AAA Bonds Are Underwater in CMBS Tied to Denver Office Tower

Investors who piled into the safest portion of a $277 million commercial-property bond tied to a Colorado office tower are facing the prospect of steep losses after the building was reappraised at a fraction of its former value and interest payouts were cut.

The CMBS is backed by the mortgage on the 52-story Wells Fargo Center in downtown Denver. The more than 40-year-old building’s value was recently reassessed at $115 million, according to the securitization’s July remittance report, down 76% from when the debt was sold in 2019.

The Wells Fargo Center building in Denver in 2012.

Photographer: Matthew Staver/Bloomberg

That’s left even the once-AAA portion of the bond ...