern tip of Manhattan that leased short-term rental units.
Cash flow issues led to the CMBS loan’s transfer to special servicing, according to an alert from Morningstar Credit Analytics.
The $131.5 million loan is split among BMARK 2021-B29, BMARK 2021-B28 and 3650R 2021-PF1 conduit deals. The loans are set to mature on Aug. 6, 2031, according to Morningstar Credit.
BMARK 2021-B29 and BMARK 2021-B28 are conduit deals issued by Citigroup and Bank of America in 2021, while the 3650R 2021-PF1 was securitized by 3650 Capital that same year.
2 Washington Street’s cash flow problems stem from its master-lease tenant, Sonder, a global hospitality company that sold hybrid hotel-apartment units featuring fully furnished rooms, keyless digital entry, and in-unit kitchens managed by Sonder staff.
The short-term rental company began occupying 2 Washington Street — a 1970s-era office that was converted in the 2010s into residences — in late 2020. The firm entered into bankruptcy in November 2025, shortly after Marriott terminated a licensing deal, putting the firm’s roughly 9,000 rental units in more than 40 cities in limbo once its business model collapsed.
“Sonder went bankrupt and ceased operations in November 2025, effectively cutting off the majority of the cash flow at the property,” wrote Morningstar Credit of 2 Washington Street.
The special servicing notice stated that 286 of the building’s 345 rental units are designated by the City of New York to serve only as rentals for a maximum of 30 days, hence the hospitality-hybrid business model. That designation makes it unlikely the building can be turned into a multifamily property without zoning changes.
Prior to Sonder’s bankruptcy, 2 Washington Street boasted short-term studio, one-bedroom, and two-bedroom units and featured amenities such as a 7,500-square-foot Life Time fitness center, a golf simulator and a music room, as well as a roof deck and coworking spaces.
2 Washington Street opened in 1972 as an office complex attached to 17 Battery Place, an iconic 31-story Renaissance Revival building completed in 1904 along the southern portion of the Hudson River in Battery Park.
The Moinian Group did not respond to requests for comment.
Brian Pascus can be reached at bpascus@commercialobserver.com
