A loan on a class A, two-tower office complex in Chicago, known as The Franklin, will collateralize about $340 million in commercial mortgage-backed securities (CMBS) coming to market from the CHI 2026-FRKLN.
The first-lien, non-recourse loan will be co-originated by
Located on West Adams Street, The Franklin is composed of a 60-story tower built in 1989 and a 35-story tower completed in 1992, occupying a city block in Chicago's West Loop, KBRA said.
With a low-grade parking garage, an amenity space featuring a golf simulator, fitness center, a co-working space, and a sky lobby, The Franklin has a collateral occupancy of 79.1% and covers about 2.5 million square feet of space, KBRA said.
Tishman Speyer Properties sponsored the loan, and its affiliate will manage the property, KBRA said.
KBRA estimates that the Franklin has net operating income of $45.1 million, and net cash flow of $39.5 million; a capitalization rate of 9.75% and a collateral square-foot value of $161.
CHI 2026-FRKLN has an in-trust loan-to-value (LTV) ratio of 83.9%, and a net cash flow debt yield of 11.6%, KBRA said. The debt yield is above the average for the comparison set, 8.3%. KBRA notes that a lower debt yield could reduce a borrower's chances of refinancing a loan at maturity, especially in environments of higher interest rates and lower liquidity.
The deal will offer six tranches of notes to investors and retain a $17 million horizontal residual interest piece. All the notes have a rated final distribution date of September 2043.
KBRA also noted that CHI 2026-FRKLN has an in-trust service coverage ratio of 0.96x, which sits below the average of 1.17x for the comparison group. Also, based on the one-month Secured Overnight Financing Rate, the deal has an in-trust service coverage of 1.54x.
KBRA assigns AAA to classes A and B; AA- and A- to classes C and D, respectively; and BBB- and BB+ to the E and F, respectively.
