This week’s column examines CMBS borrowers cashing out $3.4 billion in equity this year, a major New York office tenant trimming space and a preference for apartment deals involving multiple properties. Read the entire piece by clicking “read more” below.
Borrowers cash out $3.4 billion: Borrowers have cashed out $3.4 billion in equity from their properties so far this year as part of single-asset, single-borrower commercial mortgage-backed securities deals, according to CoStar data. The amount returned represents about 11% of total loan proceeds of $38.3 billion.
The activity highlights how property owners are monetizing gains, with nearly half of all CMBS deals this year involving some form of cash-out refinancing. The process occurs when a borrower, tapping into a property’s built-up equity, replaces current debt with a new, larger mortgage and receives the difference in cash.
Of the 49 deals in which the use of proceeds was disclosed in presale analysis by bond-rating firms, 23 transactions described borrowers returning equity to ownership rather than purely refinancing existing debt.
Office properties dominated the equity extraction by dollar volume with borrowers pulling $1.15 billion from the sector, representing 10% of office loan proceeds. The biggest transaction this year was Tishman Speyer's refinancing of The Spiral in New York, which alone generated $967.3 million in cash-out proceeds for the developer. Excluding that megadeal, office borrowers have seen more modest equity returns of about 2%.
Industrial properties, including self-storage assets, generated $762.8 million in cash-out proceeds, representing 11% of loan balances in that sector.
Hospitality properties saw $646.4 million in equity extraction at 15% of proceeds, while data centers saw $562.5 million, or 8% of sector loan volumes.
Multifamily borrowers were more conservative, taking just $85.4 million in equity, representing 4% of loan proceeds. Retail borrowers showed the most restrained approach, with only $144.5 million in cash-out activity, representing just 2% of sector financing.
Despite the cashing out, debt refinancing remained the dominant use of proceeds across the single-asset, single-borrower market. For the $38.3 billion in deals where use of proceeds was disclosed, 94% of loan proceeds plus additional borrower cash went toward repaying existing debt.
Borrowers contributed $2 billion in fresh equity to pay down existing obligations, with $1.45 billion of that cash concentrated in office property refinancings. This cash contribution pattern comes as office property owners attempt to navigate high interest rates and tight lending standards.
The broader single-asset, single-borrower market also saw $5.1 billion raised and directed toward acquisition financing. The use of proceeds remained undisclosed for $5.3 billion in transaction volume.
New York office tenant trims space: Bond-rating firm Morningstar DBRS is maintaining a negative status on all credit ratings for Worldwide Plaza Trust 2017-WWP, a CMBS deal that deal holds a $940 million loan on One Worldwide Plaza in New York.
The action stems from developments related to the largest tenant, Nomura Holding America, with more than 660,000 square feet at the 2 million-square-foot property. Nomura’s lease is scheduled to expire in September 2033, but the investment banking firm has an early termination option it’s said to be exercising.
CMBS bondholder data posted in July indicates Nomura requested an early termination of two of the 19 floors it occupies.
Building owner RXR Realty did not respond to a request for comment.
The loan on the property was already in special servicing for “imminent monetary default” following the exit of law firm Cravath, Swaine & Moore at the end of its lease last August, Morningstar DBRS said. Cravath was the second-largest tenant at the property, occupying more than 617,000 square feet.
Morningstar DBRS noted RXR has begun negotiations with the special servicer for a potential restructuring of the loan to allow new capital that could aid in leasing efforts.
One Worldwide Plaza currently shows more than 784,000 square feet available, according to CoStar data.
Apartment lenders like multi-borrower deals: The CMBS market is showing a preference for apartment debt in multi-borrower deals as opposed to single-property deals.
Multifamily loans have made up 23.4% of multi-borrower private CMBS exposure so far this year, according to CoStar data. That is up from 18% in the first half of last year. Multifamily loans have made up $4.4 billion of the total of $18.7 billion in such deals this year.
The sector has drawn investors' attention despite rising expenses and stagnant rents, according to Bank of America Securities analysis.
Meanwhile, single-asset, single-borrower multifamily CMBS loans are down from the same time last year as some of the largest multifamily owners have yet to tap into the market.
Single-asset, single-borrower deals have totaled $2.8 billion so far this year, down from $8.1 billion in 2024. The two biggest players in the sector last year, Blackstone and Brookfield, have yet to use the CMBS market to refinance multifamily properties or portfolios in 2025. The two last year accounted for $5.2 billion of first-half activity.
