A midcentury property with high vacancy in one of suburban Philadelphia’s most heavily supplied office markets is facing worsening financial distress.

Parkview Tower at 1150 First Ave. in King of Prussia was reappraised at $16.2M, down from $20.6M from last year, according to CMBS monitoring platform Morningstar Credit.

Owner Keystone Development + Investment obtained a $35M CMBS loan tied to the property in 2014. The valuation was $47M at the time.

The loan entered special servicing in June 2023 after occupancy fell to 64%, down from 93% when it was issued, according to Morningstar. The borrower failed to pay off the loan ahead of its September 2023 maturity, and a receiver was appointed to manage the asset the following month.

The vacancy rate fell further to 44% by the end of 2025, when the debt service coverage ratio was reported at just 0.42x, according to Morningstar.

“Performance was generally middling from the time the loan was issued,” Morningstar Associate Managing Director David Putro said of the office building.

“It only surpassed its underwritten net cash flow in three of the years since issuance, and its DSCR exceeded 1.35x only once.”

In addition to two Keystone executives, Morningstar's database lists Lubert-Adler co-founder Ira Lubert and GF Hotels & Resorts CEO Kenneth Kochenour as sponsors on the loan. None of the companies responded to Bisnow’s requests for comment.

Parkview Tower was scheduled for an auction with the Montgomery County Sheriff’s Office in July 2025, but it was ultimately stayed.

“Don’t think the stay means much,” Putro said. “The servicer could have floated this out there just to see if they got a bite and could avoid the cost of foreclosing.”

The property, built in 1974 and renovated in 2000, is in the King of Prussia/Valley Forge submarket. That area's 15M SF of office stock accounted for roughly a quarter of the entire Pennsylvania side of the suburban Philadelphia office market last quarter, according to a CBRE report.

The submarket had a total vacancy rate of 26.9% and an average asking rent of $35.20 per SF, both slightly above the regionwide averages of 25.1% and $33.25.

Putro said he believes the property’s age and location within the submarket next to Valley Forge Casino Resort and other high-traffic destinations may be part of the problem.

“Since this loan was issued, they put up the Top Golf there as well as the King of Prussia Town Center,” he said.

“It’s older space, so if you’re looking for office space in a KOP market with elevated vacancy and have your pick of buildings, this property is a tough sell. I’ve gone through there at rush hour to get to a work event at Top Golf and the traffic is abysmal.”