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An office landlord controlled by Pacific Investment Management Co. has defaulted on about $1.7 billion of mortgage notes on seven buildings, a sign of widening pain for the industry as property values fall and rising interest rates squeeze borrowers.

The buildings — in San Francisco, New York, Boston and Jersey City, New Jersey — are owned by Columbia Property Trust, which was acquired in 2021 for $3.9 billion by funds managed by Pimco. The mortgages have floating-rate debt, which led to rising monthly payments as interest rates soared last year.

“We, like most office owners, are addressing the unique and unprecedented challenges currently facing our asset class and customer base,” Justina Lombardo, a spokesperson for Columbia Property Trust, said in an emailed statement. “We have engaged with our lenders on a restructuring of our loan on seven properties within our larger national portfolio. We look forward to a collaborative process yielding thoughtful solutions that reflect current market conditions and best serve the interests of all stakeholders.”

Pimco declined to comment.

A San Francisco building at 650 California St., built in 1964, is the most valuable property in the portfolio at $479 million, according to 2021 figures. Other properties include 229 W. 43rd St., 245-249 W. 17th St. and 315 Park Ave. South in Manhattan, 201 California St. in San Francisco, 116 Huntington Ave. in Boston and 95 Christopher Columbus Drive in Jersey City.

relates to Pimco-Owned Office Landlord Defaults on $1.7 Billion Mortgage 315 Park Ave. South in New York.Photographer: Eric Laignel/BussinessWire US offices, particularly older buildings with fewer amenities, have struggled in recent years with the rise of remote work during the pandemic and recent layoffs. Values of those properties have fallen 20% since the onset of the pandemic in March 2020, according to Green Street.

Landlords including Brookfield Corp. have defaulted on office mortgage payments. In some cases, the owners have considered walking away from the properties rather than continuing to pour money into them. Still, the delinquency rate for commercial mortgage-backed securities for offices is still relatively low, at just 1.83% in January, according to Trepp.

The seven buildings owned by Columbia Property Trust were appraised at $2.27 billion in 2021, according to loan documents on a $485 million CMBS that financed part of the debt. Goldman Sachs Group Inc., Citigroup Inc. and Deutsche Bank AG funded the original debt of almost $1.9 billion.

Representatives for Goldman and Deutsche Bank declined to comment. A spokesperson for Citigroup didn’t immediately reply to requests for comment.