One of the most notable victims of the hybrid work revolution in Philadelphia has taken a massive hit to its value.

The 207K SF office building at 5 Crescent Drive in the Philadelphia Navy Yard was valued at $89.3M in an August reappraisal, according to a special servicer report this month reported by Morningstar Credit.

The glass-covered structure was a build-to-suit headquarters for GlaxoSmithKline completed in 2013, but GSK decamped for a space in the FMC Tower in Center City less than a quarter of the size of 5 Crescent Drive in late 2021.

Korea Investment Management Co. acquired the building for over $130M in 2018 with the help of an $85M loan carrying a five-year term. After five years of interest-only payments, the loan matured in June, but it had already been transferred to a special servicer in December. The new appraisal is slightly lower than the $91.8M “go dark” value of the building estimated when the loan was securitized into two CMBS packages in mid-2018.

Though no update has been given regarding a default or a move toward foreclosure for the matured loan, Fitch downgraded some classes in the smaller of the two CMBS investments with exposure to 5 Crescent Drive in a Sept. 7 action, citing refinance concerns. Fitch also gave a negative outlook for other classes in the CMBS based on an anticipated loss on the former GSK property.

LEASING

Two new office leases were signed within 1939 Route 70 East in Cherry Hill, New Jersey, both brokered by Vantage Commercial. The Camden County Bar Association agreed to move its headquarters to Suite 120, while a behavioral health practice took Suite 260.

Vantage represented both sides of the transaction for Camden County Bar's lease and represented the building's unidentified owner in the deal to lease Suite 260.

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Pain management practice Relievus leased 7K SF at 400 Laurel Oak Road in Voorhees, New Jersey, for its new headquarters. Rose Commercial Real Estate represented both Relievus and the anonymous landlord in the transaction, characterized as a long-term lease. The landlord is underway on improvements at the one-story building.