(Bloomberg) -- The value of The Squaire, an office and hotel complex next to Frankfurt airport, may have plunged almost 40% since the last official valuation, S&P Global Ratings estimated in a report.
The property, which also includes parking facilities, is worth just €517 million ($562 million) — 37.7% below the appraised value, the credit ratings company said Thursday as it downgraded the commercial mortgage-backed securities linked to it.
It singled out the office component as facing the biggest challenges, saying it’s likely to see rising vacancy rates partly because “hybrid working has shifted demand dynamics in the office sector.”
The move comes a month after the Korean owners of one of Frankfurt’s best-known skyscrapers, the Trianon, defaulted on a loan tied to the building. Meanwhile, a drought on deals in German office properties has dragged on throughout the first half of the year, demonstrating unwillingness by investors to put money in an asset class that’s been slumping for some time.
A new valuation for Squaire has been commissioned, S&P said.
--With assistance from Neil Callanan.
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