🚨Australian Retirement Trust has defaulted on a $304 M CMBS loan secured by the Bravern Office Commons after Microsoft vacated its 750,000 sq. ft. lease in August. The property’s value collapsed from ~$605 M in 2020 to $268 M in 2025, wiping out ART’s equity and forcing the loan into special servicing. Bellevue’s vacancy spiked above 20%, illustrating how single-tenant dependence can turn core assets unfinanceable overnight. For CRE capital markets, this marks a clear warning: underwriting must model tenant rollover as inevitable, not improbable.
Bravern Office Commons loan: $304 M CMBS, defaulted Sept 2025 — [Source: Livemint].
Property value: $605 M (2020) → $268 M (2025), –56% — [Source: Livemint; New Fortune Times].
Bellevue/Eastside vacancy: 20.6% Q2 2025 vs. 17.8% Q2 2024 — [Source: Cushman & Wakefield].
U.S. office CMBS in special servicing: 16.9% Aug 2025 vs. 2.5% Dec 2019 — [Source: Livemint].
Loan Performance. DSCR collapsed with cash flow at zero; debt yield cushion proved inadequate. Absence of reserves or structured paydowns left no protection against tenant rollover.
Demand Dynamics. Eastside vacancy above 20% shows limited absorption; tech retrenchment amplifies downtime. Leasing brokers forecast multi-year backfill timelines with concessions >20% of rent roll.
Asset Strategies. Repurposing feasibility (residential or life sciences) requires $50–$100/SF capex. Short-term, mothballing towers and appealing tax assessments are survival tactics.
Capital Markets. Office loans now require <50% LTV, debt yields >10%, and recourse or reserves. CMBS tone remains hostile to office risk; life companies lending only on fully stabilized, long-lease assets.
Office values can halve in tenant-loss scenarios.
Commodity suburban office demand is structurally weak.
Financing requires heavy equity and conservative debt.
Distress funds, not traditional lenders, drive new bids.
🛠 Operator’s Lens
Refi. Unavailable; lenders unwilling absent signed leases.
Value-Add. Conversion or heavy TI/LC essential; contingency ≥20%.
Development. Exit caps reset 200–250 bps higher than pre-COVID.
Lender POV. CMBS and banks prioritize control, not extension; expect accelerated transfers to special servicing.
Bravern likely enters foreclosure and distressed sale process in 2026.
Expect Bellevue vacancy to remain >15% until 2027, with rents suppressed.
Broader office market bottom may form 2025–2027 as distress flushes through, opening entry points for opportunistic buyers.
Livemint — “Australian pension fund defaults on $304 M Bellevue office loan” (Sept 2025). New Fortune Times — “Microsoft’s exit sinks Bellevue’s Bravern Commons value” (Aug 2025). Cushman & Wakefield — Eastside Office MarketBeat (Q2 2025).
