$160M CMBS Loan Backed by Boston’s Park Square Office Sent to Special Servicing
The 102-year-old building has seen its occupancy fall from 97% to 42%
By Brian Pascus October 22, 2024 12:32 pm
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A $160 million commercial mortgage-backed securities (CMBS) loan secured by Park Square, an 11-story mixed-use office building in Downtown Boston, has been sent to special servicing due to a funding shortfall, according to an alert from Morningstar Credit.
The $160 million loan is split across two CMBS deals — BANK 2017-BNK8 and BANK 2017-BNK9 — and had been current on its payments until recently. Morningstar Credit reported this month that the borrower, Capital Properties, said it would “cease funding shortfalls” this month.
The prime culprit for the funding shortfall? As usual, occupancy.
Morningstar Credit reported that occupancy at Park Square, an enormous 540,000-square-foot building constructed in 1922, fell from its underwritten value of 96 percent occupied in 2017 to a staggering 42 percent in June 2024.
“At issuance, WeWork and Bay State College accounted for over one-third of the space in the building, but both vacated,” the Morningstar Credit notes stated. “WeWork after its bankruptcy and Bay State after losing its accreditation.”
Park Square is a blocklong building at 31 St. James Avenue, one block southwest of Boston Public Garden near Boston Common. The landmarked building leases both retail and office space and has served as the home to consulates from France, Turkey, Spain, Portugal and Colombia.
Earlier this year, Capital Properties had announced over 47,000 square feet in new and renewal leases signed at the property. These included Boston Integrated Health, Sugarman & Sugarman law firm, P.C. Hercules Capital, and retailer Vision Source.
It is not clear whether these tenants are filling less than 50 percent of space at the building.
Capital Properties did not respond to requests for comment.
Brian Pascus can be reached at bpascus@commercialobserver.com
