Maguire Properties’, a major office REIT focused in Southern California, plan to walk away from seven properties with mortgage debt, including six in CMBS deals, highlights a growing trend in the sector, Barclays Capital analysts said.

“Given the significant drop in property values, we expect many recent vintage borrowers to become ‘more efficient’ at exercising their default option and selectively ‘walking away’ from their non-recourse, CMBS debt,” analysts said. “The broader credit and equity markets do not seem to be penalizing sponsors for selectively walking away from nonrecourse CMBS debt; in some cases, we see the opposite trend emerging in this period of stress.”

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