One of several distressed office properties on the west end of Market Street has entered receivership and suffered a hefty valuation drop.
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Shorenstein Properties’ 1818 Market St. received a new appraisal this month valuing it at $181M, down 36% from when the loan on the building was originated in 2021, according to Morningstar Credit. The building was about 69% occupied in March.
The nearly 1M SF, 37-story office tower entered special servicing in September 2023 ahead of an “imminent default,” according to the CMBS loan tracking firm’s commentary.
The $222.9M loan matured in March 2024 before the building faced a previous valuation drop that August. Keycorp Real Estate Capital Markets became the special servicer in September 2024.
Shorenstein borrowed via an adjustable-rate balloon loan, which means that a large payment would have been due at the end of the term, Morningstar reported.
The loan still hasn't been paid off, and servicer commentary in Morningstar's database says "no acceptable resolution proposal has been submitted," leading to the appointment of a receiver to manage the asset.
“Given that the receiver just went into place this month, the special servicer will give them at least a few months before deciding on a resolution,” Morningstar Senior Vice President David Putro said in a statement.
A spokesperson for Shorenstein didn’t respond to Bisnow’s request for comment.
Morningstar also provided an update about another Shorenstein property at 1700 Market St., which went into special servicing in February 2024.
That building’s valuation has remained steady at $199M or $234 per SF since December 2024.
“As a point of comparison, 1700 Market had a receiver put in place last year and foreclosure won’t occur until next March at the earliest,” Putro said.
He added that “there’s a bit of a logjam on that stretch of Market Street” when it comes to distressed office buildings.
Creditors are also awaiting resolutions at 1500 Market St., which is being marketed as an office-to-residential conversion opportunity, and 1515 Market St., where Temple University is reportedly planning to move out after buying a nearby former University of the Arts property.
