Appraisers slashed the value of a portfolio of seven office buildings owned by Pimco’s Columbia Real Estate Trust by 30% after the company defaulted on $1.7 billion in loans related to the buildings.
Last year, the portfolio included buildings in New York City, San Francisco, Boston and Jersey City worth $2.34 billion, according to Trepp data.
The portfolio is currently valued at $1.6 billion, according to comments from Wells Fargo, a special servicer of commercial mortgage-backed securities loans tied to the properties.
“Rent collection remains an issue in some properties,” Wells Fargo added in its comments.
Columbia Property Trust did not respond to a request for comment.
The trust is now delinquent on more debt than the properties are worth, meaning some loans on the buildings have become overwhelmed.
At the time, the Columbia Property Trust default marked one of the largest office-backed loans since the pandemic began. But since then, many office bosses have defaulted on their debts as debt service payments surged as remote work persisted and interest rates spiked in the second half of last year.
In Los Angeles, Brookfield defaulted on $1.1 billion in office-related loans — two of which are now in receivership.
Industry experts predict more pain to come. According to a recent study, researchers at the Boston Consulting Group expect office values to decline by about 40% over the next three years from pre-pandemic levels.
Columbia Property Trust’s portfolio includes three office buildings in New York, two in San Francisco, one in Boston and one in Jersey City. The New York property is located in the office portion of 245 West 17th Street, 315 Park Avenue South and 229 West 43rd Street.
The San Francisco properties are 555 and 650 California Street, on the edge of Union Square.
Two of the buildings — 650 California Street in San Francisco and 245 West 17th Street in Manhattan — were leased to Twitter and ran into financial problems after Elon Musk bought the company last year. In total, Twitter accounts for about 11% of the portfolio’s rental income, according to Trepp.
Newport Beach-based Pimco acquired New York-based Columbia Property Trust for $3.9 billion in late 2021.
