March 2026 servicer commentary notes that one of the buildings securing the $41 million specially serviced Castleton Park loan (JPMBB 2015-C30), was sold and a curtailment of $2.9 million was applied to the loan. The sold building was a 54,000-sf warehouse portion of the initial 903,000-sf collateral office/flex park comprising 31 buildings located in Indianapolis, IN, approximately 12 miles northeast of the city’s CBD. We last highlighted this loan in a July 2025 KCP credit alert when the loan transferred to special servicing after defaulting at its scheduled maturity.

After purchasing Paramount Group in December, in a transaction that valued the company at $4.9 billion, Rithm is now seeking a partner for 1301 Avenue of the Americas (AOA 2025-1301). The 45-story, 1.8 million-sf class-A Midtown office tower secures a $900.0 million loan and is 98% occupied. The proposed joint venture, will reportedly target a $1.4 billion valuation and will kick off a shift to an asset level strategy after Rithm failed to obtain a partner for the whole Paramount Group transaction. The targeted valuation is in line with the May 2025 “As Is” appraised value of $1.35 billion provided at issuance.

The 14,701-sf 3 East 48th Street property (21% of GLA) was sold in March 2026 by LNR Partners on behalf of the trust to Ilan Bracha and IB Global for a rumored $9.5 million ($646/sf). The building was the smaller of two properties that comprised the $105.0 million 597 Fifth Avenue (COMM 2014-UBS4); the other, a 71,243-sf mixed-use property was not expected to be sold as part of the transaction. The servicer deemed the former loan to be non-recoverable in February 2024, and the collateral portfolio went REO in June 2025. Occupancy for the portfolio was 17% as of December 2025. An appraisal dated the same month valued the portfolio at $63.2 million ($790/sf) and a $60.8 million ARA was assigned in March 2026.

During the February 2026 remittance period, 13 assets within the KCP coverage universe were resolved with a loss greater than 2% of the unpaid principal balance (UPB). The assets had an aggregate principal balance of $369.4 million and served as collateral in 13 CMBS transactions. Total realized losses of $317.1 million in February represented a 60% decrease from January 2026 and were 48% above the trailing 12- month (TTM) average.

Interest rates increased sharply in March, largely driven by higher inflation expectations tied to the recent surge in oil prices amid supply disruptions in the Middle East. Markets are now pricing in a 3.7% probability of a rate hike by December 2026, with the most likely outcome remaining no change (75.4%).

In securitized markets, private label commercial mortgage-backed securities (CMBS) issuance slowed to $26.7 billion year-to-date (YTD) through March 13, down from $32.8 billion over the same period in 2025. In contrast, commercial real estate collateralized loan obligations (CRE CLO) issuance is running ahead of last year at $13 billion YTD, up from $7.4 billion.

In March 2026, 86 non-defeased loans ($1.34 billion) matured, of which 53.05% (26 loans; $712.8 million) by unpaid principal balance (UPB) defaulted at maturity. The default rate for loans collateralized by office was 83.88%, followed by multifamily (67.18%), retail (41.42%), and lodging (39.34%).

The year-to-date (YTD) multifamily default rate is 19%, which is comparatively lower than the March 2026 multifamily default rate of 67.18%. The higher default rate was partly driven by a limited volume of multifamily loan maturities, which amplified the impact of the $44.1 million The Frontier loan’s failure to pay off at maturity. A total 67.9% of office loans have defaulted at maturity YTD, followed by retail (57.9%) and lodging (36.6%).

Capital Group has agreed to acquire Bank of America Plaza (WFRBS 2014-C22, WFRBS 2014-C23, CGCMT 2014-GC25, GSMS 2014-GC26) for approximately $210 million ($150/sf), 65% below the $605 million appraised value at issuance. The 1.4 million sf office tower, located in Downtown Los Angeles, secures a $400 million loan, which was transferred to special servicing in July 2024 ahead of its September 2024 maturity default. Foreclosure was filed in April 2025 and a receiver was appointed in May 2025. Occupancy has fallen to 67% as of November 2025, down from 86% in December 2023.

The $86.3 million Signature Office Portfolio loan (GSMS 2020-GSA2, MSC 2021-L5) was identified as a K-LOC after falling 30 days delinquent in MSC 2021-L5, though it continues to be reported as current in GSMS 2020-GSA2. Allstate (19% of GLA) elected not to renew ahead of its October 2026 lease expiration, and KCP research indicates that approximately 22% of the portfolio was being marketed for lease. The collateral is a 409,901-sf, two-property suburban office portfolio in Hauppauge, NY, and Cranford, NJ.

The $280.8 million Penn Square Mall loan (MSC 2016-PSQ, MSBAM 2016-C28, MSBAM 2016-C29) was modified according to March reporting. The loan has been extended through January 2028 and includes a one-year extension option. As part of the modification, the borrower contributed $30 million of new equity. The extension option is subject to a 10.5% debt yield requirement, and an additional $15 million principal curtailment. The loan transferred to the special servicer in December 2025 ahead of its January 2026 maturity. The loan is secured by a 777,281-sf portion of an enclosed two-story, 1.1 million-sf super-regional mall in Oklahoma City, OK.

Willowbrook Mall (BPR 2021-WILL) and Altamonte Mall (MSC 2013-ALTM) are expected to be refinanced through a $250 million CMBS transaction (GGP 2026-2PAK). The collateral includes a 540,000-sf portion of the 1.5 million-sf Willowbrook Mall in Houston, TX, and a 652,000-sf portion of the 1.2 million-sf Altamonte Mall in Altamonte Springs, FL. Loan proceeds, together with $26 million in new equity from Brookfield and New York Common Fund, are expected to retire approximately $267.6 million of existing debt and pay closing costs.