Buyers of commercial mortgage-backed securities tied to a single asset are being hit with losses as the market for older offices continues to wobble.

In the latest blow, a $233M CMBS backed by a 20-building office campus in the Kansas City suburbs resulted in substantial losses. The loan’s sale left just $164M to distribute to creditors, leading the $65M riskiest portion of the CMBS bond to be fully wiped out, Bloomberg reported.

The Aspiria campus was the former home base of telecom company Sprint. Now, it has created more than $60M in losses across multiple funds for money manager Lord Abbett & Co., which owned a large portion of the loan.

Single-asset, single-borrower mortgages backed by older offices are still struggling to recover after the onset of the pandemic, even though SASB deals are enjoying a moment of popularity.

New SASB loans made up 45% of CMBS debt issuance last year, much higher than 20% in 2023, and are expected to skyrocket this year. But most of these deals center around a certain asset type: Class-A offices.

Class-A buildings, featuring luxe amenities and located in city centers and near public transit, are landing the bond deals older offices are struggling to obtain. A $3.5B SASB loan for Rockefeller Center in New York City was secured by Tishman Speyer in October, just months before a $1.2B loan for the Seagram Building in February and a $1.1B loan for 3 Bryant Park.

Older properties, like Aspiria’s 1990s-era campus, aren’t seeing as much activity. The Class-B and C market nationwide last quarter had an 11.1% gap between asking rents and taking rents, showing the negotiating power tenants hold, according to CBRE research.

Most SASB loans that now face losses were done at a time when the office market was in a different place — high rents, high occupancies and long lease terms, Bloomberg reported.

But with a weak market, falling property values and refinancing challenges have left office CMBS debt at an all-time high. According to Trepp, a record 11% of office buildings tied to CMBS loans are delinquent.