KBRA Downgrades Three Ratings and Affirms One Rating for MSBAM 2015-C26
2 Oct 2026 | New York
KBRA downgrades the ratings of three classes of certificates and affirms one rating for MSBAM 2015-C26, a CMBS conduit transaction. The transaction has been reduced to three loans with an aggregate balance of $103.8 million from 69 loans totaling $1.0 billion at securitization. The ratings actions are based on KBRA's identification of all remaining assets as KBRA Loans of Concern (K-LOCs), KBRA's estimated losses of $50.7 million (which, if realized, would impact Classes F and below) and corresponding recoveries; realized losses totaling $6.3 million, which were allocated to Class H; and cumulative interest shortfalls of $770,193 affecting Class H.
As of the September 2026 remittance period, each of the remaining assets (100% of the pool balance) are specially serviced including one loan (22.9%) that is in foreclosure and two (77.1%) that are matured non-performing. The details of the remaining assets are outlined below.
Palmer Center ($57.9 million, 55.7%, K-LOC, Specially Serviced, Non-Performing)
- The loan is collateralized by a Class-A office complex located on an entire city block in Colorado Springs, Colorado. The loan is secured by two 14- and 15-story office buildings, one two-story office building with ground-floor retail, and a three-level subterranean parking garage offering 1,642 parking spaces. The development, which is subject to a condominium regime, also includes the 292-key Antlers Hilton Colorado Springs hotel, which is not part of the collateral. Control of the condominium board is shared equally between the two units.
- The loan failed to pay off at its August 2025 maturity date. The borrower previously requested a modification to allow for a sale of the property; however, prospective buyers ultimately withdrew. A receiver was appointed in March 2026, and multiple tenants have declined to renew or exercised termination options in 2026 and 2027. Notably, the current largest tenant, Davita Medical Group (13.8% of total base rent), has indicated it will vacate at lease-end in December 2027, and the prior largest tenant, Bluestaq (17.4%), terminated its lease ahead of its 2028 expiration date. A foreclosure sale is scheduled for October 2026, but may be delayed. The borrower has submitted a discounted payoff proposal, which the lender reviewed and rejected.
- The servicer reported occupancy and DSC are 74.0% and 1.66x for the YTD ended June 2026. An appraisal dated December 2025 valued the property at $29.4 million ($64 per sf), which is 71.7% lower than the $103.9 million ($226 per sf) appraised value at issuance. As a result, the asset carries an ARA of $31.9 million. KBRA’s analysis resulted in an estimated loss of $33.6 million (58.1% estimated loss severity) on the $57.9 million loan balance. The loss is based on a KBRA liquidation value of $26.2 million ($57 per sf) and total projected exposure of $59.8 million. The value is derived from a direct capitalization approach using a KNCF of $2.4 million and a capitalization rate of 9.25%.
Skylight Office Tower ($22.8 million, 22.9%, K-LOC, Specially Serviced, Foreclosure)
- The loan is collateralized by a 320,793 sf, Class-A office building located in Cleveland, Ohio, within the city’s CBD. The collateral is a 12-story building that is part of the greater Tower City Center, a mixed-use development. The office tower has the exclusive use of 375 parking spaces in the Tower City Center parking garage pursuant to an easement agreement; however, the garage is not collateral for the subject loan.
- The loan transferred to the special servicer in October 2025 after the borrower failed to repay the loan by its maturity date. The borrower has not yet submitted a proposal to cure the default, but it consented to the lender's receivership request. The prior largest tenant, Sherwin Williams (34.9% of total base rent), had a lease expire in October 2025, and the tenant vacated . The lender will continue to dual track workout resolutions, with foreclosure anticipated by YE 2026.
- The servicer reported occupancy and DSC are 55.0% and 2.08x for the YTD ended March 2026. An updated appraisal has not been reported since closing; however, the asset carries an ARA of $6.0 million resulting in a cumulative ASER of $174,749 as of September 2026. KBRA’s analysis resulted in an estimated loss of $11.0 million (46.3% estimated loss severity) on the $23.8 million loan balance. The loss is based on a KBRA liquidation value of $14.1 million ($44 per sf) and total projected exposure of $25.1 million. The value considers a distressed non-stabilized disposition of the asset as well as comparable market values.
Market Square Plaza ($22.2 million, 21.4%, K-LOC, Specially Serviced, Non-Performing)
- The loan is collateralized by a 172,629 sf, Class-A office building located in the Harrisburg, Pennsylvania CBD. The development is comprised of an 18-story building that offers 263 parking spaces contained in an eight-story parking garage located on floors three through ten of the building.
- The loan transferred to the special servicer in September 2025 for imminent default. The borrower subsequently defaulted at maturity and failed to repay the loan. The lender and borrower have been unable to come to terms regarding a potential modification or extension of the loan. A foreclosure complaint was filed by the lender as it evaluates a potential sale of the note.
- The servicer reported occupancy and DSC are 80.0% and 1.11x for the YTD ended March 2026. An appraisal dated March 2026 valued the property at $19.2 million ($111 per sf), which is 48.5% lower than the $37.3 million ($216 per sf) appraised value at issuance. As a result, the asset carries an ARA of $5.1 million, resulting in a cumulative ASER of $45,405.KBRA’s analysis resulted in an estimated loss of $6.1 million (27.5% estimated loss severity) on the $22.2 million loan balance. The loss is based on a KBRA liquidation value of $17.2 million ($100 per sf) and total projected exposure of $23.3 million. The value is derived from a direct capitalization approach using KNCF of $1.6 million and a capitalization rate of 9.25%.
Details concerning the affirmation are as follows:
- Class D at BBB- (sf)
Details concerning the rating changes are as follows:
- Class E to CCC (sf) from BB- (sf)
- Class F to CC (sf) from B (sf)
- Class G to C (sf) from CCC (sf)
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as the magnitude and extent of interest shortfalls, if any, on the certificates.
To access ratings and relevant documents, click here.