A loan backed by the Centre Square office complex near City Hall has been assigned to a company that manages troubled commercial mortgages after the loss of a major tenant disqualified its owners — Nightingale Properties and the Wafra Group of Kuwait — from an easy loan renewal.
The $240 million mortgage backed by the 1500 Market St. towers, known for the giant Clothespin sculpture in their front plaza, was sent to a “special servicer” in July, days after the loan reached its initial maturity date, according to a report on Friday by commercial real estate debt-tracker Trepp LLC.
The mortgage had been eligible for three one-year extensions past that maturity date if its operating income stayed sufficiently high relative to its debt load, according to Trepp. With the upcoming loss of a large tenant in April 2020, that so-called debt yield ratio was set to drop below the threshold for renewal, it said.
The borrower could have paid down the debt to meet that threshold “but failed to do so,” Trepp said. It “has requested a short-term forbearance" to allow time to obtain a replacement mortgage and expects to have the debt paid “within three or four months,” according to the report.
The report did not identify the departing tenant, although its description matches that of New York-based consulting firm Willis Towers Watson, which leases about 244,000 square feet at the complex. The firm announced in October that it was moving its Philadelphia office to 1735 Market St.
A joint venture between Nightingale, of New York, and Wafra paid $328 million in July 2017 for the 1.76 million square foot complex, which consists of a 36-story east tower and a 43-story west tower.
Its other major tenants include University of Pennsylvania Health System, law firm Saul Ewing, Public Health Management Corp., and Radian, a mortgage insurer.