Digging deeper, new data by Trepp LLP provided to the Washington Business Journal indicates about $93.26 million in commercial mortgage-backed securities are tied to D.C. office properties leased in part to WeWork.
Nationwide, Trepp estimates that WeWork is a top-five tenant in properties behind more than $3.8 billion in total CMBS debt slated to expire between 2024 and 2035.
CMBS debt, as you might recall, gained notoriety in the wake of the Great Recession, causing several owners across Greater Washington to lose their properties to foreclosure or deeds in lieu of foreclosure.
Some investors had little understanding about how much risk of default or bankruptcy was presented by the individual properties that made up these pools, and many of those same properties were later challenged by higher office vacancy rates.
Trepp’s estimated $93 million in debt is spread across three CMBS notes tied to WeWork-leased properties in D.C., putting it in the same boat as Boston but less exposed than San Francisco at seven properties and Los Angeles at five.
D.C.’s trio of properties traces back to sites owned by affiliates of one owner, Douglas Development Corp., which first brought WeWork to D.C. with a pair of leases at the Wonder Bread Factory in Shaw and at Chinatown Row.
So why aren’t more properties listed from WeWork’s spree of leases from Tysons to Bethesda? That’s because Trepp’s data only tracks CMBS debt, and that’s just one of many ways a commercial real estate owner can finance its property.