Buccini Pollin Group's $54M Delaware Office Park Loan Enters Special Servicing
An office complex outside Wilmington, Delaware, has entered special servicing, though what landed it there is up for debate.
Buccini Pollin Group’s 305K SF Bellevue Park Corporate Center faces “imminent monetary default,” according to a Morningstar Credit alert Tuesday morning that cites falling revenue and strained cash flow.
But Wilmington-based Buccini Pollin denies that the loan is close to default, adding that it is current on payments and requested the loan be put into special servicing itself.
“The loan has been current on all payments for the life of the loan,” the company said in a statement. “There is no monetary default, and it does not mature until August 2026. The Borrower requested that the loan be transferred to special servicing.”
The three-building complex constructed between 1987 and 1990 was more than 99% occupied when the $54M loan originated in August 2016. That rate dipped as low as 61% in 2023 and stood at just over 72% as of last September.
“A gradual decrease in occupancy beginning in 2019/2020 is responsible for the decreasing (debt service coverage ratio),” special servicer Trimont reported last month in commentary on the loan.
The building yielded below breakeven rents for the first nine months of 2024 and has suffered a series of occupancy setbacks, Morningstar said in its alert.
When health insurance provider Cigna renewed its lease in 2020, it downsized from almost 90K SF to roughly 58K SF. Tech firm InterDigital made a similar move in 2022, inking a three-year extension and shrinking its footprint from more than 36K SF to about 7K SF.
Although occupancy has dropped, there appears to be some stability among its remaining large tenants.
Investment firm BlackRock’s roughly 60K SF lease, accounting for about 20% of the office park, won’t expire until April 2027. Connecticut General Life Insurance has a similar-sized space under contract until September 2029. Wilmington Savings Fund Society, a bank, has a roughly 30K SF lease that doesn’t expire until September 2034.
Bellevue Park isn't the company’s first property to enter special servicing in the past couple of months. The firm last month acknowledged it planned to surrender two hotels near the King of Prussia Mall before a $32.5M loan comes due in June.
Its loan for the Fairfield Inn Philadelphia Valley Forge/King of Prussia and Crowne Plaza Philadelphia King of Prussia entered special servicing in December amid concerns of an imminent default, according to a separate Morningstar report.
“Hundreds of hotels, offices buildings, etc across the country have been returned to lenders due to the impact of covid, the slow recovery of certain markets, dramatically higher interest rates today and loan maturities that occur before assets have fully recovered,” Buccini Pollin co-founder Dave Buccini told Bisnow in a statement at that time.
“This is an unfortunate cycle of the institutional commercial real estate landscape. We stay focused on the positive movement in the industry, such as the $130m+ in multifamily financing we’ve been able to secure this month.”
Buccini Pollin sold the Center City Renaissance Philadelphia Downtown Hotel to The Wankawala Organization in March. The buyer assumed the roughly $20M of debt tied to the property.
UPDATE, MAY 21, 10:22 A.M. ET: This story has been updated with a statement from Buccini Pollin.
