CMBS Investors Suffer $139 Million Loss on Single Office Tower

Money managers who piled into a $240 million commercial-mortgage bond tied to a San Francisco office building were hit with significant losses in recent weeks after the underlying loan was sold at a steep discount.

Buyers of the CMBS — backed by the mortgage on 600 California St., a 20-story office building in the city’s financial district — got less than half of their original investment back after the loan’s sale left just $101 million to distribute to investors, according to debt documents.

The damage reached what were once considered the safest slices of the deal: six junior ...