A weekly look at the commercial mortgage-backed securities business
The Panorama Corporate Center in Englewood, Colorado, includes 9200 E. Panorama Circle. (CoStar)
By Mark Heschmeyer via CoStar
CoStar News
June 25, 2026 | 7:04 AM
This week’s CMBS Notebook examines a distressed Denver office loan weighing on a CMBS deal, a Los Angeles office complex pivoting toward housing and a San Jose property facing debt trouble after losing an anchor tenant. Read the entire piece by clicking “read more” below.
At-risk Denver office loan drags on CMBS deal: Fitch Ratings lowered its ratings on several classes of investments in a commercial mortgage-backed securities deal and warned of possible future downgrades because a $133 million loan backing an office building in Englewood, Colorado, has defaulted and could lead to larger losses.
The debt was secured by the Panorama Corporate Center, a 777,000-square-foot suburban complex at 7630 and 7670 S. Chester St. and 9200, 9401, 9501 and 9601 E. Panorama Circle. The borrowing accounts for 31.8% of the pool in CMBS deal GSMS 2016-GS2 and is now the largest contributor to overall loss expectations, Fitch said.
The interest-only loan transferred to special servicing in February after the borrower, property owner Sagard Real Estate, failed to pay it off at maturity. Sagard did not respond to CoStar News’ request for comment.
The borrower has proposed splitting the note in two, a plan now under review, special servicer LNR Securities Holdings said in CMBS loan commentary this month. The business plan calls for repositioning one building as multitenant space and converting another to an alternative use within the six-building, Class A complex.
Aerospace manufacturer United Launch Alliance, occupying 59.2% of the net rentable area through February 2027, is in talks to renew at a reduced rent, Fitch reported. Comcast, the second-largest tenant at 36.9%, does not plan to renew its lease when it expires in February 2029.
Tenants have vacated about 105,000 square feet over the past 12 months, according to CoStar data. Vacancy has climbed to roughly 34%, about twice the market rate.
The property “had performed quite well throughout the term, with net cash flow outpacing the underwritten level every year since 2018 and occupancy never falling below 98%,” Morningstar Credit noted in March, but warned that refinancing prospects would be challenged by near-term lease expirations among the two largest tenants.
LA office building prepped for conversion amid debt difficulty: An office building in Los Angeles has landed in special servicing for the second time as the property’s owner moves to close a pending sale and pivots toward a possible residential conversion under the city’s adaptive reuse rules.
The $30.4 million loan securing the 316,000-square-foot tower at 600 S. Commonwealth Ave. transferred to special servicer Rialto Capital Advisors following a maturity default, according to CMBS deal notes.
The owner, Jamison Services, did not respond to a request for comment.
The property is under contract, but the buyer needs more time to close, according to the loan commentary. Jamison has also entered into a pre-negotiation agreement — a step that typically precedes a potential loan workout — and is in talks with the special servicer about extending the loan.
The Class A tower, completed in 1970 and last renovated in 1991, was just 38% occupied as of Dec. 31, with average rents of $30.92 per square foot, according to CMBS notes. The drop in occupancy follows the departure of its anchor tenant, the Los Angeles County Department of Public Health, before its lease expired in February 2025.
Servicer commentary indicates the building was allowed to empty out in preparation for a potential conversion to residential use.
The property was reappraised at $31.4 million in February 2024, down 37% from its $50 million valuation at securitization in 2013, and now roughly in line with the outstanding loan balance.
Bondholders could face losses of $17.3 million to $18.7 million, Morningstar Credit estimates.
The loan first transferred to special servicing in December 2023 ahead of its original January 2024 maturity, followed by two short-term forbearance agreements, the latest of which expired last month.
San Jose complex loses major tenant, clouding loan: The main tenant at Champion Station, a three-building office complex in San Jose, California, that backs an $80 million loan, plans to vacate when its lease expires in September.
The debt was transferred to special servicing last month, ahead of a likely maturity default, after the borrower told the master servicer it would be unable to pay it when it comes due on Aug. 6, according to CMBS commentary.
The owner of the building, a Delaware limited liability entity, could not be reached for comment.
The borrower has requested a loan modification to buy time to negotiate new leases and backfill space in the 230 West building, the loan notes said. Discussions are ongoing.
Itron, the departing tenant, occupies two of the property’s three buildings, or about 66% of the gross leasable area. The third building is leased to ForeScout Technologies and subleased to Archer Aviation, a developer of electric air taxis, but that lease also expires by year-end and is being marketed for new tenants. Archer signed a full-building lease nearby at 10 W. Tasman Drive last year.
The pending move-outs have triggered a cash trap on the loan, meaning the property’s rental income is now being held by the servicer to protect lenders rather than flowing to the owner. The debt is securitized in CMBS deal COMM 2016-COR1.
North San Jose’s industrial market is recalibrating, with more demand seen for new, power-ready buildings, according to CoStar analysis. Champion Station, now 32 years old, has not undergone major renovations. Six of the area’s eight largest leases signed in the past two years were in buildings constructed or renovated within roughly the past decade.
Reposted with permission via CoStar
