Weil Gotshal & Manges Liquidation Puts $3 Billion in Commercial Property Loans at Risk
Key Facts
In an analysis published on October 29, 2026, the agency said the potential impact of the firm’s departure varies by property, and that the size of the loans tied to it does not mean the entire amount is exposed to default. The key test is at the GM Building in Manhattan, where the tenant is linked to a loan maturing in June 2027. KBRA believes the firm’s exit does not materially increase the risk of default over the loan term, but adds pressure to refinancing prospects. These risks come as the current interest rate of 3.43% resets to the market rate next year.
At the GM Building, Weil leases about 450,000 square feet, making it the building’s largest tenant, and pays annual rent of about $54 million, equal to 17.5% of total rents. Its lease expires in 2034, but the loan matures years earlier. The $2.3 billion senior fixed-rate loan supports a $1.6 billion single-asset issuance, along with about $745 million across 10 pooled financing deals. The building is nearly 100% occupied and has more than twenty tenants. Debt service coverage is 2.3 times and debt yield is 8.0% in KBRA’s latest analysis; if Weil leaves and its space is not re-leased, the two ratios could fall to 1.78 times and 6.1%, respectively.
The agency places re-leasing at the heart of its assessment of the impact of Weil’s departure from the GM Building. It said Weil’s rent is not above market, and that strong market fundamentals and sponsorship by Boston Properties favor the owner’s ability to re-lease some or all of the space. That prospect limits the impact of the tenant’s exit on cash flow, but does not eliminate refinancing pressure when the loan matures in June 2027. At that point, the 3.43% interest rate will reset to the market rate, which KBRA said adds pressure to financing prospects. The agency therefore distinguished between default risk over the loan term and the risk of securing new financing at maturity.
At Boston’s Lyrik building, Weil ranks third among tenants by base rent, with a 10.6% share. The firm occupies about 45,000 square feet of a total 495,275 square feet, and its lease expires in 2037. The building is tied to a $360 million five-year fixed-rate loan maturing in 2031. Debt service coverage is 1.45 times and debt yield is 8.2% in the issuance analysis. If Weil leaves and the space is not re-leased, coverage could fall to 1.41 times and yield to 8.1%, under KBRA’s scenario, indicating a limited impact on these two metrics compared with the base case.
At 1999 Avenue of the Stars in Los Angeles, Weil leases about 13,000 square feet, representing 2% of the property’s annual base rent. The property secures a $425 million whole loan. KBRA said the firm’s departure there would have a negligible impact on cash flow, in contrast with the GM Building’s greater sensitivity to the size of the space and rent represented by the tenant. The agency’s analysis thus covers 3 locations, but the indicators do not point to a uniform level of risk across them. The variation is tied to Weil’s share of rents and the potential impact of vacant space on each loan.
The proposed liquidation plan coincides with a stated path for the firm to manage the process outside bankruptcy proceedings, according to Reuters, which reported that AlixPartners had been appointed as its adviser. A Weil spokeswoman said the management committee had recommended an orderly wind-down to the partnership and that the firm would continue serving clients during the process; partners were expected to vote in the following days. Reuters reported that the firm generated more than $2 billion in revenue in the previous year, while average profits per equity partner were about $5.4 million, compared with more than $10 million at two prominent rivals. It also reported that Michael Aiello left for Cravath with 5 partners, and that merger talks with Willkie Farr & Gallagher collapsed. Weil was among the 30 largest U.S. law firms, with revenue of nearly $2.1 billion in the previous year, according to Bloomberg Law.
KBRA said it would continue monitoring Weil’s situation and the performance of the three loans covered in its analysis. The monitoring includes the impact of any actual tenant departure on space and rents, as well as the re-leasing path at locations where debt service coverage and loan yields are affected. The GM Building loan’s June 2027 maturity remains the nearest financing milestone among the maturities specified in the report, while the Lyrik loan matures in 2031. Weil’s lease at the GM Building expires in 2034, while its Lyrik lease runs through 2037. The analysis did not say that the proposed liquidation plan had begun.