One South Broad Office Tower Facing Foreclosure With $35M Of Debt
A prominent office tower overlooking Philadelphia City Hall is encountering more financial distress after its owner received a lifeline two years ago.
One South Broad, owned by Aion Partners, was the subject of a September foreclosure complaint filed by special servicer Rialto Capital Partners, the Philadelphia Business Journal reported.
The owner consented to foreclosure and receivership, according to special servicer commentary in the Morningstar Credit database. Aion Partners still owes nearly $35M on the $46.5M CMBS loan underpinning the 25-story property.
The CMBS loan was originated in 2012 under the prior owner, 601W Cos., which sold the property to Aion in 2014, according to Morningstar.
The loan has been in special servicing since 2022. It matured in June following an extension Aion negotiated in 2023.
Aion had put One South Broad on the market in April as it tried to pay off the debt, but it was unable to find a buyer, according to the servicer commentary. The 464K SF tower is reportedly around 60% occupied.
“It simply looks like there’s been little leasing at the property since the extension was granted,” Morningstar Head of CRE Analytics David Putro told Bisnow. “So even with the two-year extension, the needle has not moved in terms of occupancy or value.”
Aion didn't respond to Bisnow’s request for comment, and Rialto declined to provide a statement.
A wave of distress washed over the Center City office market in the wake of the pandemic.
One South Broad sits around the corner from 1515 Market St., where owner Accesso Partners received its own two-year loan extension last month. Accesso put up $7M in equity and agreed to expanded guarantee and financial reporting requirements as part of the extension, a Morningstar Credit update said this week.
1515 Market was 72% occupied as of April, and the owner plans to build out spec units and upgrade the building’s conference center and lobby to try to attract tenants.
The largest office property in Philly at 1500 Market St. remains up for sale following a valuation cut earlier this month. The building CBRE is marketing as a potential residential conversion play is now worth just $104.4M, down 78% from $471.1M in 2019.
