DFW Office Loans Make Up Outsized Share of CMBS Defaults

Office loans account for more than a fifth of delinquent CMBS value in Dallas-Fort Worth, compared with roughly one-eighth nationally, Trepp data shows.
2 min read
DFW Office Loans Make Up Outsized Share of CMBS Defaults
  • Dallas-Fort Worth has $434 million of delinquent CMBS loans, and office makes up more than a fifth of that value, well above the roughly one-eighth national share.
  • Fifteen of the metro’s 90 CMBS office loans are delinquent, and Harwood Center’s appraisal fell from $124 million to just under $20 million while it sits 48% leased.
  • Buyers like Lincoln Property and Cross Ocean Partners are treating defaults as entry points, but upcoming maturities and lease expirations could add more distress.
Key Takeaways

Office loans make up more than a fifth of delinquent CMBS loan value in the DFW office market, against roughly an eighth nationally, The Real Deal reports.

The metro carries $434M of delinquent CMBS loans, per Trepp data the Dallas Business Journal cited. Lodging is next at $112M, followed by multifamily at $96M and retail at $15M.

By the Numbers

Of the 90 CMBS loans on DFW office properties, 15 are delinquent. CMBS only covers 10% to 15% of commercial real estate debt, so the data is a signal, not the whole picture.

Harwood Center Shows the Damage

The clearest example is Harwood Center, a 36-story tower at 1999 Bryan St. Lenders financed it in 2014, and a June appraisal pegged it at just under $20M, down from $124M.

The tower is 48% leased.

Distress Draws Buyers

Some investors see openings. After the previous owners defaulted on a $233M CMBS loan, Lincoln Property Company and Cross Ocean Partners picked up The Colonnade, a three-building complex in Addison.

The buyers plan to put $100M into upgrades across its 1M SF. Because the sale closed so recently, the loan may soon come off the distressed list.

Zoom Out

The pressure is not unique to Texas. CRED iQ’s October data, which we covered here, put office at 16.4% distressed nationally, with stress shifting toward Los Angeles, Chicago and Houston.

Auction pressure is a separate gauge. Texas foreclosure volume fell below $600M for November after topping $1B in October, per Roddy’s Foreclosure Listing Service.

Why It Matters

A heavier office concentration means DFW’s CMBS numbers swing more on office than on any other sector. Appraisal resets like Harwood Center’s also reprice nearby comps.

The delinquency list may undercount trouble ahead. Loan maturities and big lease expirations are approaching, and that could thin out tenant rosters in large towers.

What’s Next

Watch whether recapitalizations like The Colonnade’s pull assets off the distressed list, and how many 2027 maturities need new capital.

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