The value of Philadelphia’s largest office property has plummeted, which could set a precedent for similar distressed buildings.

1500 Market St. is now worth just $104.4M, down 78% from $471.1M when the loan on the building originated in 2019 and 53% below its appraisal of $223.5M in September 2024, according to a report from Morningstar Credit.

The current loan balance is $368M.

This new appraisal, which came in at just over $59 per SF, could hasten similar activity at other Center City office properties and reset market pricing.

“The resolution of other distressed buildings (like 1700 and 1818) may have been waiting for a floor value on 1500 and this seems like it is it,” Morningstar Senior Vice President David Putro said in a statement.

There is an appraisal subordination entitlement reduction in place on the loan, which means special servicer Keycorp Real Estate Capital Markets must continue paying principal and interest to bondholders.

The firm will be paid back when the property sells, but Putro said this indicates the loan is likely underwater.

“Long story short, it means the amount owed to the CMBS trust is significantly higher than the $368.0 million balance,” he said.

Court-appointed receiver CBRE listed 1500 Market for sale in August and has been marketing it as a potential residential conversion play.

Nightingale Properties and InterVest Capital Partners, formerly known as Wafra Capital, spent roughly $328M on the property in 2017 and refinanced it via a $390M loan from JPMorgan Chase two years later.

Occupancy fell precipitously during the pandemic and sat at just under 55% in June. The property was foreclosed upon in 2023.

Nightingale CEO Elie Schwartz was indicted for wire fraud the following year after he was accused of bilking hundreds of investors out of $63M via the crowdfunding platform CrowdStreet.

He is serving a seven-year prison sentence following his conviction and was ordered to pay $45M in restitution.

Nightingale and InterVest didn't respond to Bisnow's requests for comment. CBRE declined to provide a statement.

A nearby office property at 1515 Market St. got a lifeline when it received a two-year loan extension following a hefty valuation cut.

Accesso Partners also got the option for an additional one-year extension at the building, which was worth $28M in August, down 68% from when the firm bought it in 2014.

“This loan extension is a vote of confidence in Accesso’s ability to successfully reposition 1515 Market, an initiative that will be critical to the building’s continued success given the current flight to quality in the U.S. office market,” Accesso General Manager Deb Kolar said in a statement last month.