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<\/p>\nThe value of Philadelphia\u2019s largest office property has plummeted, which could set a precedent for similar distressed buildings.<\/p>\n
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\n The two towers of 1500 Market, the largest office property in Philadelphia, seen in June 2023\n <\/p>\n
1500 Market St<\/a>. is now worth just $104.4M, down 78% from $471.1M when the loan on the building originated in 2019 and 53% below its appraisal of $223.5M in September 2024, according to a report<\/a> from Morningstar Credit<\/a>.<\/p>\n The current loan balance is $368M.<\/p>\n This new appraisal, which came in at just over $59 per SF, could hasten similar activity at other Center City office properties and reset market pricing.<\/p>\n \u201cThe resolution of other distressed buildings (like 1700 and 1818) may have been waiting for a floor value on 1500 and this seems like it is it,\u201d Morningstar Senior Vice President David Putro<\/a> said in a statement.<\/p>\n There is an appraisal subordination entitlement reduction in place on the loan, which means special servicer Keycorp Real Estate Capital Markets must continue paying principal and interest to bondholders.<\/p>\n The firm will be paid back when the property sells, but Putro said this indicates the loan is likely underwater.<\/p>\n \u201cLong story short, it means the amount owed to the CMBS trust is significantly higher than the $368.0 million balance,\u201d he said.<\/p>\n Court-appointed receiver CBRE<\/a> listed 1500 Market for sale in August<\/a> and has been marketing it as a potential residential conversion play.<\/p>\n Nightingale Properties<\/a> and InterVest Capital Partners<\/a>, formerly known as Wafra Capital, spent roughly $328M on the property in 2017 and refinanced it via a $390M loan from JPMorgan Chase<\/a> two years later.<\/p>\n Occupancy fell precipitously during the pandemic and sat at just under 55% in June. The property was foreclosed upon in 2023.<\/p>\n Nightingale CEO Elie Schwartz<\/a> was indicted for wire fraud<\/a> the following year after he was accused of bilking hundreds of investors out of $63M via the crowdfunding platform CrowdStreet<\/a>.<\/p>\n He is serving a seven-year prison sentence following his conviction and was ordered to pay $45M in restitution.<\/p>\n Nightingale, InterVest and CBRE did not respond to\u00a0Bisnow’s requests for comment.<\/p>\n A nearby office property at 1515 Market St. got a lifeline when it received a two-year loan extension<\/a> following a hefty valuation cut.<\/p>\n