KBRA Affirms All Ratings for OMPT 2017-1MKT

KBRA affirms all of its outstanding ratings for OMPT 2017-1MKT, a CMBS SASB transaction. The affirmations follow a surveillance review of the transaction, which has exhibited stable collateral performance since KBRA’s last ratings change in January 2021. The rating affirmations also take into consideration high upcoming rollover at the collateral property, and reflect the high quality and competitive position of the collateral property as well as the sponsors’ experience.

The transaction collateral consists of a first lien mortgage loan secured by the borrower’s fee simple and partial leasehold interest in One Market Street Plaza, a 1.6 million sf, Class-A office complex consisting of a 28-story office tower (Steuart Tower), a 42-story office tower (Spear Tower), a six-story annex building, and a two-story subterranean parking garage. The property is in San Francisco’s South Financial District near the waterfront. The fixed rate loan failed to pay off by its originally scheduled maturity date of February 2024 and has been modified, resulting in an extension of the maturity date and a $125.0 million principal paydown among other stipulations. The loan has an outstanding balance of $850.0 million ($537 per sf) as of December 2024 and matures on February 6, 2026. The sponsor is a joint venture between affiliates of Paramount Group and Blackstone Property Partners.

KBRA analyzed the cash flow for the property utilizing information from the trustee and servicer to determine KNCF. As the property’s occupancy is expected to decrease with the departures of Google and Visa in 2025 and 2026, KBRA is utilizing a stabilized analysis to derive property value and KLTV. The analysis produced a stabilized KNCF of $96.0 million, a change from $94.1 million at KBRA’s last review and $76.8 million at closing. The resulting in-trust KLTV is 70.8%, a change from 80.3% at KBRA’s last review and 89.7% at securitization. KBRA identified the loan as a K-LOC and adjusted the KPO to Underperform from Perform, as the loan failed to pay off by its original scheduled maturity date, and significant tenant turnover is expected to occur in the near term. At this time, KBRA does not estimate a loss for this asset.

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