CIM Group hands back keys to NY building, SF building loses 84% of value due to coworking firm’s travails
OCT 21, 2023, 7:00 AM
- Ted Glanzer
Nowhere is office distress more evident than with WeWork, which, despite its name, isn’t working at all.
Indeed, the coworking firm could be renamed “ReWork” after its staggering losses have forced it to renegotiate nearly all of its leases.
Landlords that count WeWork as a top five tenant owe about $2.6 billion in CMBS debt, an analysis of Trepp data shows. About half of those loans come due within 12 months and nearly 80 percent are either watchlisted, delinquent or in default.
Kushner Companies and Aby Rosen’s RFR are already weathering the fallout of a WeWork departure. The landlords failed to refinance their Dumbo office complex and landed in maturity default last month. WeWork had ditched a majority leasehold in one of the portfolio’s four buildings.
CIM Group, caught in a perfect storm of remote work, rising interest rates and WeWork exposure, is handing the keys to 1440 Broadway back to its lender.
The Los Angeles–based landlord, which picked up the large office property with Australian pension fund QSuper in 2017, saw the $399 million loan backed by the Midtown building go to special servicing this month, according to Trepp.
“The special servicer comments are not encouraging,” a Trepp email alert reads, noting that WeWork, which had been the building’s top lessee, has vanished from the tenant list. A WeWork spokesperson said the firm is still a tenant at 1440 Broadway and a change in building ownership would not affect that.
The CMBS loan had gone to a special servicer because “there is no single lender to negotiate with and the loan must first be transferred to special servicing in order to enter into any negotiations,” CIM said in a statement.