Office Loans: $12.1B Facing DSCR Stress Amid Occupancy Claims

Trepp identified $12.1B of performing securitized office loans that have cash flow below debt service out of $97.2B reviewed. Notably, $5.17B of these loans are for properties with at least 80% occupancy but coverage ratios below 1.00x. A significant portion of this shortfall, $1.46B, is attributed to free rent, with 280 Park Avenue accounting for $1.075B. Understanding these dynamics is essential for lenders and investors, as they may misinterpret low coverage as a leasing problem rather than operational expenses. This analysis impacts how these loans may be priced in the market.