KBRA Maintains the Watch Developing Status of the Ratings for All Classes of DBCG 2017-BBG

KBRA maintains the Watch Developing status of the ratings for all classes of DBCG 2017-BBG. The ratings were placed on Watch Developing on May 14, 2024 based on the extension of the Bloomberg lease, which comprises 98.8% of the collateral square footage, and the expected near term refinance of the transaction. According to the servicer, the entirety of the space currently leased by Bloomberg has been extended to February 2040 from February 2029 and the borrower has deposited $66.8 million into a leasing reserve in connection with the extension. However, KBRA does not have additional details including the new rent terms and landlord concessions.

The floating rate loan matured on June 11, 2024 and at the time, the borrower had not secured a refinancing of the loan. In order to allow the borrower time to complete a refinance, the special servicer extended the loan to October 11, 2024 and the borrower made a principal curtailment of $10.0 million. The loan will remain in a cash trap until it has been paid in full. If the refinancing does not occur and the transaction is not paid off in full, KBRA will take the appropriate rating actions as needed.

The collateral for the transaction is a non-recourse, first lien mortgage loan with an outstanding balance of $490.0 million as of July 2024. The mortgage loan is secured by the borrower’s fee simple interests in two office condominium units totaling 909,369 sf located at 731 Lexington Avenue, in the Manhattan borough of New York City, New York. The property was constructed in 2004 and consists of a 57-story Class-A, mixed-use tower connected by a curved glass courtyard to a nine-story building that together are referred to as the Bloomberg Building. The loan sponsor is Alexander’s, Inc., a REIT that is engaged in leasing, managing, developing, and redeveloping its properties. Alexander’s, Inc. is managed by Vornado Realty Trust. Alexander’s Management LLC has subcontracted its duties as property manager to Vornado Office, Inc., an affiliate of the borrower.

KBRA will continue to monitor the transaction and loan performance and will seek to resolve or update the Watch Developing status within 90 days.

To access rating and relevant documents, click here.

Related Publication

Methodologies